Amazon Enters Singapore With a Pitch to Big Spenders

By Laura Stevens and Liza Lin Features Dow Jones Newswires

Amazon.com Inc. is launching in Singapore with a twist: It is targeting loyal, time-strapped shoppers by starting with its more limited one- and two-hour subscription delivery option.

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The new approach, contrary to its usual online retail offering to the masses, could prove a tactic for entering new markets and attracting high-income shoppers where the U.S. e-commerce firm doesn't yet operate.

For the first time, the Seattle-based retailer is tackling a new country by initially offering Prime Now, its fast-delivery option that offers a smaller selection of food, necessities and gifts. Amazon later plans to introduce Prime membership, which consumers pay a monthly or annual fee to use. Prime Now is usually offered as an add-on to Prime.

"In Singapore, the fact that we don't have a classic, local dot-com offering, that's been really interesting, to think about how that's going to work for customers," said Stephenie Landry, vice president of Prime Now. "We're thinking up new solutions that are required for places where we don't have such a well-worn path established yet."

Amazon has been pushing into a number of new foreign markets, most recently Australia, as it works to maintain its growth in both sales and Prime members.

Prime customers spend double their non-Prime counterparts, according to UBS analyst estimates. Amazon has about 63 million Prime members in North America, UBS estimates, nearly twice the number abroad, leading to expectations of larger gains in membership internationally.

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While Amazon has a presence in Japan, China and India, Singapore is its first major foray into a smaller Asian country. The city-state of about 5.6 million people has high average income levels, a business-friendly government and an urban environment that allows for straightforward and easier deliveries, said Florian Hoppe, a partner at Bain & Co.

"There aren't many cities with such concentrated purchasing power in Southeast Asia," said Mr. Hoppe. "It's a good way to dip your toes into the region."

Many of the consumers are affluent and already shop overseas, said Xiaofeng Wang, a senior analyst at Forrester.

Singapore consumers buy on Amazon's Japanese, European and U.S. websites for import goods, Ms. Landry said, purchases that are informing the Prime Now offering. The country's heavy mobile usage makes it a good candidate for shopping on the Prime Now app.

But the market could still prove tough to crack. Stores with food and necessities are often just a short walk downstairs. And popular local online players such as Alibaba Group Holdings-backed Lazada Group and eBay.com Inc.-backed website Qoo10 already sell everything from smartphones to facial creams.

Alibaba said in June it is plowing an additional $1 billion into Lazada, which operates online stores for international brands and merchants in six countries in Southeast Asia.

In addition, Amazon will have to create new methods to ship in merchandise to restock its Prime Now warehouse rather than relying on an existing Amazon supply chain and logistics network because it is starting from scratch.

Prime Now, which has been around for nearly three years, is now in nine countries. In Singapore, one-hour deliveries will cost 9.99 Singapore dollars (about $7.30). If customers spend a minimum of 40 Singapore dollars, two-hour shipping will be free.

Until the introduction of Prime membership, it will be open to any Singapore resident, and the company will offer local brands such as Tiger Balm herbal ointments and foreign labels such as L'Oreal, Pampers and Samsung, Ms. Landry said. It will also sell items like board games, baby strollers and groceries.

"We're trying to get this really unique set of selection, all in one place," Ms. Landry said. "That obviously creates logistical challenges."

Write to Laura Stevens at laura.stevens@wsj.com and Liza Lin at Liza.Lin@wsj.com

(END) Dow Jones Newswires

July 26, 2017 22:04 ET (02:04 GMT)