Amazon is among a variety of retailers and private equity firms eyeing a bid for a stake in Dubai-based online retailer Souq, which could be valued at $1.2 billion, Bloomberg reports,
Souq tapped Goldman Sachs Group Inc. to find buyers for a stake sale, sources told Bloomberg last month. Current investors Tiger Global Management and South Africa’s Naspers are open to selling their stakes or portions of them, and a potential sale could offer a stake in the e-commerce company exceeding 30%. Representatives for Tiger Global, Naspers, Amazon and Souq all declined to comment.
Meanwhile, Amazon is also said to be moving into Southeast Asia, with plans to launch services in Singapore in Q1 2017, sources told Techcrunch. Initial plans were to move in via an investment in Redmart, but the company was just acquired for about $50 million by e-commerce startup Lazada Group, in which Alibaba Group has a controlling stake.
Amazon has been experimenting with various services in Europe, is a major player in India’s booming e-commerce sector and clearly also has plans for other parts of the world. The company recently expanded its Prime membership program to its Chinese customers, with a scaled-down version that doesn't include digital content streaming and offers free shipping only on foreign products that meet a certain price threshold.
But as China’s e-commerce market has matured, dominated by homegrown giant Alibaba and hampered by slowing growth, Amazon, Alibaba and other e-commerce companies are looking to other parts of the world for growth.
Like India, the Middle East, generally speaking, includes many areas with young, rising middle class populations, while Singapore boasts an established middle- and upper-middle class population with a somewhat Western approach to consumption and taste. As a densely populated city-state, Singapore is also a natural focus for Amazon, whose fulfillment and delivery services are best suited to urban areas.
Delivery and fulfillment have emerged as a major cost driver for Amazon, threatening even its runaway sales results. The company in its most recent quarter logged its sixth straight profitable quarter, but operating expenses of $32.1 billion (a 29% increase from $24.9 billion in Q3 last year) undid that almost totally. Amazon’s much-touted fulfillment and shipping ambitions look to have finally caught up with it.