American technology giant Amazon enjoys a high reputation in the global e-commerce field. At the same time, it also has strong businesses such as cloud computing network services, streaming media platform Twitch and physical Whole Foods Market, but why has it been difficult for the company to become the king of the e-commerce industry in Southeast Asia? "Woolen cloth?

01 Amazon's arrival and future

The e-commerce industry in Southeast Asia is booming. Platforms such as Lazada and Shopee have continued to grow in user numbers and traffic, and even social media platforms such as TikTok have joined the ranks to integrate e-commerce capabilities into their platforms.

However, it should be noted that Amazon is not in the list of e-commerce platforms in Southeast Asia. Amazon, which is so good at disruptive business expansion, why can't it succeed in the Southeast Asian market?

In fact, Amazon already has partnerships in the region, launching its Startup Ramp Program in Southeast Asia last year, and is currently working with Singapore’s Office of Space Technology and Industry. Officials also brought Amazon Prime Video to Singapore and Indonesia. But those partnerships don't belong in the e-commerce industry, so they haven't allowed Amazon's e-commerce business to dominate Southeast Asia.

Then a new question arises: Why has Amazon's e-commerce business succeeded in other markets, but not in Southeast Asia? What's the secret to Amazon's past success? Why doesn't this recipe work in Southeast Asia?

The answer naturally cannot bypass the word "monopoly".

Amazon's dominance in the global e-commerce space is due to the company's monopoly in the industry. Businesses that want to sell their products online and launch their products through e-commerce platforms often have no choice but to choose Amazon. In this way, Amazon has positioned itself as a “necessary” middleman in a market, providing an important channel for sellers to reach consumers, and has become the “first choice” for most consumers to choose to shop.

However, Amazon's dominant position in the e-commerce field has also allowed it to carry out a series of "dimension reduction attacks" on its partners and sellers on the platform, and misconduct has been closely watched by the market. According to the investigation, the e-commerce giant's misuse of third-party data, persistent predatory pricing, coercion of sellers and the like appear to be commonplace.

At the same time, Amazon has also helped various startups succeed to consolidate their market positions. Amazon uses some of the profits from its business to help lower-margin businesses and let them overcome the various market barriers they face and ultimately overwhelm their competitors.

This is why Amazon is so different from the major e-commerce platforms in Southeast Asia.

02 A market soil without monopoly

Amazon's "anti-competitive tactics" are not popular in Singapore. In 2021, the then Minister of Trade and Industry of Singapore, Chan Chun Sing, mentioned that the government and industry players such as Amazon are committed to supporting talent development in order to maximize the returns that e-commerce companies can get.

The government wants to help sellers succeed, not bully them. From the standpoint of the Singapore government, e-commerce platforms should allow platform officials and sellers to achieve a "win-win" situation.

Therefore, the successful e-commerce platform in Southeast Asia has also really helped the seller group to achieve success, rather than relying on vicious competition to make themselves more income.

Shopee has been expanding its seller program to help sellers earn more revenue. In 2020, Shopee held a masterclass to provide sellers with selling tips for engaging consumers on livestreams. In 2021, Shopee launched Shopee Pros to encourage knowledge sharing among sellers, allowing them to share success stories with each other.

Earlier this year, Shopee also partnered with Meta to launch Facebook ads on its seller platform to further expand sellers’ presence on the social media platform.

If you think Shopee is just an "exception" in the competition in the Southeast Asian market, you are wrong.

Lazada, which is owned by Alibaba, has also announced its Seller Fair Trading initiative to address the pain points of the platform sellers it works with, helping sellers enhance their brand image and engaging consumers’ platform activities, and forging partnerships with tech companies to help strengthen sellers online image.

In the Southeast Asian market, there are significant differences in the way that various e-commerce platforms treat sellers and Amazon, which also largely explains why Amazon's e-commerce business is not at the forefront of market competition in the region.

03 One platform to support one person

It may be difficult for Amazon to attract sellers in Southeast Asia at the moment, but what about the appeal to consumers?

After all, Amazon does ship to Singapore and Southeast Asia, so what's stopping consumers from going to Amazon for their online shopping needs? Do other e-commerce sites offer anything different compared to Amazon?

Facts have proved that e-commerce platforms in Southeast Asia have adapted to the needs of local consumers, and platforms are combining online shopping with entertainment to provide consumers with "shopping entertainment".

According to research by social media platform TikTok and the Boston Consulting Group, shopping for entertainment could be worth $1 trillion for brands in the Asia-Pacific region by 2025.

The e-commerce function TikTok Shop launched by TikTok is a good illustration of what shopping entertainment is. This function provides consumers with live shopping services.

Lazada and Shopee also offer live streaming, with sellers and brands participating in ShopeeLive seeing up to a 75% increase in sales.

In addition to leveraging shopping and entertainment to their advantage, platforms targeting Southeast Asia have also been adapting to the local consumer market. For example, Carousell transformed the traditional B2C e-commerce model into a new C2C model and became one of the star e-commerce platforms in Southeast Asia. According to Carousell officials, one-third of Singaporeans use the platform every month.

By contrast, Amazon appears to be missing out on these features that allow sellers to reach consumers — at least in Southeast Asia. Amazon Live has less than a thousand daily active viewers.

Instead of asking why Amazon failed to break into the Southeast Asian e-commerce market, it is better to ask why the e-commerce platforms in Southeast Asia are "incompatible" with Amazon.

E-commerce platforms in Southeast Asia are successful because they cater to local audiences—both sellers on the platforms and consumers searching for products on these platforms get what they want.

The Southeast Asian e-commerce market is unique, and Amazon shouldn’t put itself on the back burner just because of its size.

Amazon may be powerful, but its market position is by no means unassailable. E-commerce tech giants in Southeast Asia have managed to create new barriers to market entry through their adaptations. And so far, those barriers have been holding back Amazon. This barrier is to create a win-win situation.

Perhaps, instead of considering why Southeast Asian e-commerce is different from Amazon in the competition, it is better to think about whether Amazon's business model is worth replicating in batches.

Because at the end of the day, the Southeast Asian e-commerce platform is itself a success, and probably better than Amazon in some ways.