Singapore’s E-Commerce Market
Singapore’s thriving e-commerce market is forecast to rise to US$10 billion by 2026.
Singapore is a seen as a launch pad into Southeast Asia and a showcase market for the region. Per capita income is $65,000 which makes Singapore one of the most affluent countries in Asia. In 2021, the Singapore e-commerce market was valued at US5.9 billion and it is forecast to rise to US$10 billion by 2026. The city state has more than 3 million e-commerce users. Among all Southeast Asian countries, the Singapore shopper registered the highest basket size at $67.40. Singapore has an internet penetration rate of 98% and a smartphone penetration rate of 93% as well as a 58% rate of residents making online purchases.
The Covid-19 pandemic accelerated the pivot to e-commerce leading to a change in consumer trends. A wide choice of payment methods has also made it very convenient. The Singapore Government has actively promoted digitalization so that even the mom-and-pop shops offer e-payment options. As there are no fees charged for them to register and such methods also cost these merchants less than credit card fees, it is highly efficient.
Traditional brick and mortar retail stores such as departmental stores, personal care chain stores, supermarkets and hypermarkets still dominate but it is interesting to note that all of them have an online presence and offer deliveries. E-commerce platform Shopee ranks #1 with a significant share of the market followed by Lazada in second place, and then Amazon, a close third. E-commerce product categories span consumer electronics, fashion, food, cosmetics and personal care, furniture and appliances as well as toys, and do-it-yourself hobbies. “Livestreaming” is gaining traction and exploded during the pandemic as people were confined at home. Livestreaming allowed people to stay engaged and this was made all the more interesting with gamification.
Efficient payment systems, some with easy interest-free instalments, artificial Intelligence, prompt deliveries and companies’ corporate ethos supporting sustainability and the circular economy all led to the deeper adoption of e-commerce. Social media platforms shared locally and around the world, also contributed to the rise in e-commerce adoption. There was, however, a corresponding rise in online scams, cyber threats, and a shortage of talent in this field. To this end, Singapore law enforcement has stepped up efforts to combat this.
There are three broad distribution models. As in traditional retail, the standard is that the distributor gets the best price from the principal and undertakes all costs associated to bringing the product or brand to market. We are increasingly seeing a hybrid model being adopted where the risks are shared. This typically requires a monthly retainer fee to be paid to the importer. The third is that e-commerce platforms directly partner with exporters and principals thus offering a regional market reach. However, if you are successful in negotiating an agreement with any e-commerce platform, the chances are they will ask for credit terms that could stretch up to 90 days.
Singapore is a free port and the majority of products enter Singapore duty-free. The Goods & Services Tax (GST) which currently is 7% will be raised over the next two years, to 8% in 2023 and 9% in 2024.
There are no specific regulations governing e-commerce per se, but sellers need to abide by existing regulations governing their products. As a U.S. exporter, do look for a distributor who is able to leverage e-commerce and abide by all regulatory guidelines.