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Tag: amazon

  • Alibaba And Singles Day Make Black Friday Look Small And Show The Future Of Retail

    Alibaba And Singles Day Make Black Friday Look Small And Show The Future Of Retail

    Singles Day may be an invented holiday, but Nov. 11 in China gives an indication of how retail will evolve globally over the next decade. And Alibaba is the company to watch. The numbers posted by e-commerce giant Alibaba on Singles Day — a holiday created as an antidote to China’s Valentine’s Day, which has caught on big time — in 2017 are mind-boggling. Alipay, the company’s payments system, processed $25B of payments, more than four times what the entire U.S. spent on Black Friday weekend and Cyber Monday in 2016.

    That is 1.5 billion individual transactions, 325,000 orders per second, at the day’s peak. Cainaio, the logistics company owned by Alibaba, processed 812 million delivery orders. The opportunity for brands is clear, and Alibaba said 167 companies each generated more than $15M in sales, 17 companies surpassed $75M, and six companies surpassed $150M.

    But as important as the numbers Alibaba posted was the way it posted them, because this gives an insight into how the worlds of online and physical retail will intertwine. “More than $25B of orders in one day is not just a sales figure,” Alibaba Chief Executive Daniel Zhang said in a statement. “It reflects how merchants and consumers alike have now fully embraced the integration of online and offline retail.”

    Ahead of Singles Day, Alibaba, founded by Chairman Jack Ma, sent an army of technicians across China to help more than 600,000 independent retailers — mom-and-pop stores, convenience stores and independents selling everything from clothes to hardware  — upgrade their computer systems.

    Those stores were able to sell goods through one of Alibaba’s online platforms, Tmail.com, and now serve as delivery and storage centres for goods sold on Alibaba. Wikimedia Commons Alibaba Chairman Jack Ma Convenience stores use an Alibaba app that helps manage these sales and deliveries, but also gives store owners advice on what they should be stocking to maximise profits and how their wares should be displayed. This is part of Alibaba’s wider effort to have deeper links into the world of physical retail.

    It is also working on the conversion of 100,000 retail stores into Alibaba-linked smart stores. If customers go into a shop and cannot find a product, they can find other stores nearby that might sell it, or have it delivered at home. “Alibaba plans to use these retailers to reach the elderly and children, who largely aren’t engaging with Tmail online,” said Henry Mason, managing director of consumer insights firm Trend Watching.

    “This move demonstrates that the future of retail is not a simple battle between online and offline. It is far more nuanced than that. As Alibaba in China and Amazon in the U.S. have noted, a purely online presence is not enough. “Because despite the proclamations of many online-obsessed, future-focused trend watchers, there are still hundreds of millions of consumers who aren’t pressing Amazon Dash buttons or using WeChat to order toilet paper via drone delivery on a daily basis.”

    Courtesy of Trend Watching Henry Mason Alibaba also has a chain of department stores called Intime, which double as fulfilment centres. Alibaba’s Singles Day numbers also highlight how smartphones will play an increasing role in retail, both online and offline — 90% of the payments Alibaba took were from mobile phones. “In major Chinese cities you hardly see cash machines anywhere,” Value Retail Chairman Scott Malkin said. “You pay for goods using your phone everywhere, whether it is at the street food stall or in the store.”

    Of course, the innovations being pushed by Alibaba will not be replicated exactly in other markets. The company has the advantage of working in a market which, because of the rapid pace of economic development and recent political history, does not have the pre-existing infrastructure and methodology of Western countries. “If you don’t have legacy companies like Marks & Spencer operating then you can go straight to what people want,” Malkin said. Its methods will not be adopted wholesale, but the way Alibaba is creating a platform that connects physical stores and online retailing is a development that will surely be replicated around the globe.

  • Another Alibaba major step in China retail

    Another Alibaba major step in China retail

    This week’s Alibaba-Sun Art deal is a major step in the development of a new retail landscape in China, write Wai-chan Chan and Jacques Penhirin of Oliver Wyman.

    This is not a “real estate play” with Alibaba buying 446 grocery stores, but shows how serious Alibaba are in developing the “new retail” model combining the strengths of online and offline retail.

    The first winners from this alliance are likely to be consumers.  Alibaba will use its investment in Sun Art to improve its price, service levels and the range of products available. In addition, expect to see Alibaba add the ability to deliver a wide range of goods from these stores to consumers’ homes in super quick times. Today delivery time is the new battlefield but performance is still highly dependent on physical networks.

    In the context of retail this alliance is more important than Amazon’s acquisition of Whole Foods in the US.  Sun Art is the largest, and one of the most respected grocery players in China, while Alibaba already has a large grocery business, making it an alliance between two leading players in retail.

