Amazon is in the process of acquiring Souq.com, one of the biggest e-commerce player in Middle East, for $650 million, according to several reports. Though the decision to spend less than a billion dollars to buy an e-commerce company can be easily dismissed as being part of Amazon’s goal to keep expanding its international presence, the deal signals a major shift in Amazon’s overseas expansion policy.
Unlike other retail companies that take a painfully slow approach to international expansion, Amazon has been fleet-footed in spreading its operations to 13 countries outside the United States. It’s easy to say that they just want to be everywhere, but in reality, Amazon has been extremely methodical when it comes to selecting the markets that they want to set up shop in.
Amazon operates in Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Netherlands, Spain and the United Kingdom. That’s most of the world’s top 20 economies of the world and all top 10 economies.
If you are business person, you would want to invest wherever you think you will get the best returns. Similarly, Amazon kept moving into one large market after the other, and now that it is already present in 14 of the top 20 global markets, the company has decided to get more specific with its targets.
Amazon was supposed to enter Singapore during the early part of this year, but the launch seems to be pushed back a little. Singapore ranks 37 in the World Bank’s 2015 GDP ranking with $292 billion, while United Arab Emirates ranks 30 with $370 billion against its name.
Singapore and UAE have several attributes that have made them attractive to Amazon: high per capita GDP (Singapore is 5th and UAE is 13th), strong levels of Internet penetration (Singapore 82.5% and UAE 91%) and sizable populations.
The Souq deal is yet to be confirmed by Amazon, but the fact that the company decided to jump into Singapore as well is a clear enough indication that Amazon has become more specific about its international targets – small, high GDP and high Internet penetration.
If you are living in a country with such attributes, Amazon could soon come knocking at your door!
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