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Amazon storms Singapore with Prime Now

Vows two-hour delivery on vast range of items, readies to take on Alibaba

S. Iswaran, Singapore's minister of trade and industry, third from left, with Amazon's executives at the official launch of Amazon Prime Now in Singapore

SINGAPORE -- Online retail giant Amazon kicked off its eagerly awaited Prime Now service in Singapore on Thursday.

The service offers two-hour delivery on tens of thousands of items, from toys to cold beer. For a limited time, the company is not requiring Amazon Prime membership, a program that grants members special privileges, among them access to Prime Now.

"We used advanced techniques and algorithms to fulfill orders as quickly and efficiently as possible with processes such as random stow, batching and machine learning," said Ivan Lim, site leader at the Prime Now hub in Singapore.

S. Iswaran, Singapore's minister of trade and industry, noted that Amazon expects the new technologies to "achieve significant gains in labor productivity and infrastructure utilization, as well as near real-time delivery of goods in cities."

"By tapping [into] the Amazon Prime Now platform and its global fulfillment networks, [Amazon] can access and serve global markets at scale and speed," he added.

Social media has been abuzz since last year, when rumors of the launch first surfaced. Local media fed the Prime Now frenzy when they announced the possibility of a launch this week.

Amazon Prime is hugely popular in the United States, with 42% of U.S. adults claiming Prime membership, according to a report by analyst Raghav Kapoor from Smartkarma. Among millennials, the figure rises to 55%.

Reaction to the Singapore launch was mixed. Chester Tan, one of the initial users, tweeted about his first order, having bought a collector's item at a discount. However, another user tweeted that "none of the things I'm buying are available [on Singapore] Prime Now. Will stick to Amazon US for the time being."

The launch signals Amazon's ambition to carve out a larger share of the Southeast Asian and compete with its Chinese rival, Alibaba Holdings. Analysts noted that the Singapore launch is just the start of the company's foray into the region.

Amazon declined to comment on whether it will expand in the service for the rest of Southeast Asia.

Competition in the region is heating up. Online retailer Lazada is working with parent Alibaba Group Holding to extend the Chinese retailer's vast online marketplace and suite of digital services to Southeast Asian shoppers. Alibaba owns Lazada, and spent an extra $1 billion to boost its stake to 83% last month.

Geir Lode, Head of Global Equities at Hermes Investment Management, sees Amazon's move as a game changer. "Amazon has also challenged accepted business practices by offering a retail platform for small third-party suppliers, and by creating a new standard in logistics execution," said Lode. "The breadth of Amazon's operations means it cannot simply be considered a retail business: it is now a global leader in a number of industry sectors," he added.

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