Will Amazon kill the retail stars?
When Amazon officially launched its Prime Now service in Singapore, one of the biggest talking points is whether it will snap most of the market share out of incumbent e-commerce players and e-tailers like Lazada and online clothes store Zalora whilst cannibalising traditional brick and mortar stores like Tesco in Singapore.
To some experts, Amazon Prime Now’s entry may not exactly be a bad thing for e-commerce and brick and mortar incumbents. Local e-tailer Pelando.sg’s co-founder Mehul Jobanputra believes that the talk of competition is too premature for now. “Lazada has been around since 2011 and it has expanded to neighbouring Southeast Asian countries gradually,” he said, adding that Lazada’s online marketplace is too well-positioned to be affected by the arrival of Amazon in Singapore since they are currently the “master of the region with local expertise and Alibaba backing.” Meanwhile, Gartner’s research director Adrian Lee said, “The incumbents should worry as the focus shifts to differentiation of customer experience and ability to fulfill a growing and more discerning consumer base.” Foodpanda managing director Luc Andreani said that the whole cannibalisation of the market and its players really depends on what kind of operational and growth model are being compared.
For example, marketplace models, like food delivery service foodpanda, may not necessarily mean cannibalising bricks and mortar because there is still a value chain connection there with these physical stores providing the goods and the online service acting as the platform for consumption or delivery.
Demolition of brick and mortar?
Shirley Zhu, programme director at IGD Singapore, emphasised the importance of the human experience in food shopping. “Shoppers will always want to touch and experience a product in the flesh, especially fresh food, so we believe there will always be a place for brick and mortar stores.” Zalora, for instance, needed to adopt and launch mobile pop-up stores in certain cities in Southeast Asia tagged as growth areas, allowing people to physically see and experience their products as a guide before purchasing online.
Shoppers will always want to touch and experience a product in the flesh, especially fresh food, so we believe there will always be a place for brick and mortar stores.
Zalora’s mobile pop up store