Singaporean netizens rank at 4th place globally for sessions per year on Amazon, when judged in proportion to the number of internet users. That puts them just marginally behind Canada.
It’s probably one of the reasons why the company chose to enter Southeast Asia via Singapore; not only is there is an internet-savvy population with a high credit card penetration, consumers already have a stated preference to transact with the platform.
Amazon wasn’t physically present in Singapore until last year but the company’s white-label electronic products such as the Echo Dot and Kindle have been stocked and fulfilled by Lazada Singapore through grey market sellers as far back as March 2015, according to analytics platform BrandIQ.
Demand for Amazon in Singapore
BrandIQ mapped the number of reviews on Amazon products on Lazada SG over a three-year time period. When compared against Google Web Search data from Google Trends, there was a direct correlation between the volume of reviews on Lazada and Google search interest for Amazon from Singapore – until the marketplace’s official launch in July 2017.
Google Trends data shows a very similar spike to that of product reviews on Lazada in December 2015, which can be attributed to the holiday season and popularity of the new Fire product lines.
A very similar trend was also witnessed in 2016; product reviews rose following the September 2016 announcementof the new Echo Dot product, with corresponding spikes in both Google Web Search and Lazada product reviews in December 2016.
Web search interest in Amazon reached a crescendo in July 2017 following the Prime Now launch in Singapore. This event also marked the first inverse trend between web searches for Amazon and product reviews on Lazada. While the number of product reviews grew approaching the December 2017 holiday season, it never recovered to 2016 or 2015 levels, suggesting decreased interest across Lazada following Amazon’s entry.
There’s a correlation between Amazon product launches and their popularity in Singapore based on reviews by certified users, but what does it mean?
Rival on Lazada’s marketplace
Despite Amazon’s belated entry into Southeast Asia, its products are still ranking high on Lazada.
The interesting part is that the products in question; Amazon Fire TV, Kindle, and Echo are simply unavailable on Prime Now and can’t be shipped to Singapore from AmazonGlobal, it’s international shipping site.
Instead, these products are sold and fulfilled by a multitude of grey sellers on Lazada such as GeekBite, that has been active on the platform for 3+ years.
There’s clear demand and interest for Amazon products, which leads us to the question: why is a customer-obsessed Amazon content with grey market sellers fulfilling this need?
Standard industry practices indicate that well-known brands often find a crowded grey market for their products to be a cause for concern. Leaving grey sellers to fulfill local demand for foreign products results in brands losing control of their brand image, as delivery, packaging, and warranties from grey sellers usually don’t correspond to the same brand guidelines adhered to by the company.
The answer here is likely linked to the outdated industry distribution rights for television/movie content on the Fire platform and e-book rights for the Kindle. Content distribution rights are negotiated geographically, and local distributors commonly have long term contracts with content producers. Amazon either hasn’t prioritized, or is still in the process of securing distribution rights for Southeast Asia, and thus can’t make these products available to purchase.
What Amazon is falling short of, grey market sellers are picking up admirably. In the electronics categories including “Tablets” and “Video” on Lazada, Amazon products rank in the Top 10 when sorting by “Popularity”. The Amazon Fire TV Stick and Amazon Kindle stand out within their own respective categories.
The prices of items like the Kindle are also marked up by almost 23% (US$79.99 on Amazon US vs US$103 on Lazada SG) and the Echo Dot is marked up by 15% (US$49.99 on Amazon US vs US$59 on Lazada SG).
Singaporean consumers itching for the new Amazon items are stuck with purchasing through grey sellers on Lazada, like local reseller SGKindleShop, who offers the Kindle for US$155, or like forwarder shipping service like comGateway, which can set you back another US$15 for the US$79 Kindle, only slightly cheaper than the US$103 price tag on Lazada.
Amazon is missing out on a large potential revenue source by foregoing some of its best selling products on Prime Now. It’s also unable to cross-sell by offering enhanced product warranties, which are an important addition to overall product revenue streams.
Unless Jeff Bezos makes a conscious decision to include Amazon’s products on Prime Now SG, it’s going to continue to cede the market to grey sellers on its largest regional competitor.
Originally published in eIQ