To say that Singapore is a high-tech country is putting it mildly. Being a small nation never stopped Singapore from being the most innovative and techno-savvy in Southeast Asia. And even with a population of just over 5.9 million — smaller than most megacities across the region — the country has proven to be among the most resilient in the region, if not the rest of the world.
Let’s look at Singapore’s e-commerce growth before and during the pandemic, as well as what is expected for it to happen shortly.
Singapore in figures
Singapore has among the highest literacy rates at over 97% with an equal number of educated women and men in the populace.
Singapore also has among the highest GDP (gross domestic product, a measure of the national economy) in the region at US$340 billion as of 2020. Before the pandemic of 2019, it was growing at a rate of around 3 to 4% annually. Per capita income is around US$97,000 and unemployment is at a low of 5.2%
Many businesses of varying enterprises also thrive in Singapore due to its government’s friendly legal and tax structure, and dependable regulatory processes. It has even established a one-stop business support service for aspiring businesses where they can sign up for licenses that would otherwise be processed separately.
Internet and social media
For digital use, Singapore is at the top. Before the pandemic, internet penetration in Singapore stood at 89%. This increased to 92% during the pandemic. It also has among the fastest internet speeds anywhere at 63 megabits per second (Mbps) for mobile data and 184 Mbps for fixed connections.
Social media use in the country is also high with 89% of the population using one or more social media platforms. Facebook is the highest at 3.55 million users, followed by Instagram at 3 million. However, the Chinese social media platform TikTok is also gaining traction with 1.8 million users. Note that YouTube still has the highest number of users at 5 million, even if it is not a full-fledged social media platform.
E-commerce was big… now bigger
Singapore is already one of the biggest e-commerce markets in Southeast Asia. In 2019, Singapore’s business-to-consumer (B2C) e-commerce market was worth US$4.9 billion and was expected to grow by 8.35% in 2021.
It is estimated that 3.3 million Singaporeans have shopped online, spending an average of US$1,456 online every year. As of 2021, revenues from online shops amounted to US$2.79 billion.
The most popular online merchants by the percentage increase in traffic in Singapore are the following:
- Shopee (82%)
- Ezbuy (63%)
- Amazon.sg (29%)
- Qoo10 (12%)
- Lazada (10%)
E-commerce as lifelines under lockdown
When lockdowns in Singapore began due to the pandemic, many businesses had to close to prevent the spread of COVID-19. This affected traditional retail businesses, which relied on foot traffic.
One report showed that total retail business fell to 46% in 2020 during Singapore’s Circuit Breaker, a period where shutdowns across all industries were done to preempt the spread of the COVID-19.
In a rare moment, the Singapore government reported that the country’s GDP fell by 41.2% in the second quarter of 2020 and was projected to decline to as much as 7%.
But early into the pandemic, some companies transitioned to using e-commerce platforms to continue their operations. Traffic to these e-commerce sites was already surging past 35 percent in 2019 but this went up to over 50% in the first quarter of 2021. There was also a 31% increase in Singaporeans who started shopping online.
Early into the pandemic in 2020, Singaporeans who spent more time online, buying essentials like groceries, increased by 198%. Food deliveries also increased by 50%. It essentially became a lifeline for many Singaporeans who otherwise had challenges in getting goods.
(A side note: Singaporeans also became more selective in their choice of e-commerce mobile apps during the pandemic, with about 50 percent deleting more than half of the e-commerce apps on their phones.)
In a report, Kunal Chatterjee, Visa country manager for Singapore and Brunei, noted that the pandemic has made it possible for companies to utilize e-commerce as a way to reach out to more people. Large retail firms, most especially, are also moving in this direction.
“Since the onset of COVID-19, people have changed the way they shop and pay and these changes are unlikely to reverse, even as a vaccine becomes more widely available. We see more first-timers shopping on eCommerce, more companies going digital and this trend is likely to stay,” Chatterjee was quoted as saying.
Opening doors after the pandemic
Singapore began easing restrictions among its populace and businesses in early 2022. This is expected to have a ripple effect on the locals’ buying behavior, as more people want to return to some normalcy in their lives.
However, this does not mean that e-commerce businesses would be left out. E-commerce is poised to become a mainstay in the buying behavior of many Singaporeans.
In a news report, National University of Singapore professor of strategy and policy Lawrence Loh said the outlook for e-commerce would be steady and healthy even after the pandemic is gone.
“Many people have switched to online transactions to fulfill their needs. Even after the pandemic ends, we have built a foundation of purchasing habits and behavior among consumers to continue this pattern of buying goods,” said Professor Loh.
Data analytics provider GlobalData also said e-commerce in the Lion City will experience an annual growth rate of 16.2% from US$5.9 billion in 2021 to US%10.7 billion in 2025.
The key driver would be people: millennials (26-41 years old) and Gen Z (9-24 years old), many of whom were born during the Internet age, and whose primary form of socialization is through the Internet and social media platforms.
These same age groups would be the ones most likely to buy goods from e-commerce platforms and pay through their mobile e-wallets rather than physical cash.
Gen Z people, in particular, have a strong influence on how e-commerce businesses should go. They are also being closely eyed by retailers and digital firms to become the next level of buyers, especially as this age group starts becoming part of the mainstream workforce and business owners.
In an opinion piece, Glenn Maguire, the principal Asia-Pacific economist at Visa, said e-commerce, not just in Singapore but the entire world, would be led by how Gen Z people are brought up by their environment and experiences they had, especially with the pandemic. Acknowledging them would be a good way to ensure the growth of e-commerce.
“For once, we’re witnessing inter-generation wisdom flow backward instead of forward as Gen Z influences other generations to adapt to their values. It’s time for us to no longer regard their behaviors from a distance, but take heed of their motivations, recognize their market-wide influence, and embrace the adoption of these preferences as our own,” Maguire said.