Amazon enters Southeast Asia, launching Prime Now service in Singapore

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Posted: Jul 26, 2017 10:45 PM EDT

By Sherisse Pham

HONG KONG (CNNMoney) -- Amazon is rolling into Singapore, marking its first foray into Southeast Asia.

The e-commerce giant launched its two-hour delivery service Prime Now in Singapore on Thursday, offering tens of thousands of products -- everything from champagne to diapers to instant noodles -- for speedy delivery.

Singapore's "density works really well for us," said Henry Low, Asia Pacific director of Amazon Prime Now. Singapore packs more than 5.6 million people into an area about half the size Los Angeles.

"For the first time, we can launch [Prime Now] and have it open to the entire country at the same time," Low said.

The service is free for orders that cost at least 40 Singaporean dollars ($29). For an extra 10 Singaporean dollars ($7.37), shoppers can get their goods in an hour.

Amazon has been teasing the launch on social media for the last few days, enlisting influential Singaporean Instagram users to post photos of the seemingly random contents of a Prime Now package.

The Seattle company will be going up against local rivals like Lazada, which is bankrolled by deep pocketed Chinese e-commerce giant Alibaba. Lazada currently offers same-day service for several thousand products.

But Amazon "has deep pockets and takes no prisoners," said Mike Booker, partner with consulting firm Bain & Company. The online retailer is "probably keen go up against Alibaba in a contained environment and try out its strategies and offerings," he added.

Amazon also has brand recognition on its side.

The company is leading in innovation with products and services like Echo and Prime, said Sandy Shen, an analyst with research firm Gartner. "No other e-commerce players have anything similar or even close," she said.

Southeast Asia's e-commerce industry pulled in $15 billion last year, and the number of digital consumers has increased 50% this year, according to a recent report from Bain.

"Singapore is a good first step," said Booker, adding that the small state's e-commerce market "is still in its infancy."

Only 6.5% of retail in Singapore is online, compared to 25% in China and 16% in the U.S.

Amazon shoppers usually need to pony up for Prime membership to access Prime Now perks. In the U.S., Prime's annual $99 fee gets members two-day shipping on many products, as well as access to streaming video and music services.

Amazon's newly built 100,000 square foot warehouse in Singapore seems poised for Prime service, but the launch appears to be delayed.

Low said Prime will be available in Singapore soon, but wouldn't elaborate on timing or price.

The-CNN-Wire