Not so Amaz(ing)on in Southeast Asia

Amazon is synonymous with ecommerce across the world. This ranges from consumers to suppliers. A consumer is looking to satisfy all their daily and long-term material needs with Amazon. At the same time, suppliers are looking to grow on ecommerce channel via Amazon as its biggest growth driver. The Amazon story is a source of inspiration across the world, but that story takes sudden fall when we venture into Southeast Asia.

A late entrant into market, Amazon entered in Southeast Asia markets (Singapore, Thailand, Malaysia, Vietnam, Indonesia, Philippines) in 2017 with the aim of disrupting the market share and be an ecommerce growth engine in the region. However, Amazon still continues to trail the market leaders with it finishing as the 12th most used ecommerce portal in Singapore last year. This is a far cry from the domination that we are used to seeing with Amazing Amazon. The ecommerce market in Southeast Asia stands at a projected whopping $240 billion but cracking the SEA code for Amazon is proving to be a difficult task. In this highly growing and dynamic ecommerce channel. what is proving to be such an uphill task for Amazon in Southeast Asian markets to be successful?

The answer to this is simple. Consumer expectations, needs and mentality. eCommerce channel is driven by consumers for the consumers and the entire game plan for a company to success in a particular market relies on the consumer profile of that region. Amazon has been unable to capture the imagination of Southeast Asian consumers owing to varying aspects that we can deep dive into further.

1. Discounts over next day delivery: Patience is a virtue seen across Southeast Asia and that stands true for consumers in their behavior with ecommerce websites as well. People across Southeast Asia are not adamant or fascinated by next day delivery or delivery within the same day. Their discipline, planning and patience makes them value discounts offered by other players like Shopee and Lazada over the next day delivery in which Amazon expertise.

2. Assortment of anything and everything: Although Amazon’s assortment is exception, but it often fails to cater to local needs with focus being more on generic needs. Markets across Southeast Asia have a wide variety of local needs which Amazon fails to identify. On the other hand, dominant players like Shopee, Lazada, Gojek have an unlimited assortment of products that cater to the consumer needs in the market.

3. Shoppertainment: Gaming and the process of shopping is something which people across Southeast Asia love. They love spending time on ecommerce portals shopping for the products they love. They are looking for entertainment after their hectic days in office in their process of shopping. The simplistic nature of Amazon to have one click buys as opposed to gamification within Shopee, Lazada portals makes it even more difficult for it to become amazing.

4. Accessibility of offline stores: Unlike other countries, the spread of 7-Eleven across Southeast Asia markets is unbelievable. The ease of accessibility allows the patient and extremely active Southeast Asian consumer to get their products from the offline store for immediate needs instead of opting for one day delivery.

5. Heavy Investor Backing: There is no denying that Alibaba group is an out and out competitor of Amazon. With Alibaba group owing Lazada group and SEA group having huge investment and major ownership in Shopee, Amazon’s means of tackling competitors with capital is a strategy which cannot succeed in Southeast Asia.

6. SuperApp Success: The success of super apps like Grab in Southeast Asia has blocked any attempts by Amazon to venture into grocery delivery or food delivery to build any sort of awareness in the market among consumers about Amazon. The strong presence of Grab and synonymy with consumers prevents any miniscule presence of Amazon in the region.

For Amazon to be amazing in Southeast Asia, it can tread down 2 paths. Amazon could continue to dominate its presence in the cloud business in the region via AWS(Amazon Web Services) and eliminate its ecommerce marketplace model completely in the region. This will enable it to cut costs and bring in huge revenues and positive bottom line by leveraging its exist8ing and dominant AWS portfolio. Another high road that Amazon can take is follow the Uber route and partner with big players like Grab or Shopee to counter Alibaba’s Lazada Group and continue to be amazing, though in the shadows of other big players. Both the steps would involve a huge gulp of ego for the behemoth, but sometimes you have to lose something to be Am