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What's Happening In Singapore's E-commerce Market?

Amanda Lim

With many players eyeing the Southeast Asian market for e-commerce expansion, Singapore has always stood out as an attractive market. Singapore has the highest internet speeds and one of the highest smartphone penetration rates in the world, making it a ripe market to enter for e-commerce.

But what are the considerations that you should have in mind if you want to expand into Singapore’s e-commerce industry?

Why Should You Enter Singapore’s E-commerce Market?

Singapore’s e-commerce market is expected to grow steadily in the upcoming years. According to Worldpay, that number is projected to reach US$ 7.4 billion by 2022, while Statista is expecting the market to hit US$ 8.6 billion in 2023. This is a 14.7% CAGR from 2019’s expected value of US$ 4.9 billion.

The majority of Singaporeans are already connected to the internet. The number of internet users in Singapore has reached 4.9 million in 2019, out of a 5.8 million population. That’s an internet penetration rate of 84%. Of the 4.9 million users, 3.5 million of them – that’s 73% – have bought items online, which means a sizeable number of them are digitally savvy enough to navigate the realms of e-commerce.

Singaporeans also tend to have a big basket size when shopping online, which measures the average number of items sold in a single invoice. The basket size averages at US$91 per order, which is the highest in Southeast Asia.

Additionally, retail shops that have dotted Orchard Road are seeing fierce competition by e-commerce shops. This signals a shift away from traditional brick-and-mortar retail models. To top it off, Singapore is home to popular e-commerce platforms that are dominating the Southeast Asian region, such as Carousell and Shopee.

These factors definitely signal the rise of e-commerce in Singapore. So what has been driving the adoption of e-commerce in the Southeast Asian country?

What’s Driving Singapore’s Shift Towards E-commerce?

Some major factors driving Singapore’s surge in e-commerce activity include:

  • Better Bargains and Convenience for Consumers

  • Popularity of Cashless Payment Methods

  • Low Barriers to Entry

1. Better Bargains and Convenience for Consumers

Having many products listed online means that the savvy Singaporean shopper can find better deals for similar products before making their purchase. To top it off, many e-commerce merchants are vying for a slice of Singapore’s e-commerce pie, either by carving their own niche or to capture the mass market.

In a study by iPrice in 2017, one of the reasons why Singaporeans like to shop online is because they are able to access promotions and discounts easily. Similarly in a study by PwC in 2016, 60% of Singaporeans access social media to tap into promotional offerings and reviews before making the purchase.

Singaporeans also enjoy the ability to find products that cannot be bought locally. In Paypal’s 2018 study, 73% of online shoppers in Singapore have bought items from overseas online stores. Thus the convenience in accessing these items and getting them delivered straight to the shopper’s doorstep cannot be overstated.

In the same iPrice study in 2017, they have also found that 18% of Singaporean shoppers do so because they need to fix something urgently.

For instance, an office assistant has to address the need for more monitors quickly as new hires are coming in to work. In the morning, she makes an order for 25 new monitors and asks for same day delivery and the parcels arrive at the office before it closes. She and her colleagues are able to set up their new workstation pretty quickly to welcome the new hires that way.

Because Singapore is a small island, same day domestic shipping is a feature that Singaporeans can afford. As cross-border deliveries are difficult to fulfil within the same day, you can always give a realistic timeframe for an international shipment to arrive to set your customers’ expectations right. Singaporeans are generally aware that cross-border shipping tends to take longer than domestic shipping.

2. Popularity of Cashless Payment Methods

When it comes to paying for goods online, Singaporeans are spoiled for choice. The availability of payment methods like credit cards, e-payments, and bank transfers make it easier for customers to pay for things online.

Additionally, the presence of global e-payment platforms and the availability of cashless payments make it easy for Singaporeans to shop globally on sites like AliExpress, Amazon, Taobao, and even sites like Etsy and Kickstarter.

While the majority of Singaporeans prefer to pay using credit cards (67%) in a 2018 study by Worldpay, other methods that are accessible to them include e-payments (10%), cash on delivery (5%), and bank transfer (10%). Singaporeans tend to favour using credit cards as it allows them to maximise the rewards programme offered by their credit card provider.

