Amazon reaches for millions in Southeast Asia's cyberspace

SINGAPORE (AP) - Amazon is introducing express delivery to Singapore in its first direct effort to tap into surging online shopping in fast-growing Southeast Asia.

The American e-commerce company announced Thursday it will begin operating a distribution facility bigger than a football field in the wealthy island nation. It promises to deliver tens of thousands of types of items within two hours for free, if customers spend at least 40 Singapore dollars ($29.52).

That's a step up from past international shipping options offered by Amazon, where items sometimes took weeks to arrive.

Amazon is late to capitalize on the region's rising middle class. The biggest local competitor is Lazada, which is backed by Chinese giant Alibaba and launched in the region in 2012. It operates in Indonesia, Malaysia, Thailand, the Philippines, Vietnam and Singapore.

Henry Low, the Asia Pacific director of Amazon Prime Now, said the company is keen to expand elsewhere in Southeast Asia, a market of more than 600 million people.

"I'm super excited about future possibilities," Low said.

The number of internet users in Southeast Asia is expected to rise from 260 million now to 480 million by 2020, according to research by Google and state-owned investor Temasek Holdings. It forecasts that the value of e-commerce in the region will soar to 88 billion by 2025 from 5.5 billion in 2015.

"The offline-to-online shift will continue and we strongly believe in the great success of e-commerce (with) the rising middle class in many Southeast Asian markets," said Hanno Stegmann, chief executive of the Asia Pacific Internet Group, the Asian arm of Rocket Internet, which founded Lazada.

As Amazon gears up in Singapore, Rocket Internet already is looking at other emerging markets. Its current focus is on Daraz, an e-commerce platform aimed at the 400 million people living in Myanmar, Pakistan and Bangladesh.

Still, there's plenty of room for growth in Southeast Asia, where e-commerce accounts for only 2.6 percent of the retail market, said Sebastien Lamy, a partner at management consultancy Bain & Company.

That's compared with 15 percent to 25 percent seen in the U.S. and China.

Even if online commerce is just getting started, it's already having an impact in Singapore, whose glitzy malls are the backbone of the local economy and tourism.

Mall vacancies along Orchard Road and in other areas are rising, abandoned by shoppers like Rahil Bhagat, a content producer.

Rahil started buying video games and accessories online from the U.S. in 2009. Now, he makes 75 percent of his purchases, from car parts to quinoa, online.

"Physical shopping has lost its appeal," he told the AP. "Even if I visited a brick-and-mortar store, I would be checking online to see if it's cheaper. It usually is."