Singapore has long been a modern, forward-thinking technology hub with a population of early adopters and tech-savvy people. The government is promoting this further through their Smart Nation initiatives and supports for technology startups in the city-state. With a thriving startup ecosystem, it is not surprising that per capita spending on eCommerce in Singapore is over three times that of Thailand and eight times the spend in Malaysia.
In 2019, around 85% of the country’s population used the internet, and over 73% of 16- to 64-year-olds purchased online. With expectations of growth doubling, we take a look at what eCommerce market trends are likely to make this happen.
A growth surge
During the four years between 2015 and 2019, the compound annual growth rate (CAGR) was 15.4%, bringing the market to a $6.2 billion USD value. Predictions for 2020 were showing a favourable CAGR increase of approximately 7%, bringing the value to around $7.4 billion USD, but then COVID-19 happened and shook up the market even further.
Thanks to people needing to stay home and spend less time shopping in bricks and mortar stores, this growth is now looking likely to double and hit over $9.5 billion USD by the end of the year. So what are the trends behind this growth? What sectors are taking full advantage of this upward swing in online shopping?
Ecommerce continues to be a hot topic, as the industry is evolving again due to COVID-19. Read how Lazada took 2 million SMEs in Indonesia online.
Trends in 2020
Prior to the pandemic, the biggest demographic was the 25-to-34-year-old age bracket who made up 46% of the market with the gender split of 57% female and 43% male. They mainly shopped on Lazada, Qoo10 and Shopee and purchased technology, clothing and homeware items. Grocery online spend pre-COVID was barely 8% of the market. This was still much more than its neighbours, again showing Singapore as quick to embrace technology. In 2018, online grocery purchases increased by 47%, the most substantial increase in the world.
Then the Coronavirus outbreak forced everyone to stay home as much as possible, closed stores and more people were working from home. This drove the eCommerce economy in a slightly different direction with a swing to healthcare products such as masks, hand-sanitiser and pharmaceuticals. Online grocery shopping has also seen a significant increase. People are enjoying the convenience of ordering their household needs and having them delivered to their door rather than spending time wearing a mask, queuing up to get into supermarkets and putting themselves and their family at risk from COVID.
With a flip to more basic need-centric shopping, the eCommerce market also noticed an increase in the trend to purchase from local suppliers rather than import goods. The local wet markets and smaller grocery stores are creating online presences to help them survive in a time of less footfall. Viral baking trends also helped spur on purchases of the ingredients and get people back into their kitchens.
Travel purchases and event tickets had previously been the primary online transactions for Singaporeans, but since tourism, sports and live entertainment have come to a standstill, spending has shifted to virtual fun and home fitness products and services.
Alongside this increased use of eCommerce to deliver the everyday needs of the country, Singapore has seen an increasing move to mobile online shopping. In 2019 Lazada broke into the top 10 mobile apps for average monthly usage, showing a desire by many to shop on their phones.
Globally, mCommerce (mobile commerce) is growing at a phenomenal rate, with 79% of smartphone owners purchasing online. Platforms, coverage and accessibility are improving, allowing even those in remote areas of the world to access the market. Singapore is no different; in fact, it has been leading the way since 2018.
Increase in ePayments
Paying for all this shopping has changed, too, with the advent of ePayments and eWallets. The uptake in Singapore is in line with its propensity to adopt cutting-edge technology and embrace change. Again, due to the pandemic, this sector received a shot in the arm as more outlets, both online and off-line, moved to contactless payments. As part of the social distancing strategy, using cards, eWallets, and bank transfers were greatly encouraged.
Tech unicorn Grab has a major slice of the eWallet pie in the country with GrabPay claiming to have a 77% share of the market in 2019. Other options such as PayLah and Fave have also benefited from the trend of online payments as they saw increased monthly active users too.
As the government continues to relax the “Circuit Breaker” policy and life returns to normal, eCommerce in Singapore will likely continue to grow. People who adopted new online shopping habits during the pandemic are learning how easy and convenient it is and expectations are that many will continue to make some of their purchases online.
The eCommerce market trends of using mobile phones to make purchases, the ease of obtaining daily supplies and an increased reliance on the internet for gaming and entertainment are sure to push this already progressive country further along the online shopping tracks. With so many already relying on the internet to make purchases, manage their money and entertain themselves, the future of eCommerce in Singapore is looking rosier than ever, and the expectations of doubling its value are far from outlandish predictions.