In this article
- The E-Commerce Landscape in Singapore
- Why is the E-Commerce Market in Singapore Growing Rapidly?
- What Makes Singapore an Attractive Destination for E-Commerce Businesses?
- What is the Most Popular E-Commerce Platform in Singapore?
- How to Start an E-Commerce Business in Singapore
- Will E-Commerce in Singapore Continue to Grow in the Future?
In recent years, electronic commerce, or e-commerce, has become an integral part of the international retail ecosystem.
Through e-commerce, shoppers can browse and buy products from a multitude of categories, including consumer electronics, food, furniture, kids, experiences, and more.
Digital buyers across the world are increasing at lightning speed year on year – in 2020 alone, more than 2 billion people worldwide bought goods or services online.
As a modern city-state with plenty of digitally savvy consumers, it’s no surprise that Singapore is also experiencing this boom in e-commerce.
We take a closer look at why e-commerce in Singapore is going through massive growth in this article!
The E-Commerce Landscape in Singapore
What is the current state of Singapore’s e-commerce market?
There were 3 million e-commerce users in the country as of 2021, which is estimated to rise to 4.1 million by 2025. E-commerce sales are also expected to hit US$10 billion by 2025, up from US$8 billion in 2021.
This figure is supported by how an overwhelming 90% of shoppers in Singapore choose to make their purchases via e-commerce platforms, compared to just 43% for brick-and-mortar stores.
These statistics suggest that the e-commerce industry in Singapore is thriving and advancing ahead quickly.
Why is the E-Commerce Market in Singapore Growing Rapidly?
The e-commerce industry has grown tremendously worldwide, with plenty of factors that have contributed to its rise.
The use of efficient payment systems, data analytics, and social media platforms to boost brand awareness and product visibility are some examples that have played a part in the deeper adoption of e-commerce.
Singapore’s e-commerce industry is no different. What has caused its similar upward trend in consumer usage and spending?
Here are some reasons that explain this phenomenon:
Flexible and Efficient Payment Methods
Payment methods have been increasing over the years, and Buy Now, Pay Later (BNPL) companies like Atome and Rely are the latest to take the market by storm.
And by 2024, credit cards, which had the biggest share of the payments industry, will likely be overtaken by mobile wallets.
The availability of many payment methods, particularly cashless means, give Singaporeans immense flexibility and encourages online purchases. These are the payment methods you can find:
- Credit cards
- Digital wallets
- Direct debit
- Prepaid cards
- Bank transfers
- Debit card
- Charge and deferred debit card
Related Read: A Guide on Payment Options for E-commerce in Singapore »
The digital economy has faced rapid acceleration, caused in part by COVID-19 which saw many move online for their purchases.
This shift in consumer behaviour has led to the rise of online shoppers and contributed to the growth of e-commerce adoption.
High Internet and Smartphone Penetration Rates
The country has high internet and smartphone penetration rates, and one of the world’s fastest internet speeds to support usage. This means that more consumers have access to the internet and are able to shop online.
It leads to the growth of the internet population, which has also helped to fuel the growth of e-commerce.
Technology has played a significant role in the growth of e-commerce. With the advancement of smartphones and mobile devices, more people are able to access the internet and shop online.
In addition, technology has allowed businesses to develop innovative and convenient shopping experiences for consumers. This has helped to drive demand for e-commerce services.
What Makes Singapore an Attractive Destination for E-Commerce Businesses?
Both local and international businesses, like Ezbuy and Amazon, have been eager to capture a part of the e-commerce market in Singapore.
What are the key reasons that make Singapore such an ideal location for these businesses to set up?
Going online comes with a set of cybersecurity risks. Singapore recognises the need to protect customers with adequate measures in place.
It has signed a few trade agreements to achieve this, like the Digital Economy Partnership Agreement (DEPA) with New Zealand and Chile, and the Singapore-Australia Digital Economy Agreement (SADEA).
Implementing protective measures leads to an increase in both business and consumer confidence in transacting online.
