Lazada buys out Singapore e-supermart, as Amazon reportedly eyes SEA expansion

Southeast Asian e-commerce operator is acquiring RedMart for an undisclosed sum as it looks to tap the latter's fulfilment capabilities in Singapore, where Amazon also is reportedly planning to make its regional debut.
Written by Eileen Yu, Senior Contributing Editor

Southeast Asian e-commerce operator Lazada is acquiring Singapore-based online supermarket in a move to expand its service offerings. The announcement comes amid reports Amazon also is finally entering the region with a Singapore launch slated for the first quarter of 2017.

Lazada said in a statement Wednesday the acquisition would allow both companies to not only leverage each other's technology and operations, but also extend their customer networks. It did not reveal financial details involved in the deal. It did say, though, that RedMart would continue to operate independently after the acquisition was finalised, likely in the fourth quarter of 2016.

Lazada in April sold a controlling stake to China e-commerce giant, Alibaba Group, in a deal worth US$1 billion. The Singapore-headquartered company currently operated in six Asian markets including Malaysia, Thailand, and Vietnam, serving some 560 million consumers.

With a delivery window of two hours, RedMart would provide robust fulfilment capabilities in Singapore, Lazada said, adding that the acquisition also would expand the e-grocer's product offerings.

RedMart's co-founder and CEO Roger Egan said: "Through this partnership, we can further scale our logistics and tech platform to extend our product assortment and to offer an even more convenient service for our customers in Singapore. The capital flexibility provided through this deal will go towards innovating."

The acquisition come months after Japanese e-commerce operator, Rakuten, shuttered its online stores in Singapore, Indonesia, and Malaysia. It said then that it was focusing on increasing its footprint in growth markets, specifically, Taiwan and its domestic Japanese market, with goals of achieving between 10 percent and 30 percent growth rates.

Amazon reportedly eyeing Singapore launch, Southeast Asia markets

And while Amazon has been largely absent in the region, the US e-commerce giant is reportedly finally looking to make its foray in Southeast Asia with a Singapore launch slated for the first quarter of 2017.

The company currently does not operate local sites in the region, but offers free international shipping to customers in Singapore under its AmazonGlobal Saver service, for orders of at least US$125 worth and for goods sold directly by Amazon.

According to a TechCrunch report Wednesday, the online retailer had been building up its infrastructure in Singapore, buying up refrigerated trucks and making new hires. Citing sources with knowledge of the company's plans, the report said Amazon was aiming to launch selected services in Singapore within the first quarter of next year as well as extend its Prime delivery service and AmazonFresh service in the city-state.

According to market figures from Frost & Sullivan, Southeast Asia's e-commerce revenue would surpass US$25 billion by 2020, after clocking US$11 billion in 2015. It added that the B2C (business-to-consumer) market would climb 17.7 percent over the five-year period.

Within the region, Malaysia and Thailand were the two largest e-commerce markets in 2015, churning US$2.3 billion and US$2.1 billion, respectively. By 2020, though, the two countries would be overshadowed by emerging economies such as Vietnam and Indonesia, said Frost & Sullivan.

However, the research firm noted that while the region presented significant growth opportunities, market players would be challenged by low credit card ownership, which currently stood at lower than 7 percent in all Southeast Asian markets except Singapore and Malaysia. Also, in some economies, more than 50 percent of the population did not have bank accounts, Frost & Sullivan said, adding that complex geographies in markets such as Indonesia and the Philippines would further challenge e-commerce operators.

It noted, though, that recent investments in regional logistics players including SingPost and aCommerce were promising. China's lucrative e-commerce market, which account for 12.1 percent of all retail sales last year, also was expected to spillover into Southeast Asia.

Amazon last month launched its Prime service in China, as it continued to drive its gameplay in a market where it had yet to make a significant dent against local giants Alibaba and JD.com.

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