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Singapore is the most mature ecommerce market in Southeast Asia where 60% of respondents report shopping online. Singaporeans also spend the most online in the region – on average a shopper purchased online goods worth $1,022 in 2016.

Statista data shows that Singapore’s ecommerce market is expected to increase from $3.3 abyillion this year to $5.1 billion in 2021 growing annually by 11.2%. And the number of online shoppers is forecasted to rise from 64.8% of the population in 2017 to 80.9% in 2021.

Which categories present good opportunities in Singapore’s ecommerce market in the near future?

Singapore ecommerce outlook

Singaporeans mostly shop online for electronics & media

Electronics & media is currently the leading ecommerce vertical in Singapore, similar as in Thailand. It’s predicted to remain as such in the near future, Statista data shows.

  • Electronics & media ecommerce market in 2017: $918 million or 27.6% of total ecommerce revenue
  • Electronics & media ecommerce market in 2021: $1.345 million of 26.5% of total ecommerce revenue
  • Annual growth rate (CAGR): +10%
  • Market’s largest segment: Consumer electronics with a market volume of $679 million in 2017

Currently, there aren’t many players in Singapore who sell online physical media (e.g. books, DVDs, games), consumer electronics (e.g. TVs, stereo systems) and/or communication devices (e.g. computers, smartphones, tablets).

The annual growth rate of online sales in this category is not the fastest, but ensures that in five years time, more than one fourth of all projected online sales in Singapore will come from selling TVs, computers, books and other devices and media.

Furniture & homeware to grow the fastest

This vertical is expected to grow by nearly 15% annually within the next five years from 2017.

  • Furniture & appliances ecommerce market in 2017: $452 million or 13.6% of total ecommerce revenue
  • Furniture & appliances ecommerce market in 2021: $782 million or 15.4% of total ecommerce revenue
  • Annual growth rate (CAGR): +14.7%
  • Market’s largest segment: Furniture and Homeware with a market volume of $317 million in 2017

Selling online furniture and household goods such as kitchen and bathroom accessories, textile furnishings will account for nearly half of the market volume in this vertical.

Below is a few examples of companies currently selling products in this vertical.

Some local players like Horme and Star Living are already seizing this opportunity whereas global giants like Ikea have not yet taken advantage but will most likely move online.

Fashion to become the second largest vertical

Fashion ecommerce in Singapore is expected to have the second highest annual growth rate following furniture. This will make fashion the second largest vertical by sales by 2021, up from the third largest vertical in 2017.

  • Fashion ecommerce market in 2017: $769 million or 23.2% of total ecommerce revenue
  • Fashion ecommerce market in 2021: $1.243 billion or 24.5% of total ecommerce revenue
  • Annual growth rate (CAGR): +12.7%
  • Market’s largest segment: Clothing with a market volume of $584 million in 2017

The fashion ecommerce vertical is unsurprisingly quite crowded in the Lion City. From local marketplaces such as Reebonz and Megafash to local brands like Charles & Keith and global brands like Uniqlo, many have already added online to their sales channel to be where their customers are – in the digital environment.

Hobby and stationery products are big in Singapore ecommerce

Selling toys, baby items, sports and outdoor products, and stationery online is also a big market in Singapore. It is projected to be the third largest vertical in sales by 2021 making up 23% of Singapore’s total ecommerce.

  • Toys, hobby & DIY ecommerce market in 2017: $844 million or 25.4% of total ecommerce revenue
  • Toys, hobby & DIY ecommerce market in 2021: $1.178 billion or 23.2% of total ecommerce revenue
  • Annual growth rate (CAGR): +8.7%
  • Market’s largest segment: Hobby & stationery (e.g. musical instruments and office supplies) with a market volume of $529 million in 2017

Food & personal care to grow 55%

This category is expected to grow to $528 million within the next five years. Although it is the  smallest of all verticals in terms of sales, it is still projected to produce a steady annual growth rate of nearly 12% in the period from 2017 to 2021.

Singapore’s online grocery segment is quite advanced compared to other Southeast Asian countries, while there are limited numbers of beauty online sellers.

  • Food & personal care ecommerce market in 2017: $339 million or 10.2% of total ecommerce revenue
  • Food & personal care ecommerce market in 2021: $528 million or 10.4% of total ecommerce revenue
  • Annual growth rate (CAGR): +11.7%
  • Market’s largest segment: Personal care with a market volume of $231 million in 2017

Looking ahead

Although the country’s ecommerce growth is not the fastest projected in the region, an online shopper in Singapore is expected to spend on average $1,234 in 2021, according to Statista. This stands to be three to four times more than annual online shopping spending in Indonesia and Thailand, nearly 10 times more than in Malaysia, 13 times more than in Vietnam and 26 times more than in the Philippines.

Following the ECOMScape series that revealed the ecommerce landscapes in Southeast Asia’s largest six economies, eIQ is sharing a comparison of each country’s top e-marketplaces.

A marketplace is defined as the arena of competitive or commercial dealings. An e-marketplace can be horizontal – offering products from various categories – or vertical – offering only products of a specific category. Read more

Sitting comfy where I fit.

A few days back, TechCrunch broke news that sources claimed Amazon would be delaying its highly anticipated Q1 entry into the fast-growing Southeast Asian ecommerce market. Unclear who these ‘sources’ may be, the lack of any substantial evidence that the ecommerce giant is entering Singapore points to the case that it probably will never happen.

Plans of entry into Singapore have never made sense if you take a look at Amazon’s past and present market strategy, as I do here.

