Amazon move here will put pressure on local retailers

Amazon's logo is seen at Amazon Japan's office building in Tokyo, Japan, on Aug 8, 2016.
Amazon's logo is seen at Amazon Japan's office building in Tokyo, Japan, on Aug 8, 2016.PHOTO: REUTERS

Amazon will set up its Singapore site early next year.

It is expected to offer electronics with local warranty and give retailers here a run for their money.

The Straits Times understands that the United States-based online retail giant has met local officials and plans to launch here "some time early next year".

Details are scant on where its South-east Asian operations will be located in Singapore.

The Business Times reported that Amazon had leased about 100,000 sq ft in a facility in the Jurong East area.

Amazon, which did not reply to queries by press time, has already put up close to 100 job openings here on its website, with a variety of technology and business positions - some of which require experience in retail operations.

 

Amazon's global scale and reach in terms of third-party supplier tie-ups have traditionally helped lower the prices of goods on its website.

Consumers here can benefit from the faster shipping and easier returns as the e-tailer is expected to set up a warehouse here.

Amazon has since 2013 been offering free shipping of certain items from the US to Singapore, but orders need to be worth at least US$125 ($170). Items also cannot be too big.

Certain products, including certain laptops, media players and Amazon's Kindle tablet, are not shipped here.

Buyers instead ship these to a US address first before forwarding them to Singapore - incurring higher shipping costs.

Electronic goods, even if shipped here from Amazon's US warehouse, do not come with local warranty.

This means that the buyer of a certain brand of laptop or camera cannot go to the Singapore servicing centre for replacement of parts or repair at no cost covered by the warranty.

They would have to ship it back to the US for servicing.

Retail and marketing analysts believe Amazon's presence here will be of concern to local retailers, especially given the slump in the retail scene.

"Its prowess in the online retail business - from working with third-party suppliers, warehousing and delivery to its online algorithm that recommends goods to online shoppers - will draw customers away from both brick-and-mortar and online retailers," said Dr Seshan Ramaswami, an associate professor of marketing from the Singapore Management University.

In the third quarter of the year, Singapore registered the highest mall vacancy rate - at 8.4 per cent - since 2011, when the Urban Redevelopment Authority began tracking this figure.

Consumer electronics retail chain Challenger Technologies, which reported a 16 per cent drop in third-quarter revenue due to weaker retail sales, said it will "look at ways to collaborate" with Amazon instead of taking it on.

It is known that Amazon allows third-party merchants, including individual sellers, to list their goods on its website to benefit from the reach of its platform and the ease of online payment.

Merchants can also widen their reach if they ship their goods overseas.

Electronics and household products retail chain Courts remains unfazed by the competition, and will continue to invest in warehousing and logistics solutions to meet the rising demand for goods online.

Its country chief executive officer Stan Kim said: "Shoppers will still require accredited and quality service in the way of consultation, installation, servicing and product guarantees."

A version of this article appeared in the print edition of The Straits Times on November 04, 2016, with the headline 'Amazon move here will put pressure on local retailers'. Print Edition | Subscribe