The Covid-19 pandemic has revealed the opportunities that lie in Singapore’s e-commerce sector. Most retailers have realised that going digital is one of the best ways to reach their customer base and went on to develop an e-commerce strategy.
Singapore and the rest of the world has witnessed an e-commerce boom, with consumers purchasing everything from groceries to household appliances online. According to Statista, revenue in the e-commerce market is projected to reach US$2,793 million (S$3762.67 million) in 2021.
Covid-19 saw even more physical retailers jumping onboard the e-commerce bandwagon in Singapore. Even traditional, smaller players like wet market grocers took to social media channels and online marketplaces to hawk their products.
Singapore is also one of the top five Southeast Asian markets leading the charge when it comes to e-commerce market growth.
From fresh groceries to household appliances, everything can be delivered to one’s doorstep nowadays. More than ever, merchants are improving their e-commerce businesses to meet the needs of customers.
This includes homegrown and international companies that are in the marketplace, payments, logistics, groceries, buy now, pay later, cross-border and cashback spaces.
A marketplace is a platform where multiple vendors can come together to sell their products or services to a customer base.
The marketplace owner brings together the right vendors to drive sales. Sellers on the platform have a place to gain visibility and access to marketing help, while the marketplace owner earns a commission from each sale.
This differs from an online store, which is a single store selling its own products online.
Marketplace owners do not own the inventory of products on the platform, unlike online store owners. Hence, marketplace owners such as Shopee, Lazada and Qoo10 leave the operations and logistics to vendors while focusing mainly on promoting and driving traffic to their platforms.
After e-commerce marketplace Shopee was launched in 2015, it quickly climbed the ranks and went from being a new entrant to taking the crown as the most-visited e-commerce platform in Singapore by the second quarter of 2020.
Besides business-to-customer (B2C) marketplaces like Shopee and Lazada, the popularity of customer-to-customer (C2C) marketplaces is also rising in the e-commerce world.
In a C2C marketplace, customers can trade or sell items to one another. Customers might benefit from the competition for products and often find items that are difficult to locate elsewhere.
One of the largest C2C marketplaces is Carousell. The online marketplace was founded in 2012, and over 158 million items were sold on Carousell as of December 2018.
As of 2019, Carousell’s users listed more than 250 million items, averaging 50 listings per minute.
While customers can buy and sell practically any item on Carousell, other C2C marketplaces are more specific. For example, 99.co is a leading real estate technology company that operates real estate portals across Southeast Asia.
It allows users to list their property on its marketplace for sale or rent, and receive enquiries or sales from interested buyers.
Another specialised marketplace is Carro, Southeast Asia’s largest car marketplace. It offers a full-stack service for all aspects of car ownership, from buying and selling of new and used cars to offering Singapore’s first car subscription service.
Cross-border e-commerce refers to the selling and buying of products through online shops across national borders, where the seller and the buyer are in different countries.
More than half of e-commerce transactions in Singapore are cross-border, and it has one of the highest cross-border shopping rates in Asia.
The US and China are the top two destinations for shoppers from Singapore.
According to a report published by PPRO, 43 per cent of cross-border e-commerce in Singapore was from China as of January 2020. The market share of the cross-border e-commerce was approximately one-third of total e-commerce in the country.
Singapore’s volume of cross-border transactions could be attributed to the country’s large population of wealthy, tech-savvy shoppers, and the efforts of e-commerce players to vie for customers.
Since Singapore’s e-commerce market is dense with local and global players, e-commerce platforms have to constantly put out discounts or engage in other marketing efforts to encourage users to shop on their sites.
To add on, some global sites might sell exclusive items that cannot be found in Singapore, making their platforms more desirable to shop on.
More Singaporeans are turning online to fulfil their basic needs, including purchasing groceries. This is especially so due to the Covid-19 pandemic, as people are encouraged to stay at home and refrain from heading out unless absolutely necessary.
According to PitchBook Data, investors around the world have invested almost US$14 billion into on-demand grocery delivery services globally since the start of the pandemic.
Customers range from busy parents who might need products urgently, to young millennials who do not have the time to run a grocery errand.
Research firm IGD Asia found that Singapore’s grocery market saw stellar performance, and it is forecasted to be a S$9.9 billion industry by 2023, a 14.5 per cent increase from 2018.
In March 2020, at the height of the pandemic, it was reported that Singapore’s grocery delivery services were hugely overwhelmed, with long wait times for customers.
However, as supermarkets refined their delivery services over the course of the year, the problem has largely vanished. Furthermore, Singapore has also seen the rise of non-traditional players in this field.
For example, Grab recently announced the launch of GrabSupermarket, which allows customers to choose from over 10,000 unique products. These products will be delivered to customers the next day.
Another unconventional player in the field is AirAsia. Best known as an airline, AirAsia has since expanded into food deliveries and grocery delivery as well.
Starting July 6, the AirAsia superapp offers fresh groceries delivery service in Singapore with the launch of AirAsia Fresh.
Logistics is an important, but often neglected and unseen aspect of the e-commerce experience.
E-commerce logistics refers to the processes involved in storing and shipping products for an online store or marketplace. This includes inventory management and the picking, packing, and shipping of online orders.