    Unlocking fresh

    Despite the huge advances in e-commerce in China, fresh food has been one of the areas that has been most difficult to convert to e-commerce.  Freshness is the key driver for consumers in grocery shopping. According to a survey of 1500 consumers Oliver Wyman conducted in August, consumers purchase fresh products 4.9 times per week on average, and ‘fresh’ is the number one criterion in grocery retailer selection regarding range, product quality, and value for money. However, 81 per cent of respondents do not think e-commerce provides good quality fresh products compared with offline hypermarkets.

    As one of the top two hypermarkets receiving the highest rating from consumers on their fresh offering, Sun Art has strong expertise in operating fresh categories, which will greatly unlock Alibaba’s capabilities.

    Ally or die

    It is becoming clearer that the endgame of two eco-systems being established by Alibaba and JD.com is inevitable in the retail landscape of China, which poses pressure on those ‘unallied’ retailers such as China Resources, Carrefour, WuMart, etc. For retailers, capturing traffic through their own e-commerce platform will become even more challenging. Traditional retailers must understand that they are competing with giants with unlimited abilities to invest and the ambition of integrating online and offline retail. O2O orders already contribute 30 per cent of sales of Alibaba’s Hema Fresh Supermarket – it is indeed transforming the economics of the offline shopping cart, which is challenged by the declining like-for-like growth over the past 12 successive quarters.

    Traditional retailers need to choose their battlefield very quickly, but expect compromise on bargaining power and decision-making in the long term.

    Bad news for second-tier brands

    The two ecosystems are not pure retailers anymore but integrated media and branding platforms. It does not leave Consumer Packaged Goods brands much of a choice but to closely coordinate with Alibaba and JD.com and learn their rules. Niche brands which understand both the ecosystem and consumers will take this opportunity to grow, and top-tier brands will continue to flourish if they learn how to effectively partner with Alibaba or JD, to have both parties learn from each other. By comparison, weak brands will suffer because the traditional retail stores they rely on are losing ground. Furthermore, as O2O develops, the terms and conditions will become more transparent within the two ecosystems. Promotional pressure will likely increase, requiring more diligence on the return on investment.

    Despite the prospects for this alliance, Alibaba and Sun Art need to start thinking how to effectively realise its potential. Operationally, there is huge complexity in integrating the two businesses and overcome barriers of management and culture. After all, it is more difficult to manage shoppers than to manage mobile devices.

  • More online super sales for Asia online market

    More online super sales for Asia online market

    While the US formulated online super sales, such as this week’s Black Friday, Asia has adopted the concept with a vengeance.

    In fact, China has increasingly been exporting Alibaba’s Singles Day (11.11) event, which this month racked up a massive US$35 billion in sales. November is the favoured month for this new consumer mania, offering the Singles Day, Black Friday and Cyber Monday sales.

    Both Black Friday and Cyber Monday themselves have been catching on in the Asia Pacific, growing by 29 per cent last year, according to global payments company WorldPay.

    It says that despite forking out $17.8 billion on Singles Day last year, Chinese consumers still went hunting Black Friday bargains, with overall spending on the day up by 37 per cent from the previous year. In Hong Kong, the rate of growth was 32 per cent, and in Singapore 21 per cent.

    While retailers are among the biggest Black Friday winners, new WorldPay data suggests this year could also be a great opportunity for savvy APAC businesses in the travel and digital sectors. In Hong Kong, spending with travel and airlines saw a 30 per cent surge last year, with Singapore figures up 20 per cent as travellers jumped online to search for flight and hotel deals.

    Not just retailers

    Shoppers are also increasingly seeking out bargains for digital content such as subscriptions, e-books and on-demand box sets. Black Friday spending in this sector last year grew 62 per cent in Hong Kong and 14 per cent in Singapore.

    Not just retailers can benefit from Black Friday, but also a range of e-commerce businesses, says WorldPay Asia Pacific GM Phil Pomford.

    “While Black Friday and Cyber Monday have typically been the realm of retailers, a more diverse range of businesses are now recognising they can also take can take advantage of this special online opportunity.

    Shoppers during this time are highly engaged, proactive and looking for a wide range of online deals, so the potential to reach new customers and strengthen brand loyalty is huge, regardless of sector.

    “E-commerce businesses should set themselves up for success by ensuring their websites are prepared for heavy traffic, and offer simple payment options to drive shopping-cart conversions. They might also consider following the example of Amazon and kickstart Black Friday deals a week early.”