Low Setup and Operational Costs
It’s inexpensive to set up and run your e-commerce business in Singapore.
It only costs S$1 to register your company, and if you find setting up your own website pricey, you can choose e-commerce platforms like Shopee and Lazada to operate.
Low Barriers to Entry
It is easy for companies to set up in Singapore and enter the market. The process is simple and straightforward, and there is little to no bureaucracy.
You can sign up for a seller account on any of the local platforms, or establish your own site and start selling.
Foreign e-commerce businesses also find it easy to communicate with local buyers because half of Singapore’s national languages are English and Mandarin.
Availability of Schemes and Grants
There are some funding schemes available for e-commerce businesses to tap on. Here are a few examples:
- The Enterprise Singapore E-Commerce Booster Package: A one-time support package to defray up to 90% of eligible costs (up to S$9,000) for up to 6 months
- The Productivity Solutions Grant (PSG): A scheme that supports businesses interested in using IT solutions and equipment to boost business processes
Related Read: 13 Startup Schemes and Grants in Singapore »
Singapore is highly regarded for its sturdy digital and IT infrastructure. The government is also looking to promote the country as a regional e-commerce hub through a variety of strategies.
For example, it will boost its digital infrastructure further by implementing 5G coverage throughout at least half of Singapore by 2023. It will also build 2 nationwide 5G networks by 2025.
The increased bandwidth will enable greater capacity to manage large orders.
High Spending Power
It’s no secret that Singaporeans have greater purchasing power compared to the rest of the countries in Southeast Asia.
In fact, Singaporean shoppers had the biggest basket size of US$67.40 among the other countries in the region. The average Singaporean shopper is also estimated to spend about US$785 on online shopping, which is higher than most SEA countries.
Gateway to the Asia Pacific
Singapore has a strong economy and is seen as a gateway to the larger Asia Pacific region, which offers opportunities for businesses to expand their reach.
Singapore has a friendly business environment with low taxes and good support services, which makes it easy for businesses to set up and operate.
It is also well-equipped with policies and many initiatives that nurture the digital industry and make it conducive for e-commerce businesses to flourish.
A Supportive Government
The Singapore government has been supportive of the development of e-commerce, with initiatives such as the launch of a national e-invoicing system.
What is the Most Popular E-Commerce Platform in Singapore?
The most popular ecommerce platform in Singapore is Shopee. This platform is popular because it offers a wide range of products and services, and it has a user-friendly interface.
In addition, Shopee has a reliable delivery system that ensures orders are delivered quickly and efficiently.
Related Read: How to Build a Successful Ecommerce Site in 12 Steps »
How to Start an E-Commerce Business in Singapore
Setting up an e-commerce business in Singapore is fairly simple and straightforward. Here are some of the steps to expect:
- Choose an available business name and secure it for S$15 – you can use our free company name check tool
- Register your business with the Accounting and Regulatory Authority (ACRA) at a fee of S$300
- Ensure that you fulfil the requirements of having at least 1 local director or hire a nominee director
- Engage a company secretary
- Obtain a registered Singapore company address
- Provide the identification documents and contact details of yourself, the directors and shareholders, and your company secretary’s
- Specify your company structure
- Make the payment for the paid-up capital of S$1
Additionally, you should also decide on how your e-commerce business will operate. Will you choose to set up an online store on one of the many e-commerce sites available, or choose an e-commerce platform instead?
Whether you set up an e-commerce website of your own or choose the alternative, each option will come with its set of benefits and disadvantages.
Will E-Commerce in Singapore Continue to Grow in the Future?
Let’s face it: e–commerce is here for good.
Its growth is likely to continue in the future as many online shoppers are expected to continue their purchasing activities.
Likewise, a growing number of retail sellers are also expected to shift their businesses online to meet the demands of these digital shoppers.
These are some factors that contribute to the continued growth of the industry in Singapore, together with the other attractive factors that make it a great choice for e-commerce businesses to set foot in!
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