Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Focusing on Asian logistics, transportation, and travel companies

Asian Equities Analyst, Logistics & Transport

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Thematic (Sector/Industry)

Singapore It / Thematic (Sector/Industry)

Given its high GDP level, well-developed retail markets, and ubiquitous connectivity, Singapore has disappointingly low levels of retail e-commerce relative to peers. But the heralded arrival of <a href="https://www.smartkarma.com/entities/409" target="_blank" data-smartkarma-citation="entities:409:1">Amazon.com Inc (AMZN US)</a> in Singapore late last month, with its promise of a wide selection of goods, low prices and expedited deliveries, promises to catalyze a sharp increase in online retail activity over the next few years. As retail e-commerce expands and demand for expedited parcel delivery in Singapore grows in the medium-term, local incumbents in warehousing and express parcel delivery must quickly adjust to the changing expectations of merchants and consumers. If incumbents fail to adjust quickly, there appears to be a wave of newer startups in the 'last-mile' parcel logistics segment waiting to fill the void.In this note we provide an estimate of the potential size of Singapore's retail e-commerce market, plus estimates of the local express and warehousing capacity growth needed to enable the coming boom in online shopping. We also examine the areas in which we believe local express and warehouse service providers -- incumbents and newcomers -- will direct their capital expenditures in order to optimize Singapore's logistics infrastructure for retail e-commerce. We'll then assess the likely near- and medium-term impacts of Amazon's arrival in Singapore on the sales and earnings potential of a selection of incumbent and startup 'last-mile' logistics players, which we refer to collectively as 'e-commerce enablers'. Finally, we'll discuss why an expected boom in retail e-commerce in Singapore -- a small market -- actually matters to e-commerce giants like Amazon and its rival <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding Ltd (BABA US)</a>.

Given its high GDP level, well-developed retail markets, and ubiquitous connectivity, Singapore has disappointingly low levels of retail e-commerce relative to peers. But the heralded arrival of Amazon.com Inc (AMZN US) in Singapore late last month, with its promise of a wide selection of goods, low prices and expedited deliveries, promises to catalyze a sharp increase in online retail activity over the next few years. As retail e-commerce expands and demand for expedited parcel delivery in Singapore grows in the medium-term, local incumbents in warehousing and express parcel delivery must quickly adjust to the changing expectations of merchants and consumers. If incumbents fail to adjust quickly, there appears to be a wave of newer startups in the 'last-mile' parcel logistics segment waiting to fill the void.In this note we provide an estimate of the potential size of Singapore's retail e-commerce market, plus estimates of the local express and warehousing capacity growth needed to enable the coming boom in online shopping. We also examine the areas in which we believe local express and warehouse service providers -- incumbents and newcomers -- will direct their capital expenditures in order to optimize Singapore's logistics infrastructure for retail e-commerce. We'll then assess the likely near- and medium-term impacts of Amazon's arrival in Singapore on the sales and earnings potential of a selection of incumbent and startup 'last-mile' logistics players, which we refer to collectively as 'e-commerce enablers'. Finally, we'll discuss why an expected boom in retail e-commerce in Singapore -- a small market -- actually matters to e-commerce giants like Amazon and its rival Alibaba Group Holding Ltd (BABA US).

Singapore's Logistics Infrastructure Isn't Quite Ready For Amazon Yet - But That Will Change Quickly