As the e-commerce industry grows, the logistics of getting orders to customers has become even more complicated.
This is especially so when customers don’t like to wait. When people are choosing to purchase online instead of in physical stores, the fulfilment of orders at a fast rate has become more important than ever.
A typical logistics supply chain involves a supplier — those who have inventory ready to ship to a destination. Fulfilment centres are warehouses that hold inventory close to the consumer. At the warehouse, each order is picked, packed, and shipped as soon as it’s placed to ensure a speedy delivery.
Shipping carriers handle the transportation of products to their destination. There are also last-mile delivery services which transport products from warehouses to the consumer.
In Singapore, some of these last-mile delivery services include Ninja Van, Lalamove, SingPost and DHL. Some e-commerce giants might also make use of their own delivery services. These include Lazada Express, and Q Express which belongs to Qoo10.
Payment providers are naturally important in the e-commerce industry, as merchants require a platform which allows them to collect money from the sales made.
Besides the traditional credit and debit cards, mobile wallets are also growing in popularity.
A mobile wallet is a type of virtual wallet where users can send, receive, and store money, and pay for purchases through their smartphone. These wallet services are typically by, and in collaboration with mobile service providers, smartphone e-payment solutions, and financial institutions.
This is true for Apple Pay, Google Pay, Samsung Pay, and other smartphone-based e-wallets.
However, many companies are also implementing their own e-wallets. GrabPay and ShopeePay enable customers to fund their virtual wallets via their banks, and use these wallets to pay for items when shopping online.
According to a research report by Boku, a London-based fintech firm, Asia will lead the e-wallets space globally. The mobile wallet market in Singapore has become one of the most attractive and competitive markets in the region.
Several mobile wallets including WeChat Pay, FavePay, and Alipay have also become popular in the region. According to Boku, GrabPay is the top mobile wallet in Malaysia and Singapore.
Most commonly, cashback is known as a credit card benefit that refunds the cardholder a small percentage of the amount spent on each purchase.
However, the rise in the popularity of e-commerce has also led to the proliferation of cashback apps and websites which can also help shoppers earn money for shopping while using their tools.
Shopback is one of the largest players in the cash back industry in Singapore. For every purchase you make online (after clicking through ShopBack’s portal), ShopBack gives a percentage of your purchase amount back to you.
The app also has a free browser extension that lets you get notified when cashback and coupons are available on various e-commerce sites.
However, other payment platforms have also begun their foray into cashback options for customers. For example, Fave offers customers cashback options when they use FavePay to check out at partner merchants.
For a long time, consumers have been content with the various modes of payment available in Singapore. Despite this, a new mode of payment — buy now, pay later (BNPL) — has emerged in recent years.
BNPL promises users all the perks of current payment modes, with the added benefit of deferring payments at no extra charge.
The concept of BNPL is based on good repayment behaviour in exchange for affordable purchases, through flexible payment plans.
These services are free to use, but users need to fulfil certain criteria first. For instance, they have to be aged 18 and above, and own a credit or debit card that must be linked to their account.
When checking out items online or in-store, they can choose among hoolah, Atome, Rely, Split or OctiFi as a payment option, depending on which service provider the merchant has partnered with.
Consumers usually pay a third to a fourth of the full price upfront. The remainder is split between instalments that are repaid monthly or biweekly.
Most recently, Fave also announced that it launched its BNPL service in Singapore and Malaysia. Called FavePay Later, the service offers interest-free flexible payments on the Fave app.
Besides being able to split purchases over three equal, interest-free instalments, users of FavePay Later can earn up to 10 per cent cashback with every purchase.
The firm also recently opened up their API integration for online e-commerce platforms to support FavePay payments with buy now pay later and loyalty cashback features.
About 38 per cent of Singaporeans, or 2.2 million people, have used a BNPL service, according to financial comparison platform, Finder. This testifies to the phenomenal growth of BNPL startups in Singapore.
Singapore’s retail outlook was weak prior to the Covid-19 pandemic.
However, e-commerce platforms in Singapore witnessed a two-digit growth at 23 per cent in total web visits throughout the first 6 months of 2020 according to iPrice. Singaporeans spent an average of S$113 in a single transaction online from January to June 2020.
Now that Singaporeans are already accustomed to the convenience and efficiency that e-commerce brings, going back to a pure-retail model is highly unlikely.
Furthermore, Singapore’s e-commerce platforms are quick to pick up on global e-commerce trends and implement them in Singapore.
For example, Southeast Asia saw an upsurge in the popularity of live-streaming on e-commerce platforms and social media sites. Shopee and Lazada were quick to hop onto the trend and implement their own live-streaming features on their apps.
As consumer experiences online continue to get closer and closer to what they can get offline, it is likely that the e-commerce industry will only keep growing, with new verticals emerging every few months.
Featured Image Credit: Inside Retail Asia
Subscribe to our premium content for just S$99.90 a year.
Gain access to all Vulcan Post Premium content for S$9.90 per month.
Gain access to all Vulcan Post Premium content for S$99.90 per year.
Stay updated with Vulcan Post weekly curated news and updates.
MORE FROM VULCAN POST
Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.
© 2021 GRVTY Media Pte. Ltd.(UEN 201431998C.)