Ecommerce Market Watch: Singapore
Singapore has been recognized as an ecommerce market to watch in Asia, thanks to digital maturity, strong internet penetration and an increasing number of tech-savvy consumers.
A hotbed of innovation in both the technology and finance industries, it’s no wonder the country has experienced ecommerce growth. Online businesses have plenty of ongoing opportunities in Singapore for the foreseeable future, as long as they understand Singaporean consumers and have a strategy for fraud prevention.
With an annual growth rate of 16.2%, Singapore’s ecommerce market value is expected to reach US$10.7 billion by 2025. Gross merchandise volume (GVM) is on a similar track, with a trajectory toward $8 billion in the same timeframe. Additionally, Singapore is an attractive region for international ecommerce businesses. Cross-border ecommerce accounted for 35% of the country’s total ecommerce volume in 2020 and was worth US$2.15 billion.
Another factor that makes Singapore so appealing to online businesses is location. Asia is a thriving region for ecommerce.
Let’s look at what else makes this market so unique.
Singapore’s Online Consumers Span Generations
Singapore is a country of mixed generations. The median age is 42.2, and more than 54% of the population is between 18 and 54. That means a majority of Singaporeans are millennials and Gen X. Ecommerce businesses have to stay up to date on trends across several generations to appeal to the range of consumers and achieve success.
In our original research report, “State of Consumer Attitudes on Ecommerce, Fraud & CX 2021,” we found that consumers in the millennial and Gen X markets differ when it comes to online shopping behavior.
Millennial consumers tend to:
- Shop online more often.
- Expect a high level of personalization.
- Are open to mobile payment options.
Gen X consumers are split on all three points. Younger Gen X consumers favor their mobile devices for shopping, but not all Gen X consumers are open to more recent ecommerce developments.
Sustainability Is a Priority for Singaporeans
One interesting commonality among Singaporean consumers is a commitment to sustainability. In Singapore, price isn’t the most important factor when it comes to making an online purchase. Consumers are more committed to companies that deliver value to themselves and the world around them.
A SYNC Southeast Asia Report found that consumers in Singapore switch brands for three primary reasons:
- They discovered better products.
- They wanted to try something new.
- They considered brands’ stances on sustainability and social responsibility issues.
Singaporeans will even pay more for sustainable products, a common trend throughout Southeast Asia – 92% of consumers are willing to pay a premium for products that are seen as sustainable.
Singapore Is a Model of Digital Adoption
The biggest factor contributing to Singapore’s ecommerce appeal is digitization. Considered the most digitized economy among its regional peers, Singapore’s companies are highly connected to customers through a variety of channels: mobile, social, gaming and more.
Singaporeans are mobile-enabled and tech-savvy
A whopping 92% of the population had access to the internet at the beginning of 2022, and only 8% of the population was consistently offline. It helps that Singapore is an urban landscape, making infrastructure easier to implement and roll out.
Nearly every adult in Singapore has a mobile phone, which creates the opportunity for omnichannel strategies, especially social commerce. Approximately 89.5% of Singaporeans are active social media users, making social advertising and selling an absolute must for ecommerce businesses.
Here’s a breakdown of the social media channels Singaporeans use most often and the ad reach opportunity for each:
- YouTube is hugely popular, and its ads reach 93.3% of Singapore’s population.
- Facebook accounts for 67.2% of eligible users (13 and older) with an ad reach of 65.2% of the country’s total population.
- Instagram users account for 57.7% of those eligible, and its ads reach 56% of the country’s total population.
- Twitter users make up 48.1% of those eligible, with an ad reach of 52.3% of the country’s internet user population.
- TikTok is also popular in Singapore, with 1.83 million users and an ad reach of 36.2%.
- Snapchat is used by only 18.8% of those eligible and has an ad reach of 16.8% of the country’s total population.
Support from the top has also helped with the high adoption rate and ecommerce growth.
Singapore’s Government Is Pro-Ecommerce
Singapore’s officials have been implementing country-wide initiatives to help drive ecommerce adoption, which range from subsidies for small businesses to programs that enforce fraud prevention practices – much like we see in countries like Chile.
Ecommerce Booster Package
Singapore’s government rewards retailers that sell online and leverage ecommerce platforms, including Lazada, Shopee and Zalora. No surprise that all three platforms are on the list of top website visits in Singapore.
Retailers aren’t just given tiny subsidies, either: The program offers up to 80% of setup and selling costs, with a maximum of just over US$6,000.
Ecommerce Marketplace Transaction Safety Ratings (TSR)
Another Singaporean program rates ecommerce marketplaces based on their anti-scam measures. The E-commerce Marketplace TSR assesses ecommerce platforms for their ability to prevent scams using tactics such as:
- User authenticity
- Transaction safety
- Loss remediation for consumers
The rating scale ranges from one tick for the lowest score to four ticks at the highest, with the results published every year by the Ministry of Home Affairs and Singapore Standards Council. (The current list has Facebook Marketplace at the lowest rating, while platforms like Shopee has three ticks, and Amazon and Lazada each have four.)
Technical Reference 76 (TR76)
The latest Technical Reference 76, which was first released in June 2020, is published with best practices for ecommerce platforms to protect online transactions throughout the lifecycle of an order. These include filters, fraud rules and even deny lists for businesses that are considered “high-risk” for fraud.
Liability framework in the works
The Monetary Authority of Singapore (MAS) is even going so far as to create a formal guideline that details how fraud losses would be shared by platforms and ecommerce businesses. With this framework, Singaporean consumers who fall victim to scams may not be responsible for recovering their losses (unlike in China, where consumers are responsible for credit card fraud losses).
All these measures require that ecommerce businesses have a clear strategy for fraud prevention to do online business in Singapore.
Choose the Right Fraud Protection Solution
When considering an ecommerce business in Singapore, whether it’s local or a cross-border expansion, small business or enterprise-level, one fact remains: Fraud prevention and protection are critical.
Enterprise companies need to balance safety with experience
Enterprise companies need to be wary when contemplating markets with unusually high transaction amounts, like Singapore. A single purchase could look like fraud to fraud filters, but it may very well be legitimate.
A strategic approach to fraud prevention should include both AI-enabled analytics and secondary review to ensure the highest approval rates and the fewest number of false declines.
Why are false declines an issue?
Think about the mix of generations in Singapore — namely the high number of millennials. They have neither the time nor the patience for false declines, as we discovered in our research: Almost half of consumers under 40 will simply stop shopping at a store — forever — because of a false decline.
To make things worse, the high social media penetration in Singapore sets up the perfect storm of reputation fallout when a customer’s order is declined. It’s easy and natural for younger consumers to complain on social media — about 33% of those under 40 will do just that.
Small businesses need to be wary of chargebacks
For small businesses starting or expanding their online ventures into Singapore, card-not-present and account takeover fraud —and the chargebacks that result — can become a serious issue.
Once a business’ chargeback rate crosses the 1% threshold, the resulting penalties and fees can make it almost impossible to break even. And that’s if the credit card company doesn’t decide to drop that business altogether.
Any business looking to enter the Singaporean ecommerce market needs a comprehensive solution to address all aspects of fraud. A fraud prevention solution provider with international experience and knowledge of current fraud trends can help prevent fraud from eating away at revenues.
At ClearSale, we help companies enter new markets with ease. Online businesses count on us to help them find the balance between fraud prevention and false declines. Contact us today to find out how we can work together toward success in this burgeoning market.