    Black Friday online sales surpassed $3 billion last year and are expected to rise this week, says Adobe Digital Insights, as buyers seek to avoid long queues and lost hours in retail stores.

    In Southeast Asia, Google searches for “Black Friday” have surged over the past five years, and 12 months ago major offline/online retailers like Robinsons, Sephora and Zalora offered generous discounts for the event.

    “Many industries rely on this event to make up a large portion of their fourth-quarter sales, in particular toys and games,” says Euromonitor International senior toys and games analyst Matthew Hudak.

    ‘Sure to jump on’

    Digital campaign company RTB House says Black Friday last year attracted 106 per cent more people to online stores, with 204 per cent more transactions.

    “We anticipate conversion rates surging this time,” says RTB House Southeast Asia country director Chandra Kuncara. “Customers who missed out on Singles Day will be sure to jump on this event.”

    He says personalised retargeting is an important selling tool during Black Friday. With AI technology and deep-learning algorithms, marketers can highlight most-desired products for each individual customer.

    More purchases mean more packages being shipped, and international courier service FedEx is again expecting to handle a record number of packages over the peak holiday shopping period, which starts on Monday and runs to December 24. This year it is expecting 380 to 400 million packages.

    The growth of cross-border e-commerce is turning the peak shipping season into a global phenomenon, says FedEx. For instance, 37 per cent of Singles Day purchases in China last year were from international brands or merchants. Cross-border shopping is expected to make up 20 per cent of e-commerce sales by 2022, led by Asia Pacific.

    “While an online purchase takes just a few clicks, logistics providers are working hard behind the scenes powering every moment,” says FedEx Express AsiaPacific president Karen Reddington. “Our business is the backbone of the e-commerce market.”

    Meanwhile, while shoppers scramble for Black Friday bargains this week, outdoor retailer REI is closing its 154 US stores for the third consecutive year, offering its nearly 12,000 employees a paid holiday. It is truly going against the tide by also putting a hold on online orders.

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  • Amazon Australia launch to happen “really soon”

    Amazon Australia launch to happen “really soon”

    US giant Amazon announced it plans to launch both an online retail and a “marketplace” presence in Australia, confirming that its arrival is imminent in the buoyant local retail market.

    In a conference in Melbourne, Amazon Australian country manager, Rocco Braeuniger said the e-commerce heavyweight was “getting really, really, really close” to opening trade, but failed to give an exact date.

    Braeuniger did confirm, however, that when Amazon opens, it plans to sell products from first Australian warehouse, and also host third-party retailers on its online marketplace.

    Right now, Amazon is in the process of converting a 24,000-square-metre warehouse in Dandenong South, in Melbourne’s outer east, into its first Australian fulfillment centre.

    The company has already taken out trademarks on private-label brands that sell electronics, home wares, baby products, and pantry staples.

    The company this week also booked out several photography studios around Melbourne for product shoots, according to local media reports, highlighting a push into fashion and accessories.

    Amazon said it would wait, however, before taking on Australia’s grocery market, saying “it is really, really complicated to make fresh food delivery a great customer experience.”

    “We have the long-term ambition to be successful and to earn the trust of Australian companies and the Australian customer,” Braeuniger told the crowd, made up of media and hundreds of small business owners hoping to sell their products on the website.

    “We will be focusing on listening to the Australian customer, inventing on behalf of the Australian customer, [and] delivering a great customer experience.”

    While a date has not been disclosed, experts predict the company will start taking orders before Christmas, particularly close to the Black Friday or Cyber Monday shopping events on 24 and 27 November 2017.

    For the three months ending 30 September 2017, Amazon Inc. said global revenues rose 34 percent to $43.7 billion in the third quarter. The world’s largest online retailer said net income rose to $256 million, or 52 cents per share.

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  • Anticipating your customers reaction to the launch of Amazon in Australia

    Anticipating your customers reaction to the launch of Amazon in Australia

    The Amazon juggernaut is coming to change Australian retail…or so they say. There is also lots of conjecture over what their offering will be? What is their strategy? And how will they deliver it to the Australian consumer?

    A great deal of debate, conjecture and for some, abject fantascism and equally many opinions are somewhat isolated from the opinion that ultimately matters most – being the customer

    So, we decided, within our insights division at Retail Doctor Group, and supported by our partners at Lightspeed, to ask a wide range of Australian retail customers about Amazon.

    What do our customers think about this launch? What will their reaction be?

    Awareness of the Amazon brand was high however, the results also uncovered the lack of knowledge around what the Amazon proposition really is, with 38 per cent of Australians reporting not to be aware of the upcoming launch of Amazon, surprisingly millennials were even less aware.

