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Global Japan
NOV 19, 2013

E-commerce Trends in Singapore Are Transforming Customer Expectations and Company Strategy

By Steven Neo Say Bin
iStock photo/William_Potter

Singapore is home to over 4,000 online businesses, ranging from blog shops to grocery stores. LiveJournal, which hosts more than 50,000 Singaporean blog shops, reports that its platform attracts 480,000 potential customers monthly, generating over US$72 million worth of transactions in 2011 alone. Business-to-consumer (B2C) e-commerce is expected to climb by almost 50% between 2011 and 2015, aided by the high internet penetration rate of around 75% – the highest in Southeast Asia.

Despite the rosy outlook, however, a recent Groupon survey revealed that although 60.4% of Singaporeans shopped online during the nation’s annual Great Singapore Sale (GSS), only 13.4% generally prefer to shop online.

Changing consumer expectations

A recent study by Havas Worldwide and Market Probe International explored challenges faced by traditional retail stores and the influence of e-commerce on consumer behavior. According to its findings, 94% of Singaporeans shop online, but approximately 70% feel overwhelmed by the experience due to the vast choices and information.

Another study by comScore and UPS on the customer experience for Asia and Australia found that Singapore’s overall satisfaction with online shopping is only 51% – far lower than the United States (83%), Europe (78%), and China (60%). This low score is attributed to issues with delivery dates and times, lack of convenient retail locations, and general return policies. e27 blog reporter Elaine Huang recently reported an incident involving Zalora Singapore, in which a consumer had to spend 68 days trying to resolve a refund over $40 worth of defective goods. This, despite the company’s advertised 30-day free return policy!

The comScore and UPS study listed two key consumer factors for e-commerce:

– Transparency in the shopping experience
81% of Singaporeans have a tendency to abandon e-carts during the purchasing process. Why? Because hidden costs add up. Companies unveil delivery costs and shipping times one after another during the checkout process until it just doesn’t seem worth it anymore. Singaporeans crave transparency. In fact, 97% rated the ability to track packages as either “essential” or “nice to have.” Free or discounted shopping has also been rated as the most important aspect of e-commerce.

– Hassle-free returns
Over 60% of Singaporeans ranked hassle-free returns as the second most important aspect of e-commerce, and 61% said such a feature would factor into their decision to buy from a company for the first time. 62% indicated that an easy return or exchange process can drive word-of-mouth recommendations and shopping loyalty. This is shows how a bad return experience can have a cascade effect on a company’s profits: Havas Worldwide and Market Probe International found that 63% of Singaporeans are likely to share both good and bad experiences online, and 67% trust peer reviews above experts.

Incorporating mobile platforms into consumer strategy

The omni-channel experience of combining online platforms and traditional retail stores has been defined by comScore and UPS as an important driver for enhancing consumer experiences. 70% of consumers want the ability to make purchases online and either return them to a physical store or ship them back for free. Groupon was quick to detect this trend and establish a physical store in Suntec City Shopping Mall in 2012 to complement their online presence.

Successful engagement of consumers, both online and offline, is an important key success factor for online operations, as exemplified by OpenRice Singapore. Despite a competitive landscape, the online dining guide has managed to attract 15,000 registered users and 1 million monthly page views thanks to active consumer engagement: online discussions and offline face-to-face communications at dining events. This echoes a recent global study by Hamburg on the trends for B2C e-commerce, which cited that online shopping will become more personalized as retailers customize their services and integrate online sales channels.

With a high penetration rate of mobile smartphones (74%) and tablets (42%) and a significant climb in app usage (75% in Singapore), mobile platforms will surely need to become a standard part of any online strategy. Key mobile e-commerce trends that have already emerged include loyalty apps (Perx), fashion discovery (ShopSpot), and location-based coupons or promotions (LivingSocial). In Singapore’s Digital Fashion Week 2013, a joint partnership involving DFW Creative, YouTube, Google+, and Twitter enabled consumers to watch live streams of the fashion event and make instant purchases via the Asos Marketplace.

These are exciting times for e-commerce, indeed.