The Lion City’s astute online consumers provide a challenging platform for testing new e-commerce tactics and promotions.
Located on one of the world’s busiest shipping routes at the southern tip of the Malay Peninsula, Singapore has welcomed global traders to its shores for centuries. Long recognized as one of Asia’s principal retail destinations, Singapore is now prioritizing the economic benefits of digitization – and is often the first port of call for brands navigating their way to South East Asia’s emerging online markets.
Singapore’s population of 5.3 million is the second smallest among the ten members of the Association of South East Asian Nations (ASEAN), but consumers are eagerly embracing online buying. E-commerce sales hit SGD 2.14 billion in 2016, according to eMarketer – or 4.5% of total retail sales, the highest proportion in South East Asia. By 2025, e-commerce is projected to account for 6.7% of all retail purchases.
As the region’s most affluent and discerning retail market, these are the four key factors that I believe makes Singapore an attractive location to test e-commerce initiatives before rolling them out across ASEAN.
Singapore’s GDP per capita of USD 85,208.80 is the largest in South East Asia. This strong spending power combined with world-class banking services has created a buoyant cashless payment culture – with 76% of respondents to a recent survey preferring payment cards to cash.
In addition to boasting ASEAN’s most affluent consumers, Singapore is home to its most discerning customers. Singaporeans have long been accustomed to shopping in South East Asia’s smartest flagship stores and chicest boutiques. They have led the way in online buying for flights, accommodation, ride-sharing and consumer products.
Consequently, Singapore’s high-expectation consumers provide a critical benchmark for brands. Across ASEAN, shoppers aspire not just to the wealth of Singaporeans – but also to their judicious and structured approach to product research and purchasing. Singaporeans are unafraid of sharing their consumer insights, both positive and negative, online – and their experienced and constructive analysis is highly prized by their regional counterparts.
Brands and retailers operating in Singapore’s digital sphere should pay attention to the proven penchant for researching the best deal – as competitive pricing is as coveted as speed and convenience.
In a September 2016 consumer survey, 72% of Singaporean shoppers said lower prices compared to offline stores was a key motivation for buying online – while 71.2% cited the allure of online deals and promotions. Access to new products and shopping experiences also appeals – with around 20% of Singaporean e-commerce transactions being cross-border purchases.
Singapore’s impressive commercial infrastructure backed by strong legal and financial systems attracts businesses across multiple sectors to use Singapore as a regional base – and online shopping is no exception.
Leading online marketplaces, such as Lazada, Zalora and online grocery retailer RedMart (which was purchased in November 2016 by Alibaba), have consolidated their positioning in Singapore, and Alibaba has also invested in an e-commerce logistics joint venture with SingPost. In 2017, US online giant Amazon will launch its e-retail services into South East Asia from its Singapore headquarters.
Technology and consumer electronics, fashion, beauty and cosmetics record strong online sales in Singapore, with notable growth in health and wellness, mother and baby products, and food and groceries. As competition between e-retailers and marketplaces intensifies, more product categories will be heavily promoted. Digital marketing and promotion management offer new opportunities for brands to optimize their exposure, engage with consumers and grow their sales.
At the same time as seeking new shopping experiences, Singapore’s perceptive consumers are also demanding enhanced service upgrades. This includes same-day delivery, and collection and return at in-store and third-party locations.
Forging an e-commerce footprint in Singapore
While the online route-to-market offers considerable appeal in Singapore’s congested retail landscape, brands seeking a springboard into ASEAN markets also face challenges. The cost of living and doing business are the highest in the region, while online retail tactics formulated in Singapore will need careful tailoring to appeal to the distinctive shopping behaviors and preferences across South East Asia.
Each ASEAN nation is carving out its own e-commerce roadmap, and while online experiences in Singapore are likely to prove instructive, they should not form the basis of “copy-and-paste” strategy rollout into different ASEAN markets.
Singapore’s e-commerce sector is also becoming more competitive – and new investments are expected to drive further fragmentation. Meanwhile, the shifting attitudes of Singapore’s high-expectation consumers mean a much higher degree of creativity and personalization are expected for offline and online marketing than elsewhere in the region.
Despite the challenges, Singapore’s small geographical size and low population base make getting closer to consumers easier than in its larger, more dispersed neighbour nations. Forging a successful digital footprint, however, requires being able to anticipate and react fast to new consumer trends in ASEAN’s most dynamic and discerning e-commerce market.