    Retailers where naturally 100 per cent aware.

    Dig a little further into the fuller Amazon model and we see even less Australian consumer awareness.

    Knowledge of Amazon Prime was murky for consumers when asked to define it, with 24 per cent thinking TV streaming, 15 per cent thinking delivery subscription and a whopping 47 per cent admitting they’re not sure. Likewise, Alexa hadn’t been heard of by 65 per cent of respondents and only 27 per cent knew it was artificial intelligence.

    So, the process begins in earnest for Amazon to educate and convert customers, as all retailers need to do on an ongoing basis,

    Security, trust, fulfillment, value add, community build and experience are the currencies of competition with Amazon. As retailers, focus on improving service offerings, simplifying order processes, accelerating the speed to customer while still retaining a focus on quality.

    Only 22 per cent of consumers think Amazon will change their shopping behaviour. For those unlikely to shop at Amazon, the barriers were around a physical element as 33 per cent like to see, touch and feel the product before buying and 28 per cent prefer the shopping experience in a store.

    This confirms what we already firmly believe, that building a one channel retail ecosystem is key to customer loyalty, as we like to say “Interaction before transaction”. Retailers should be dialing up their in-store experience and emotionalising their brand attributes to build their customer connection and loyalty.

    During our recent event we asked some of the country’s most influential retail leaders some of the same questions we asked the consumers.

    Interestingly, we saw that retail professionals think 97 per cent of their customers are likely to start shopping at Amazon post Australia launch versus only 57 per cent of consumers who report this intention.

    Trust was a key area of difference between consumer and our retail leaders’ opinion.

    93 per cent of the retail professionals said Amazon was a brand consumers trust, whereas consumers themselves rated this at 58 per cent.

    Building your customers trust is key to customer loyalty, ensure you know everything about your customer. Knowing how to connect to them on an emotional level with strengthen their loyalty to your offering and brand.

    During these times, it is imperative to understand consumers to better build quality strategy

    The real risk lies with not understanding the changing customer needs and how to fulfil these, rather than Amazon itself.

    The world of retail is changing and as retailers we must keep up, but how can we realise this change if we do not understand our raison d’être, our customer.

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  • Temasek Holdings to enter online fashion

    Temasek Holdings to enter online fashion

    Singapore state investor Temasek Holdings has led a new round of equity funding for US second-hand fashion marketplace Poshmark.

    Poshmark plans to use the cash to expand its footprint across Asia, broaden its product categories and develop data-driven shopping experiences. It will also introduce its voice-enabled Stylist Match service. Accessed via Amazon Alexa, this aims to offer shoppers a personalised experience through engaging with seller stylists on its platform.

    Founded in 2011, Poshmark hosts about 5000 brands and sells up to 7 million items daily.

    The latest funding round raised US$87.5 million, led by Temasek, with support from GGV Capital, Inventus Capital, Mayfield, Menlo Ventures, Uncork Capital and Union Grove Venture.

    That takes the aggregate equity investment in the business to date to $160 million.

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  • Giants’ retail partnership points to Asia’s future

    Giants’ retail partnership points to Asia’s future

    JD.com brings to the partnership its competitive edge in logistics and technologies such as artificial intelligence, cloud computing, drones and robots, while Central offers retail expertise including knowledge of Southeast Asian markets, brand relationships, customer base, physical store network and loyalty programmes.

    E-commerce has enormous growth potential in Thailand, which the partnership hopes to tap into. For example, only 1-2 per cent of Central’s sales are online; by working with JD.com, Central aims to increase this to 15 per cent by 2021.

    A major benefit for Central is better access to the Chinese market. JD.com has an alliance with Tencent, owner of the popular messaging app WeChat that averages 902 million daily logged-in users (as of September 2017). JD.com customers who make their purchases with WeChat have their goods delivered using an advanced logistics system which increasingly features drones. JD.com’s 150 or so drones make more deliveries than any other drone user globally. The company is also testing drones that can carry up to a tonne, and using robots in its warehouses.

    JD.com’s drone-delivery model is different from that being tested by US retailers such as Amazon and 7-Eleven. Instead of delivering packages direct to individual homes, local distributors receive and distribute them. In the US, a stricter regulatory environment and privacy concerns mean drone deliveries are not advancing as rapidly as in China and are still in the testing phase.

    JD.com founder and chairman Richard Liu believes drone deliveries would save massively on costs, especially in rural areas. He estimates that drone deliveries are at least 70 per cent cheaper than delivery by truck and take a fraction of the time.

