Amazon Prime Now has arrived in Singapore and Singaporeans can sign up for a service offering free delivery for groceries and popular household items within 2 hours. It’s a huge statement of intent from the global eCommerce giant, which is pitting itself against Alibaba in an aggressive move into Southeast Asia.
What is Amazon Prime Now?
Amazon Prime Now launched its first service in New York in December 2014 and is now operating in over 50 cities across nine countries.
This most recent move into Singapore marks the first time an entire country has been served by Prime Now.
From its huge East Jurong warehouse, Amazon is offering everyday household and food items from popular brands and also from its in-house Amazon Basics range. Users normally pay a membership fee to access the service, although Singaporeans can currently use it free for a limited time. So far, users can only order through the mobile app which is a marked difference from local company Redmart, which allows both web and mobile orders.
How are they achieving a two-hour delivery time?
Since Amazon previously has not had a base of operations in Singapore, the company has reportedly been working closely with local authorities including Singapore Economic Development Board, according to Tech in Asia:
“To deliver within two hours, there’s a lot of innovation that needs to happen … in terms of infrastructure. We had to work closely with [Amazon] to navigate the Singapore government machinery, to ensure compliance with our LTA [Land Transport Authority] from a traffic and signaling perspective, and our Agri-Food & Veterinary Authority in terms of classifying food safety.” Assistant Managing Director of the Singapore Economic Development Board, Kiren Kumar
While starting from scratch might be a drawback in some instances, it could also be a blessing in disguise: without legacy systems and processes, Amazon is free to build a world-class service from the ground up – one which utilizes AI and machine learning.
Amazon has adopted New logistics processes such as on-demand delivery scheduling and arranging stock in the warehouse according to demand to meet the punishing two-hour time frame.
What it means for competitors
Last year, Amazon put in a bid to acquire Redmart but lost out to Lazada, which in turn is owned by Alibaba. Now, with faster delivery speeds and the backing of one of the world’s most recognized brands we’re likely to see each company make decisive moves to win over Singapore consumers.
Currently, Singaporeans can try out Amazon Prime Now for free, and while Redmart (and other local brands like Honestbee) have strong local brand recognition and a home ground advantage, Prime Now membership (when it becomes a paid service) will likely be rolled into Amazon Video and other select Amazon products. This enhanced offering may edge out the competition – if the free sign-up offer hasn’t done so already.
Opportunities and risks for smaller eCommerce stores
While the big players battle it out for supremacy, this launch represents an opportunity for smaller eCommerce retailers, who may be able to benefit by offering their customers faster order fulfilment via Amazon’s network. Local wholesalers may also be able to create a new distribution channel through Amazon Prime Now.
However, in the short term there could be downward pressure on retail prices as the larger retailers enter a price war, and it’s possible that smaller players will be the casualties. Smaller eCommerce businesses will have to innovate and shore up customer relationships in order to weather the storm.
While smaller retailers may not be able to offer same-day delivery options like Amazon Prime Now, having a strong inventory management system in place will ensure that orders are sent and received smoothly. Long shipping times or errors in your supply processes could mean losing customers to Amazon or other big retailers; optimizing your inventory management is key to maintaining an edge.
Businesses operating in the same or similar markets could also consider joining forces to enhance their product offering. One of Amazon’s most enticing features is the sheer volume and variety of products available on the platform. By partnering with other businesses to breathe fresh air into your inventory could help you steady sales as Amazon solidifies within the Singaporean marketplace.
Visit our blog for more advice for SMEs operating in Singapore and around the world.
Inventory & supply chain management lessons from retail giants - Remart, IKEA, Walmart, Apple