Is Selling on Amazon Worth It for Pursuing SEA Consumers?

When it comes to global e-commerce, Amazon is the world's leading marketplace, renowned for its vast product range, speedy delivery, and exceptional customer service. Recently, Amazon has set its sights on Southeast Asia (SEA), a region characterised by rapid growth and vibrant online shopping trends. At a conference event hosted in Singapore back in March 2024, the e-commerce giant unfurled a US$9 billion investment plan for the region.

This blog evaluates the current state of SEA’s e-commerce market, and whether Amazon is a viable platform for businesses looking to start selling to SEA consumers.

The E-commerce Landscape in Southeast Asia (SEA)

SEA's e-commerce market is booming, with a market size projected to exceed $200 billion by 2025. This growth is fueled by increasing internet penetration, rising middle-class incomes, and a young, tech-savvy population. Consumer behaviour in SEA reflects a strong preference for mobile shopping, social commerce, and competitive pricing.

According to a report by TMO Group, major players like Shopee and Lazada dominate the SEA e-commerce landscape. Both are by far the top one and two e-commerce marketplaces in countries like Philippines, Vietnam, Malaysia, Indonesia, Thailand and Singapore. With the exception of Indonesia, where Tokopedia is second to Shopee.

Amazon, although a global powerhouse, faces stiff competition from these entrenched local platforms.

Amazon’s Presence in Southeast Asia

Amazon's journey in SEA began with its launch in Singapore in 2017, marking its first significant foray into the region. Since then, Amazon has established local partnerships, opened fulfilment centres, and introduced services like Prime Now to cater to regional consumers.

Statistics reveal that Amazon's traffic share in SEA varies significantly. According to the same report by a TMO Group, the traffic share figures for Amazon are as follows:

• Philippines (8%)
• Vietnam (2%)
• Malaysia (3%)
• Indonesia (not listed)
• Thailand (2%)

While the report does not show percentages for Amazon’s traffic share in Singapore, statista indicates that Amazon is third in traffic share behind Shopee and Lazada for the nation. The lower take-up rate for Amazon in SEA can be attributed to fierce local competition, high operational costs, and the need to adapt to diverse cultural nuances.

Comparing Amazon vs Other SEA Platforms (Shopee and Lazada)

Amazon's business model, renowned for its technological sophistication, vast product range, and superior customer service, sets it apart globally. However, in SEA, local platforms like Shopee and Lazada excel in other areas.

Amazon vs Shopee

• Shopee’s Strength:
  • Aggressive Marketing Strategies: Shopee utilises eye-catching advertisements, influencer partnerships, and viral marketing campaigns to attract a large customer base.
  • Frequent Promotions: Shopee regularly hosts promotional events like flash sales, voucher giveaways, and seasonal discounts, which entice shoppers to make frequent purchases.
  • Deep Understanding of Local Consumer Behavior: Shopee tailors its platform to meet the preferences and habits of SEA consumers, offering localised payment methods, language options, and customer service.

Amazon vs Lazada

• Lazada's Strength:
  • Robust Logistics Network: Lazada benefits from Alibaba's extensive logistics capabilities, ensuring efficient delivery and reliable service across the region.
  • Localised Shopping Experience: Lazada offers a shopping experience that resonates with local consumers through localised content, promotions, and a user-friendly interface designed to cater to the specific needs of each country within SEA.

Amazon's relatively higher marketplace fees, less aggressive pricing strategies, and lower levels of localisation in marketing and product offerings contribute to its smaller market share in SEA.

Advantages of Using Amazon for SEA Market Entry

Despite the challenges, Amazon offers several potential benefits for businesses targeting the SEA market. The platform’s extensive logistics network ensures reliable and fast delivery, a critical factor in regions with varying infrastructure quality. Additionally, Amazon's reputation, capabilities and support provide a trustworthy platform for sellers, making it an attractive option for businesses considering entering SEA.

For Western brands, selling on Amazon can be particularly advantageous. As an Amazon seller, businesses can leverage the platform’s infrastructure, detailed analytics, and marketing support to optimise their operations and reach their target audience effectively. Amazon provides a familiar and streamlined platform, allowing these brands to test their SEA market entry without the immediate need for extensive localisation. This makes Amazon a more accessible and easier entry point compared to local platforms, which often require deeper integration into local consumer behaviours and preferences.

Is Amazon the Right Choice for Your SEA Market Entry?

Amazon sellers looking to enter the SEA market must be aware of the intense competition the global e-commerce platform faces from local giants like Shopee and Lazada, who excel in understanding the varied preferences of SEA consumers. While Amazon's global brand has yet to find a strong foothold in SEA, there is plenty of future market share up for grabs as the e-commerce spend in the region continues to grow with 85% projected YoY growth in online retail penetration.

In summary, Amazon offers significant advantages but also faces tough competition from local platforms. Businesses must weigh these factors and conduct thorough market research before deciding to sell on Amazon in SEA. For insights and capital for e-commerce business to support regional expansion, speak to an expert at Choco Up. Our expertise can help you navigate the SEA and the broader APAC e-commerce market, and help you leverage platforms like Amazon more effectively.