Ecommerce has emerged as a growing business all over the world. But in Singapore, e-commerce has grown by bounds and leaps. 4.7 million people of Singapore log onto the internet every day. It makes up for a whopping 84% of the country’s population. Three million people out of this figure have shopped online at least once in their lifetime, making Singapore one of the most successful markets for eCommerce.
While many SMEs are still struggling with finding the right resources, experience, and time to get online, the smart business owners have already started exploiting the vast customer base that Singapore provides. Quite a few eCommerce startups have sprung in less than a decade, and most of them have been able to find funds and investors. A famous example is that of Lazada that has successfully earned the exotic ‘unicorn’ status after being backed by Alibaba Group.
But what exactly triggered the growth of eCommerce on such a large scale in Singapore? Let’s find out!
Growth in the number of buyers
Singaporeans are pretty comfortable with spending their hard-earned money online. Singapore has seen growth in online shoppers, gone up from 2.7 million in 2015 to 3.6 million in 2019. The number is expected to cross 4 million by 2021. Statistics also show that 26 percent of Singaporeans indulge in online shopping at least once per week, while 51 percent love to make online purchases at least once a month. An average Singaporean digital shopper falls in the age group of 25 to 44 and spends an average of 440 SGD per month on online outlets.
Technology leads the trend
Singaporeans are known to be tech-savvy, and this is highly evident when one looks at the number of daily internet users in the country. With the availability of high-speed internet (fixed internet connections are typically 3 times faster than the global average), browsing and transacting online is easy and quick.
Moreover, Singaporeans have been shifting to the plastic model of payment constantly. As per JP Morgan, 68% of all online transactions are done by debit and credit cards. However, the agency also believes that the popularity of cards will drop in the coming future, and that of digital wallets would increase. Interestingly, cash on delivery is not a preferred method in Singapore. In 2019, only 5 percent of the total volume of online transactions were conducted through cash on delivery, and this figure is expected to drop to a mere 2% by 2021.
The Smoother and Transparent Customs Process:
People of Singapore love to shop from foreign countries. As per research, 60% of online shoppers of Singapore have bought from cross-border sellers. China is the favorite overseas shopping destination of the Singaporeans, with the United States and Malaysia holding second and third place, respectively. Buying goods from sellers outside the country means that the products will have to pass through a custom clearing process. The country offers a good, clear, and consistent customs process that is low in corruption and highly efficient. It leads to a border clearing time of 30 hours on average, much faster than any other country in the region, including the likes of Indonesia, Thailand, Malaysia, and the Philippines.
Mobile led technologies are an instant hit
As per Reuters Institute for the Study of Journalism, Singapore has the highest smartphone penetration in Asia at 90%. Therefore, it is no surprise that mobile eCommerce is well established in the country. As of 2019, mobile eCommerce makes up for 42.3% of the total online financial transactions, and this expected to touch 50% pretty soon.
Many e-commerce startups have already picked up the trend, and they are focused on creating an equally rich mobile experience for the users. Some startups like Carousell started with a mobile app first and later added a website to its channel.
Social media is another mobile channel for online sales that the startups of Singapore have started exploiting. It is because 7 out of 10 Singaporeans access social media platforms. The top social media platform in Singapore are Facebook, YouTube, LinkedIn, Instagram, Tumbler, and Pinterest.
The private and public sector initiatives
The country has robust services that support the growth of eCommerce in the country, either directly or indirectly. For example, Singapore is known for its responsive logistics framework. This framework helps eCommerce startups in reducing the price of delivery and reducing the time of delivery of goods. Both of these factors contribute to achieving better customer satisfaction and hence repeat sales. Singapore has also emerged as a hub of innovation in the AI sphere. It has enabled companies like Amazon to offer faster and more reliable deliveries, like 1-hour delivery. Such facilities are exclusive to Singapore, and not even available in the USA.
Another reason why e-commerce is gaining popularity in Singapore is that it falls in line with the government’s vision of making Singapore the first-ever smart nation. An effort in this direction was made by the government recently when it strengthened the laws and regulations that govern eCommerce. The rules expected to make consumers more confident in online shopping.
Another initiative was the introduction of a pilot scheme for parcel collection lockers in public locations in late 2018. The lockers were accessible 24×7 and decreased the chances of missed or wrong deliveries.
Should a startup enter the eCommerce niche in Singapore?
In spite of growing at 14.7% annually, eCommerce in Singapore is still at a very nascent stage. Startups like Lazada and Zilingo have proven that eCommerce in Singapore is a highly practical and profitable idea. Singapore has everything that an eCommerce website needs to grow and make money. Cross-border products are a hit in the country. The popularity of credit cards and debit cards ensures that the business is paid on time by the customer, and access to several platforms that enable startups to find investors increases the chances of success.
The government is pushing for a digital and smart country. Hence, the startup in the eCommerce niche is bound to receive support from the government in the form of exciting policy reforms.