    Unlike China’s other e-commerce giant Alibaba, JD.com is focused on building a complementary bricks-and mortar-business through strategic alliances with strong retail brands such as Walmart, and selling luxury goods through its partnership with the online luxury-brand marketplace Farfetch.

    According to Liu, JD.com is attracted to Thailand because of its large population, developed infrastructure and strong logistics network. The plan is to make Thailand a major hub for e-commerce expansion across Southeast Asia.

    Many North American retail stores are closing – Sears and Macy’s among them – so it is encouraging to see the confidence reflected in this partnership. Given the Chinese love of shopping, Thailand’s experience in developing luxury malls and the rapid development of technology in this part of the world, this points to a prosperous future for retailing in Asia.

  • Hundreds of cities bid to become home to second Amazon HQ

    Hundreds of cities bid to become home to second Amazon HQ

    It’s the prize of a lifetime – a $5 billion investment creating 50,000 well-paid jobs that everyone wants, but only one city will get. Amazon said Monday it has received 238 pitches from places across North America vying to be home to its second headquarters.

    It’s the prize of a lifetime – a $5 billion investment creating 50,000 well-paid jobs that everyone wants, but only one city will get.

    “We received 238 proposals from across North America for #HQ2,” the Seattle-based internet colossus said in a post from its official Twitter account.

    “The team is excited to review each of them!”

    From East to West and North to South, metropolises across the United States are locked in a frenzied bidding war, desperate to woo Amazon into favoring them as the site of the e-commerce giant’s second headquarters.

    Proposals were also reported to have come from Canada and Mexico.

    From $7 billion in tax breaks in Newark, New Jersey — 50 years ago aflame in deadly race riots — to a giant cactus shipped inter-state from Tucson in Arizona, bids ranged from the extremely ambitious to the silly before the deadline for submissions recently passed.

    The e-commerce giant announced last month that it planned to invest more than $5 billion in opening Amazon HQ2, a second company headquarters in North America that would also create tens of thousands of spin-off jobs.

    “We expect HQ2 to be a full equal to our Seattle headquarters,” promised Amazon founder Jeff Bezos, America’s second richest billionaire worth $85.8 billion.

    The unusual announcement unleashed competitive streaks nationwide as some of America’s most glittering cities vie with lesser-known backwaters looking to exit oblivion.

    In addition to direct hiring and investment, Amazon expected construction and operation of HQ2 to create tens of thousands of additional jobs.

    Amazon said in an online post that it is making the selection of its second headquarters a public process because “we want to find a city that is excited to work with us.”

    It has expressed a preference for places with more than one million people, a business-friendly environment and urban or suburban locations able to attract and retain strong technical talent.

    A study commissioned by World Business Chicago claimed that in 17 years, HQ2 would generate $341 billion in total spending, including $71 billion in salaries.

  • Amazon sales surge on Wholefoods acquisition

    Amazon sales surge on Wholefoods acquisition

    E-commerce giant Amazon has posted a surge in sales of 34 per cent to $43.7 billion over the last three months.

    Amazon announced profits in the three months to the end of September were $256 million, up from $252 million in 2016. Despite its sales growth, the company’s profits were nearly flat as it ploughed money into tech gadgets, streaming video, data centres and warehouses to support its growing empire.

    The firm also saw an increase in revenue in its profitable cloud services division which exceeded $4.5 billion, up 42 per cent.

    Amazon’s recently acquired upmarket grocer Whole Foods has brought in $1.3 billion in sales for the quarter.

    Upmarket grocer Whole Foods, which Amazon acquired in August, brought in $1.3bn in sales in the quarter. Excluding Whole Foods, the e-commerce giant said sales increased 29.8 per cent.

    The firm has posted a 35 per cent increase in overall sales in North America, which accounts for the bulk of Amazon’s business. They increased 29 per cent in its international division thanks in part to a Prime Day surge, but the unit is still running at an operating loss.

    Neil Saunders, managing director of GlobalData Retail, said Amazon has impressively managed to increase the pace of growth from its online stores, where sales increased by 22 per cent over the prior year.

    “This is the highest rate of growth since the second quarter of 2016,” Saunders said. “A very successful Prime Day, the addition of more customers to the Prime ecosystem, and continued uplifts in spending from both Prime and non-Prime customers alike, all drove the outperformance.”

    “All that said, it is clear that Amazon’s own online stores are no longer the star of the show,” he said. “Both the subscription services arm and Amazon’s web services division (AWS) are outpacing product sales in growth terms.”

    Saunders said the former, which includes Prime fees, grew by 59 per cent and the latter by 42 per cent.

