Amazon is in Singapore, but here's where offline retailers still have the upper hand

It's official. Amazon is in Singapore.

For Singaporeans who have awaiting its (much delayed) arrival, this is good news in spades.

In the past few months, e-commerce platforms have been bolstering themselves - Shopee, who recently launched Shopee mall), as well as, Lazada, with their Avengers LiveUp programme. Amazon has its work cut out for it, and it looks like they are in good stead to do so.

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Amazon Prime Now

What Amazon promises Singaporeans are 2-hour delivery times to their door-steps, says the Business Times.

This "is a differentiator in speed and gives them (customers) an opportunity to really get things at another level of urgency and speed," said Dave Clark of Amazon's SVP Worldwide Operations.

"We are going to have the best prices and [a] phenomenal selection of goods […] from hundreds of local suppliers along with the access we have to the global supply-chain we operate in all other marketplaces."

It's all about the selection, low prices and speed.

And about Amazon Prime Now - described as Amazon's "most innovative" product. They also "[expect to] roll out more Prime services to Singapore as [they] move forward."

"This is a place where there are five million people and it's a great opportunity and it's such an innovative culture and a tech-forward place to be, it seemed like a perfect fit for us."

Singaporeans is the first country where people will get to benefit from having Amazon's Prime Now immediately upon Amazon's entry. Other countries who saw the launching of Prime Now previously had Amazon's businesses.

A Blow To Retail?

November 2016, we wrote on how retail space rentals were going down, but vacancies were climbing.

Our mall vacancy rate was the highest it had been in a decade, but the most worrying trend of all is the fact that our developers are still building more malls.

Photo: Vulcan Post

In fact, it was just announced today Yishun would be getting the largest mall in the North by end-2017.

But emptying malls doesn't mean brick-and-mortar retail is dead, retailers just need to be clever about it.

By offering flexible payment methods, such as 0 per cent instalment plans, as well going cashless with Android and Apple Pay (read: having insufficient cash is no longer a deterrent to shopping), retailers are finding ways to combat online spending.

Meanwhile, Singapore landlords and retailers are also taking up new methods of keeping themselves competitive with revenue sharing models. This means that some landlords will charge their tenants a base rental fee and a cut of their gross turnover.

"The rationale is to share profits when the tenants are doing well and, when the tenants are not doing well, the landlord will receive less rent," said Professor Sin Tien Foo of National University of Singapore's real estate department.

This will motivate landlords to keep the space attractive by sprucing up the building and shoppers enjoy the convenience and amenities.

But that's not enough.

A golden question for retailers is to ask themselves what customers do not get when they shop online.

The answer is the on-site experience.

Apple enthusiastically welcomed visitors to its Orchard flagship store, and HipVan turned its shop into a 'home'.

Indeed, previously online-only brands are also taking on brick-and-mortar retail, such as Love, Bonito's gargantuan flagship store at 313@Somerset (previously Forever 21). We also discussed how malls could actually renew themselves by #supportinglocal (see HipVan at Orchard Central and Megafash at Suntec).

Meanwhile, existing offline brands are also actively expanding, such as Miniso and Owndays. This means they are doing something right, and are case studies for retailers to learn how they can compete better.

Amazon may be in Singapore, but that does not mean that brick-and-mortar shops will automatically face death.

I concede that the competition will get fiercer as the American giant rolls out even everyday products like Tiger Balm. But what online shopping provides is the speed and convenience.

What offline shopping provides is the "surround-sound" shopping experience, fulfilment from spending time with family and friends, and the unique experiences great customer service can offer.

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