Keyword search
Tag search
Global Japan
NOV 19, 2013

Trends of E-commerce in Singapore

By Steven Neo Say Bin

Consumer expectations are changing with the rapid expansion of e-commerce in Singapore. Steven Neo investigates the trends.

One of Singaporean’s favorite pastime is online shopping which is serviced by over 4,000 Singapore-based online businesses, ranging from blog shops to coupon deal sites and grocery stores. According to reports by LiveJournal which hosts more than 50,000 blog shops in Singapore, its platform attracts 480,000 potential customers monthly which generated over US$72 million worth of transactions in 2011. Business-to-consumer (B2C) e-commerce is expected to climb by almost 50% between 2011 and 2015, which is aided by the high internet penetration rate of around 75% which is the highest rate in Southeast Asia. Despite the rosy outlook, a recent Groupon survey revealed that although 60.4% Singaporeans shopped online during the nation’s annual consumer retail event, the Great Singapore Sale (GSS), only 13.4% preferred to shop online. This anomaly intrigued me and I embark to try to understand the phenomenon.

Changing Consumer Expectations For E-commerce

According to a recent study by Havas Worldwide and Market Probe International which explored challenges faced by traditional retail stores and the influence of e-commerce on consumer behavior, 94% Singaporeans shop online but approximately 70% Singaporeans feel overwhelmed in online shopping due to the vast amount of choices and information available. In a global study conducted by comScore and UPS on the customer experience for Asia and Australia, Singapore’s overall satisfaction with online shopping is only 51% which is one of the lowest globally as compared to the United States (83%), Europe (78%), and China (60%). This low score can be attributed to issues such as delivery dates and times, lack of convenient retail locations for collection, and general return policies. e27 blog reporter, Elaine Huang, recently reported an incident involving Zalora Singapore where a consumer had to spend 68 days trying to resolve a refund over $40 worth of defective goods despite the company’s advertised 30-day free return policy.

The comScore and UPS study listed the following important key consumer factors for e-commerce:

– Transparency in Shopping Experience.

81% Singaporeans have the tendency to abandon carts during the purchasing process which is the highest amongst Asian consumers. This tendency can be attributed to the higher than expected total costs due to the addition of delivery costs, and long shipping periods with deliveries exceeding 8 days increasing the possibility of cart abandonment. Singaporeans crave for transparency in their shopping experience, especially in the delivery of their products. 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% Singaporeans ranked hassle-free returns as the second most important aspect of e-commerce, with an ability to influence 61% consumers to make a purchase from a retailer that they are shopping with for the first time. 62% consumers indicated that an easy return or exchange process can drive word-of-mouth recommendations and shopping loyalty. Word-of-mouth recommendation is significant as Havas Worldwide and Market Probe International found that 63% Singaporeans are likely to share both good and bad experiences online, with 67% Singaporeans trusting peer reviews above expert reviews, although negative comments are less likely to affect their decisions as Singaporeans become more e-commerce savvy.

Incorporating Mobile Platforms into Consumer Strategy

“Omni-channel experience” combining online platforms and traditional retail stores has been defined by comScore and UPS as an important driver for enhancing consumer experiences, with 70% consumers wanting 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 had established a physical store in Suntec City Shopping Mall in 2012 to compliment their online presence.

In the study by Havas Worldwide and Market Probe International, although 84% respondents preferred to purchase products in person, 72% respondents predicted an increase in online shopping activities as more retailers expand their operations online. 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 page view monthly due to active consumer engagement that incorporates online discussions and offline face-to-face communications in dining events. This view is echoed by 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 their online sales channels on any device that will connect to the Internet.

With a high penetration rate of mobile smartphones (74%) and tablets (42%), and a significant climb in app usage to 75% in Singapore, organizations need to incorporate mobile platforms into their overall strategic planning for online operations. Hamburg forecasted that over half a billion consumers will shop via mobile devices in 2016 with triple-digit growth rates of mobile payments. comScore and UPS found that in a typical three-month period, a significant number of respondents used mobile smartphones (65%) and tablets (75%) to make purchases. Key mobile e-commerce trends that have emerged include loyalty apps (such as Perx), fashion discovery (such as ShopSpot), and location-based deals involving coupons or promotions (such as LivingSocial), with 51% respondents in comScore and UPS’s study wanting to receive these location-based deals. 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 with Asia-Pacific expected to account for over a third of global revenues in B2C e-commerce. As a Singaporean and an avid online consumer, I could not be happier.