    “In particular, we believe that the growth of Prime will continue to boost subscription revenue in the quarters ahead, all the more so because of the slew of new devices that Amazon is releasing,” he said.

    Saunders said for all Amazon’s undoubted success, there are a few chinks in the behemoth’s armor.

    “The main one of these is profit,” he said. “For the quarter, operating income was down by 40 per cent to $347 million. The dramatic growth of marketing costs, which were partly a function of the Whole Foods acquisition as well as the substantial promotion of new devices, took its toll on the bottom line. Fulfilment and shipping costs also increased faster than sales, although the pace of increase is not quite as bad as feared.”

    International also weighed down on the profit line with a $936 million operating loss during the quarter, Saunders added. This was a sharp increase on the $541 million loss the division posted last year. The launch of new services like Amazon’s unlimited music service in several European countries, and the rollout of Alexa services to India and Japan, have all taken their toll on the cost line. Amazon is still very much in the building stage in many of its overseas operations, and we think profitability is likely to get worse before it gets better. However, this near-term pressure should not be seen in negative terms; indeed, we view it as an investment rather than as an unrecoverable cost.

    “Turning away to Amazon’s latest venture, Whole Foods, we believe it is too early to conclusively say whether this is a success story,” Saunders said.

    However, initial signs are encouraging, and our data show some very slight movements on price perception – these are not dramatic, but they are a step in the right direction and show that Amazon’s approach is being noticed by consumers. Looking ahead, we excited about the possibilities for the Whole Foods business and believe that over the medium to longer term Amazon will make some more radical changes that will deliver stronger results.”

    Overall, Saunders said, Amazon is in very good shape.

    “In some ways, the deterioration in profit doesn’t matter, if only because the business has an enormous amount to show for its expenditure,” he said. “These investments – in services, devices, new ventures, pricing, international markets, and business services – will all power growth in the years ahead.”

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  • Online retail grocery in South East Asia : Alibaba or Amazon?

    Online retail grocery in South East Asia : Alibaba or Amazon?

    In South East Asia, online retail grocery is growing as an increasing number of  Singaporeans  prefer to do their shopping online.

    “It is getting better and better,” said Mr Vikram Rupani, president of RedMart, an online grocery company based in Singapore that is part of Alibaba‘s push into the region, “but it’s a continuous process that never ends.”

    Alibaba and American giant Amazon already dominate online retail in their home markets. Increasingly, they are competing against each other on neutral ground.

    Alibaba’s bigger bet is in South East Asia. It has spent more than US$2 billion (S$2.7 billion) to take control of Lazada, a five-year-old online shopping company based in Singapore and doing business in six countries. In 2016, Lazada bought RedMart, the online retail grocery.

    The promise is there, as the region’s young middle class grows and goes online. South East Asia’s e-commerce sales could total US$88 billion by 2025, projections from Google and Temasek Holdings, the Singaporean sovereign wealth fund, show. Volume was less than one-tenth that in 2015.

    Alibaba and Amazon are seeking consumers like Singaporean Janice Lee Fang, who decided she needed to buy a robot to amuse her six-year-old daughter home sick from school. Through Amazon’s Prime Now service, introduced in Singapore in July 2017, she bought a Sphero SPRK Plus – a clear plastic ball that can skitter across the floor with a tap of a smartphone – that arrived in less than a day.

    But South East Asia is no China. A diffuse area of 600 million people, the region is divided by politics, language and culture. Some places are modern, like Singapore. Others lack the roads and other infrastructure to get people what they need.

    The challenges have forced Lazada, Alibaba’s biggest South East Asian operation, to be creative.

    In Vietnam, local post offices take customer returns and give cash refunds. In Malaysia, customers can collect merchandise from lockers at 7-Eleven stores. And in the Philippines, Lazada uses petrol stations as places where merchants can drop off their goods for delivery personnel to pick up.

    Alibaba’s international arm has seen its latest quarterly sales more than double in a year, in part from Lazada’s contribution. Still, Lazada and its RedMart subsidiary remain a tiny, and unprofitable, part of Alibaba’s empire. Lazada’s chief executive Max Bittner said its Chinese parent has been willing to spend money to build its delivery capabilities and draw more customers.

    “E-commerce is an economy-of-scale game,” Mr Bittner said. “I can go after this opportunity with the amount of firepower I need.”

    Amazon so far counts Singapore as its only South-east Asian market, though industry experts expect it will expand into other countries.

    Until recently, direct Alibaba-Amazon rivalry has been rare. Amazon has a modest presence in China. Alibaba sells goods in the United States through its AliExpress platform but has backed away from further expansion efforts.

    South East Asia could offer a test of their vastly different business models on neutral turf.