The State of E-commerce in Singapore

On top of credit card penetration, bigger players like Singapore’s authorities and banks have also taken the task to convert Singapore into a cashless society. Initiatives such as PayNow among others are underway, such as a common QR code to make it easy for individuals and businesses to use the service.

With that said, it doesn’t hurt to offer cash on delivery as a payment option if you are thinking of expanding your e-commerce shop into Singapore.

3. Low Barriers to Entry

Many factors contribute to having a low barrier to entry for overseas e-commerce businesses to enter Singapore’s market.

For starters, English and Mandarin being two of the four national languages of Singapore makes communicating with consumers accessible to global e-commerce players. These businesses can then build trade relations with other businesses in the country and the government as well. Singaporeans are 97% literate according to the latest statistics from Singstat in 2015.

Furthermore, Singapore consistently ranks well as a transportation hub. Not only are Singapore’s ports one of the busiest in the world, Singapore’s Changi Airport has been voted the best in the world in 2016, and their air cargo division ranks within the top 20 in the world in 2014.

What Could Hinder Singaporeans from Buying Online?

Even with e-commerce booming on the island, Singaporeans don’t always choose to buy online. Some reasons include:

  • Accessibility to nearby malls and grocery shops

  • Scepticism

1. Accessibility to Nearby Malls and Grocery Shops

Orchard Road’s decline was driven by two major factors: the rise of e-commerce and competing suburban shopfronts. Because of the rise of suburban malls and their accessibility due to Singapore’s well-developed infrastructure, it makes walking to a nearby mall or grocery shop a breeze for Singaporeans as well.

Even though Singaporeans may miss out on discounts when shopping online, which in some cases can go up to 90%, the accessibility and convenience of a physical store make them a competitor to e-commerce stores.

However, some physical stores have taken to the online space to integrate the shopping experience into both online and offline channels. This strategy then enables customers to have a feel for the product before buying.

2. Scepticism

Singaporeans tend to be meticulous about what an online product has to offer before they make a purchase.

It didn’t help that Singapore’s Health Sciences Authority (HSA) has stepped in before to issue advisories on some cosmetic products that were bought from overseas. While some of these products indeed had harmful chemicals, the average online shopper tends to be sceptical about product listings in general to begin with.

Being critical of product listings apply to all verticals selling in the online space. As much as 48% of Singapore’s online shoppers would compare the prices and features of the products before making a purchase, so it’s best to make a good first impression with good copywriting and professional product photos on your listing’s landing page.

Because of this lack of trust, Singaporeans also tend to rely on product reviews before making their purchase like most Southeast Asian shoppers.

So what can you do to ensure that you overcome these roadblocks if you decide to enter Singapore?

With Singapore’s retail space being a competitive one, it helps to have promotional strategies that help you stand out from the other players and to prepare your store’s operations to make a good first impression.

Having a delivery network that is speedy and reliable will help make your entrance into Singapore a smooth one. To test out the Singaporean market for the first time, it helps to use the cross border shipping model as you don’t need to have an upfront investment to fulfil orders. Set the expectations right by indicating how soon packages will be able to depart your country and arrive in Singapore by mentioning this upfront on your online store.

If you’re confident of the demand for your product you could partner up with existing offline stores to get the items out there. As an example, Urban Story sells through their partners’ physical stores based at centrally located areas and hip shopping neighbourhoods like Raffles Place and Bugis. That way, you can kill two birds with one stone by offering an offline shopping experience, and a cross border online shopping storefront too.

Having aggressive discount campaigns can help to establish your foothold in the short run if you can afford it. But if you’re in it for the long run, it helps to know how to do inbound marketing and building your brand to solidify your presence in Singapore. However, these strategies have to be complemented by a speedy and reliable shipping experience in order to make the most out of your e-commerce experience for your customers.

Once your e-commerce transaction is complete, it helps to ask your customer to leave a review in order to increase trust in your product’s listing.

With Singapore’s digitally savvy shoppers and continued technological development, Singapore’s e-commerce market has never been more attractive for international players. To capitalise on this, ensure that your e-commerce website and listings are able to capture your customer’s trust, and top it off with reliable shipping partners to fulfil cross-border deliveries for you.

You might also be interested in:

How to Ship to Singapore

Expanding your Online Shop Overseas (part 1)

How to Package your Products for International Deliveries

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