Will Disrupt Singapore Post Limited?

US-based online retailer’s entry into Singapore has local retailers on high alert.

Consumers have been shifting their purchases online, putting pressure on brick-and-mortar retailers in the US. On the other side, Amazon has benefited the shift online as the largest player in the space. The recent spate of bankruptcies within the ranks of traditional retailers only served to highlight the massive disruption that is happening in the industry.

The fear is that the same scenario will play out locally as Amazon sinks its tentacles into the retail market.

How now, brown cow?

However, it’s not all doom and gloom for everyone.

Companies like Singapore Post Limited (SGX: S08) might stand to gain from the trend if it plays its cards right. In fact, Singapore Post group chief Paul Coutts believes that Amazon’s entry is a good thing for the Singapore market. In a recent earnings briefing, Coutts said:

“In terms of Amazon’s entry into the Singapore market, what we would see is that we see that as a positive; we believe that that will likely help grow the entire Singapore market and also the ecosystem, and will certainly help accelerate eCommerce growth here and across the Southeast Asia region.”

Singapore Post is hoping to benefit from the shift online by providing services for delivery of goods. Coutts continued:

“We view any eCommerce growth as an opportunity and we believe that SingPost is ideally positioned with our network, our services, our geographical advantage and Singapore’s strategic location as well to ride on the growth of eCommerce logistics in Southeast Asia and beyond.”

However, it will not be a simple discussion to partner with Amazon. For one, Amazon’s competitor, Alibaba, is a strategic partner to Singapore Post and owns a 14.4% stake in the firm.

Singapore Post has benefited from the partnership though. In the fiscal fourth quarter, group chief financial officer Mervyn Lim said that cross-border eCommerce-related deliveries from Alibaba helped increase international mail volumes. Lim added:

“Our partnership with Alibaba remains strong.

Alibaba took a 34% stake in Quantium Solutions International and increased their shareholding in SingPost to 14.4% in October 2016 and January 2017 respectively.”

So, how should we think about the future between Amazon and Singapore Post? Coutts shared his thoughts:

“In terms of any potential for us to collaborate or help Amazon as a customer, what we see here is that we are an open platform as SingPost; we are free to work with any customer and partner, and obviously Alibaba is also a very key player for us not only in this particular market, but in other markets as well throughout Asia and potentially other parts of the world.

So we are happy to work with all our key customers and partners.”

As it stands, Singapore Post would prefer to be an open platform. But the picture might be muddied by the sizable stake that Alibaba holds. Can the logistics firm can partner with Amazon without distancing itself from its key partner, AliBaba?

That remains to be seen.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Motley Fool Singapore contributor Chin Hui Leong owns shares in