    Amazon owns more of the inventory it sells. By contrast, most of Lazada’s sales are from outside vendors who use its platform as a digital middleman to reach customers. That approach, which keeps costs low, is similar to what Alibaba does in China. But in China, the company’s Taobao platform has been accused of offering counterfeit goods. Alibaba says it is working to fight fakes.

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  • Inside the new Amazon stores-in-stores at Kohl’s

    Inside the new Amazon stores-in-stores at Kohl’s

    Ten Amazon stores-in-stores have opened inside discount apparel chain Kohl’s across the US, the first stage in a broader commercial partnership between the two retailers.

    Announced in early September, the deal sees Amazon smart home experience mini-stores opening in prominent locations at the front of the Kohl’s stores across the Chicago and Los Angeles areas from this month.

    Amazon has since released these accompanying images showing how the concept looks.

    The stores are staffed by Amazon employees and provide a hands-on experience where customers can interact with a variety of Amazon devices, including Amazon Echo, Echo Dot, Amazon Fire TV, and Fire tablets. They can buy them on-site.

    Amazon says the stores will demonstrate how its devices can “modernise and simplify home management, entertainment and security”.

    Returns service

    Shortly after the Amazon stores-in-stores concept was revealed, the company also announced an arrangement allowing 82 branches (initially) in the two cities to accept returns of goods bought by Amazon shoppers online. From next month, they will be able to take their goods to a Kohl’s store where the merchandise will be packed and shipped for free back to an Amazon warehouse.

    Kohl’s believes partnering with Amazon represents a competitive advantage. “The Kohl’s and Amazon collaboration leverages the strengths of both brands – the Kohl’s store portfolio and omnichannel capabilities combined with the power of Amazon’s reach and loyal customer base,” Kohl’s said.

  • Singapore malls are primed for Amazon’s click de grace

    Singapore malls are primed for Amazon’s click de grace

    Singapore’s malls are one click away from irrelevance, though the investment trusts that own them are carrying on as if nothing has changed. The first hint of trouble showed up in January when department store John Little shut down after a 174-year run. Then, in July, Amazon.com Inc. introduced its two-hour Prime  Now delivery service, choosing the city-state of 5.6 million people as the testing ground to fine-tune its Southeast Asia ambitions.

    The landlords don’t appear all that perturbed; at least not yet. CapitaLand Mall Trust, the island’s biggest retail real-estate investment trust, announced 2.78 Singapore cents (2 cents) in dividends last week, unchanged from a year earlier. That’s an annual yield of almost 5.5 per cent at a time when the 10-year Singapore government bond offers only 2.2 per cent. The tantalising premium is keeping investors hooked.

    Even the analyst community is discounting the threat from online shopping: There are 13 buy recommendations on the CapitaLand Mall REIT, and not a single sell, according to data compiled by Bloomberg. But look under the hood, and there are signs that not everything is hunky dory.

    While all its malls are almost fully occupied, agreements at some of the bigger properties are being struck at increasingly lower rents. Forget a suburban property like Westgate in Jurong East, which has seen 17 per cent of leases signed at rents 10.5 per cent cheaper than three years ago; even marquee names like Raffles City, a prime Singapore landmark, are settling for less:

    Singapore’s economy grew 4.6 per cent in the third quarter from a year earlier, with the government estimating full-year expansion of between 2 per cent and 3 per cent. Yet CapitaLand Malls’ tenants — from food and fashion to supermarkets and services — reported negative or mediocre sales growth in the first nine months of 2017. You can expect entertainment and electronics, the categories where tenants are still doing well, to start feeling the Amazon effect when the online service is able to iron out its early wrinkles.

    Then there’s fintech. By some estimates, the Singapore banking industry’s space requirement could shrink by 30 per cent, or 6 million square feet, over the next decade. To the extent suburban malls like to house a bank branch or two to catch footfalls, they’ll be affected. Indeed, the sharp drop in the rental reversion rate at CapitaLand’s Tampines Mall — from growth of 0.6 per cent in the first six months to a decline of 4.3 per cent in the first nine — was because of a change in tenant mix from banking to food and beverages, according to OCBC Investment Research.

    Ahead of further increases in US borrowing costs, CapitaLand Mall Trust has reduced its balance-sheet risk by selling the serviced-residence part of Funan, a 1980s-vintage mall that used to specialise in electronics and is currently undergoing a costly redevelopment. By the time Funan reopens in 2019, there may not be anybody left on the planet who still goes to a store to buy a computer or a phone. So the new address will play host to everything from a homegrown theatre company’s auditorium to a test zone for drone photography.

