Singapore is one of the biggest e-commerce markets in Southeast Asia despite being a small island nation. To date, the worth of the Singapore business-to-consumer (B2C) e-commerce market is $4.9 billion. It is expected to increase at a compound annual rate of 8.35% in 2021. On average, a shopper spent $1,456 online every year.
The E-Commerce Market Size
In Singapore, about 3.3 million people shop in the e-commerce market and the expected revenue from the market in 2021 is USD 2,793m. The revenue is expected to grow at a compound annual growth rate of 9.9% between 2021 and 2025. Such growth should project a market volume of USD 4,079 million by the year 2025.
The largest e-commerce segment in Singapore is Electronics & Media, whose projected market volume is USD 668 million in 2021.
How Covid-19 has Impacted the Singapore E-Commerce Market
Singapore retail industry did not have much hope of expansion even before the coronavirus crisis started in 2020. In January 2020, Singapore’s retail sales reduced by 5.3% year on year.
However, Singapore’s e-commerce platforms grew throughout the first 6 months of 2020. During that period, the total web visits increased by 23%. In the first half of 2020, an average Singaporean spent about S$113 on a single online transaction.
IGD Asia discovered that Singapore’s grocery market also performed exceptionally and is forecasted to become an SGD 9.9 billion industry by the year 2023 after experiencing a 14.5% increase from 2018. The growth was led majorly by online grocery shopping. The dominant players in the local scene include RedMart, FairPrice, and NTUC.
Covid-19 forced many physical store retailers to join the e-commerce market. Traditional smaller businesses started selling online. Even a lot of traditional small wet market grocers began conducting live auctions and hawk their products on online marketplaces and social media channels. Some of them carried out customer relation-building on social media channels.
Most Popular Online Platforms in Singapore
Here are the most popular online platforms in Singapore:
|Monthly web visits
Based on Singapore’s overall e-commerce traffic, the top 5 players in the e-commerce industry in the year 2021 were Shopee, Qoo10, Lazada, Amazon, and Ezbuy. As of the second quarter of 2021, the most visited e-commerce platform was Shopee. The number of people using the company increased by 82% between the first quarter to the second quarter of 2021. The company had nearly 5 million visitors in the second quarter alone.
E-commerce Key Metrics and Statistics for Singapore
When the state of e-commerce was analyzed for the year 2017, the following was discovered:
- Singapore was comparable to Indonesia at about 10% in terms of conversion rate.
- The conversion rate in Vietnam was 30% higher than the average of all the other Southeast Asian countries.
In 2021, user penetration is expected to be 55.9% and should reach 67.2% by 2025. The average revenue per user (ARPU) is also expected to reach USD 846.96 by 2025.
Top E-commerce Product Categories in Singapore
Various market researches have been carried out to determine the market size of some e-commerce product categories in Singapore. One of the research by Janio Asia discovered that the top e-commerce product categories are:
- Consumer electronics
- Toys, DIY, and hobbies
- Fashion and beauty
- Personal care
Credit cards are the most popular payment method for e-commerce purchases in Singapore. However, it is possible that e-wallets and real-time bank payment services will become more popular than credit cards in the future since these methods are rising at a fast rate.
According to a survey conducted by Rapyd, 42% of consumers prefer e-wallet. 34.4% of the survey’s respondents still chose credit cards as the most preferred payment method. There is a chance that the national real-time e-payments scheme PayNow will close the gap in the future because 18.2% of Singaporeans have stated it as their preferred payment method.
73% of online consumers in Singapore have patronized overseas merchants. Presently, cross-border e-commerce takes 35% of the entire Singapore e-commerce market.
The top online shopping destinations are China, the US, and South Korea. The cross-border shopping origin markets in China, U.S., and South Korea are 43%, 20%, and 8% respectively.
Singapore e-commerce as a percentage of overall retail spend is low at 5.6% compared with highly-developed e-commerce markets like the US (11%) and UK (21.8 %). This is because Singapore’s high population density and good transport infrastructure support physical retail stores.
Key E-Commerce Trends in Singapore
E-commerce Trend: Livestreaming
In the e-commerce industry, live streaming involves the broadcast of live video over the internet to promote and sell goods and services. Shopee and Lazada are examples of e-commerce platforms that are making good use of live streaming.
The total hours streamed on ShopeeLive in Singapore and Malaysia alone have increased by almost 200% between February to June 2020. In April 2020 alone, up to 4,500 Singapore merchants signed up on Lazada’s LazLive to utilize the service. This made the total gross merchandise volume generated via LazLive increase by 450% month-on-month.
Livestreaming helps marketers and businesses to connect well with their customers even when there are restrictions on movement and physical gathering. Livestreaming can be likened to TV shopping of yesteryears but retailers don’t necessarily need to use heavy airtime or pay money for advertising on TV before reaching potential buyers. Instead, they can reach a worldwide audience through social media channels.
Initially, brands may feel vulnerable interacting with a live audience, but this same practice is what makes brands feel more natural and real to customers. Livestreaming makes the online shopping experience real as customers and sellers interact with each other.
E-commerce Trend: Invisible Payments
According to Dr. Thomas Fromherz, Fellow at Netcetera shared with Fintech News Singapore, “Mobile” makes the integration of digital payments in all e-commerce checkouts possible. It allows the so-called invisible payments possible in cases where payment happens automatically.
Dr. Fromherz also said that the e-commerce transactions taking place in the mobile space are opening new opportunities, especially in the invisible payments field. The concept has already been incorporated in services and products that people use often, including ride-sharing apps.
In the US for instance, people can use Amazon Go to buy products without using a self-checkout station or being checked out by a cashier.
E-commerce Trend: Visual And Voice Search
The way people search for information nowadays is changing as we now interact more with our devices than web browsers. In Asia, sensory search is already trending. Marketers need to adapt their content in a way that is easily discoverable to people searching with voice and image.
Some people have been using voice-activated virtual assistants such as Google Assistant and Alexa for a few years, but this year, a lot of people have used voice-activated virtual assistants to make purchases.
The How We Will Pay 2020 report by PYMNTS and Visa estimated that approximately 23 million people used voice assistants to buy products in 2020. This estimate represents a 45% increase since the year 2018 and an 8% gain since the year 2019.
Many major firms already support the voice-enabled shopping game. In April 2019, Walmart announced Walmart Voice Order after forming a partnership with Google. Customers can order groceries by simply saying “Hey Google, talk to Walmart.” Amazon also plans to incorporate the same concept with AmazonFresh and the incorporation is already progressing. Customers can use any Alexa-enabled device to shop on the platform. The practice will soon be adopted in Singapore.
Setting Up an E-commerce Company in Singapore
Starting an online business at a time like this is really a good idea. This idea can bring you new growth opportunities.
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- Also read: All you need to know about Tax Regulations for E-Commerce Businesses in Singapore