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  • Over 500 already signed up as Amazon hosts first Aussie summit

    Over 500 already signed up as Amazon hosts first Aussie summit

    Amazon will host a marketplace seller summit in Sydney with hundreds of Australian businesses set to attend to receive advice on selling through the e-commerce giant’s platform.

    Over 500 Australian sellers already registered to sell on Amazon Marketplace in Australia.

    In a recent webinar with potential sellers, key account manager, Brittany Rinker, said the company aims to launch Marketplace by late 2017 or early 2018, though she emphasised that this is not an official launch date.

    She said Amazon is currently focused on getting businesses signed up and creating listings on Marketplace, which represents over 50 per cent of all items sold on Amazon websites globally.

    The free half-day event will provide practical guidance on setting up and growing a business online, and is being run in partnership with the Australian Retailers Association (ARA) and small business network, the SME Association of Australia (SMEA).

    “The internet and technology have the power to level the playing field between big and small businesses, empowering Australian companies, large and small, to grow their sales and their business online,” said Rocco Braeuniger, Australian country manager, Amazon.

    “We look forward to enabling local businesses to make their products available to a wide audience, not only in Australia, but also worldwide.”

    The event at Jones Bay Wharf in Sydney will feature keynote presentations from Braeuniger, and head of Amazon Marketplace in Australia, Fabio Bertola, as well as insight from experts and entrepreneurs.

    “Amazon launching in Australia marks an exciting time for Australian entrepreneurs,” said Adam Mills, CTO and founder of Australian business KoalaSafe, which has seen incremental year on year growth in sales, with Amazon Marketplace being its biggest channel. Mills will be presenting at the Seller Summit, sharing his experience and best practice.

    “For those who are selling physical products, Amazon provides a great opportunity to get these products in front of customers and we encourage businesses to take full advantage.”

    Russell Zimmerman, executive director of the Australian Retailers Association said Amazon’s arrival brings new possibilities to Australian retailers, small and large.

    Mark Flack, board member, SMEA added that the “reality is that there’s a lot of education that needs to happen amongst the small business community when it comes to being digitally savvy and using the right tools to take their business to the next level.”

  • Amazon Japan launching pop-up bar

    Amazon Japan launching pop-up bar

    To promote the alcoholic drinks being sold on its platform, Amazon Japan will launch a promotional pop-up bar in Tokyo.

    In Ginza, the 78-seat Amazon Bar will run for 10 days from October 20, serving cocktails, sake and wine.

    The online retail giant says some products will be exclusive, and the bar will not have a menu but recommend drinks to customers. It is the company’s first such venture, its previous foray into brick and mortar being bookstores.

    Japan is one of Amazon’s four largest markets and is among the world’s biggest alcohol markets. Beer drinking is fading there, with wine showing the biggest increase in popularity over the past decade, followed by whiskey. The number of drinkers has risen by more than 55 and 34 per cent respectively, according to Japan’s National Tax Agency.

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  • EU cracks tax whip, demands Amazon pay up

    EU cracks tax whip, demands Amazon pay up

    Amazon has been told to pay about €250 million (A$374 million) in back taxes to Luxembourg, the latest US tech company to be caught up in a European Union crackdown on unfair tax deals.

    The fine was much lower than some sources close to the case had expected and is only a fraction of the €13 billion that Apple Inc was ordered to pay to Ireland last year.

    EU Competition Commissioner Margrethe Vestager, who has other big US tech companies in her sights, has taken a tough line on multinational companies’ approach to tax.

    Amazon said it was considering an appeal.

    Amazon shares were little changed in early Wednesday trading.

    While the exact amount Amazon needs to repay is yet to be calculated, the €250 million is significantly less than the 400 million euros which sources close to the matter told Reuters a year ago was under consideration by Vestager.

    The bill suggests the Commission believes Amazon shielded around 900 million euros in EU profits from tax, calculations by Reuters show.

    For most of its existence, Amazon has worked on razor thin profit margins to fuel its global expansion, making only US$2.4 billion (A$3.1 billion) profit on global revenues of US$136 billion in 2016.

    The Commission said Luxembourg allowed Amazon to channel a significant portion of its profits to a holding company without paying tax.

    Amazon’s corporate set up with subsidies in Luxembourg was also subject of a US$1.5 billion court case with US tax authorities, which Amazon won in March.

    Amazon, which employs 1500 in the grand duchy, is one of the biggest employers in the country of half a million people. It has a Europe-wide staff of some 50,000.

    Luxembourg, whose tiny economy has benefited from providing a European base for multinational companies, rejected the finding and said it was looking at its legal options.