Conventional versus Guerilla Warfare

Like the giant in David and Goliath, Amazon performs best in wide-open “terrains” where the juggernaut can accumulate and leverage its scale advantages. Look at the markets where Amazon is currently dominating the competition: US, Japan, UK, Germany, France and increasingly India.

Amazon SingaporeAmazon entering Southeast Asia is comparable to the Americans fighting the Vietnam war. They’ll be battling an enemy that’s scattered across countries, often divided by water and much better equipped at playing the local game. Drop a few Amazon executives from Seattle into the jungle called Jakarta to navigate “Prime” logistics in the city’s legendary traffic and they might beg to go home.

Just look at Europe, which, despite the European Union, is still a loose collection of individual countries. Amazon’s tour-de-force in Europe has whittled down to three major markets — UK, Germany and France.

China seems like the exception — an enormous single market similar to the US — yet Amazon’s market share tanked from 15% in 2008 to less than 2% today. Decision-making was centralized in the US, which slowed down its operations in China and couldn’t outcompete the hungrier competition.

In the end, Amazon China was no match for Alibaba’s Jack Ma and JD’s Liu Qiangdong, leaving them no choice but to throw in the towel and set up shop on Tmall instead in 2015.

In the Middle East, Amazon is currently entangled in a bidding war with UAE magnate Mohamed Alabbar to acquire Souq.com. Souq operates across the Gulf Cooperation Council (GCC) countries, all connected by land and no custom duties between them. This provides Amazon access to 50 million people sharing the same language and culture and fits with its strategy of going after large single markets.

Singapore is not operation D-Day for Amazon

Amazon’s rumored entrance into Southeast Asia has specifically focused around setting up in Singapore first, arguably the most mature, albeit smallest, ecommerce market in the region.

Prior to Lazada snapping up Redmart for $30-40 million, there were talks of Amazon trying to buy Redmart as a way to jumpstart its Singapore operations.

But Amazon setting up local retail operations in Singapore doesn’t make any sense. Singaporeans, due to their country’s GST relief and efficient global logistics, are already ordering from Amazon en masse.

Amazon and Singpost are driving improvements in global cross-border logistics, to enable delivery of packages from US to Singapore within 3 days with priority shipping. That’s the average time for local domestic deliveries inside Indonesia. Expect even faster deliveries in the future when Amazon successfully expand its own fleet of planes.

Custom dutiesPerhaps Singapore could serve as a distribution hub to expand into the rest of Southeast Asia? Also, probably not the case. There are good reasons why Jack Ma decided to set up his new Southeast Asia hub in Malaysia’s new ‘Digital Free Trade Zone’ and not in Singapore:

  • Malaysia is connected to Thailand via land that gives it access to Cambodia, Myanmar, Vietnam, etc.
  • Malaysia is as close to Indonesia, Alibaba/Lazada’s biggest market in Southeast Asia, as Singapore is.
  • Malaysia itself is a much bigger ecommerce market than Singapore – 30M vs 5.5M population.
  • Malaysia has a much bigger overseas Chinese community than Singapore who are regular users of Tmall, Alibaba and AliExpress.
  • Malaysia is a close political ally of China. (Not everything is purely business; read between the lines).
  • Malaysia has more physical space than Singapore to fit in a massive logistics operation.

Join the eIQ Network for exclusive content & insights here.


But Amazon is recruiting people…right?

You may know someone who works in the ecommerce space in Southeast Asia who has received a phone call from an Amazon recruiter. Yes, Amazon is recruiting but not for the reasons you think.

Most of the jobs sourced are for its cross-border business based in Singapore long ago to get Southeast Asian merchants to sell on the Amazon global marketplace.

ecommerceIQ, Amazon jobs, Singapore

Amazon is hiring in Thailand for Amazon Global Selling (merchant acquisition) and AWS, not for local retail.

Indonesia would be the place to start

In line with Amazon’s strategy of going into large, singular markets, the most recent being Australia, a Singapore landing would be ruled out. If Amazon is really set on conquering Southeast Asia, a more likely entrance would target Indonesia. With a young population of 250 million and growing, Indonesia is the ‘new China’ — an economic and ecommerce powerhouse in a region of 600 million people.

Having said that, the window of opportunity for Amazon in Indonesia is closing fast. With Alibaba’s backing, Lazada is doubling down on its biggest market in Southeast Asia, and local giants like Lippo Group have pumped over $500 million into its ecommerce venture, MatahariMall. Then there’s JD that sneaked into Indonesia in 2015 and seen steady year-on-year growth and ecommerce veterans such as blibli.

To accelerate a move into Southeast Asia, a plausible option for Amazon is to buy its way into the market even though it didn’t work so well with China.

Even its bid to acquire Souq.com in the Middle East is still up for debate.

Fortunately for Amazon, Indonesia’s ecommerce space is still developing with plenty of players that could want a powerful ally like Amazon. Lets wait and see.

By Sheji Ho, aCommerce Group CMO

What do you think? Will Amazon ever enter Southeast Asia?

Post sponsored by Last Mile Fulfilment Asia (LMFAsia)

LMFA is Southeast Asia’s premier trade show for the retail, ecommerce, logistics and parcel industries, and returns with the 3rd edition on March 2-3 2017.

Themed “Go Global, Deliver Local”, the event aims to drive and strengthen a borderless fulfilment process.

Amidst a backdrop of economic uncertainties today, Southeast Asia’s ecommerce market is expected to reach $88 billion by 2025.

In recognising that last mile costs almost 28% of total cost of moving goods, achieving cost efficiency through innovative logistics solutions will be key to amplify the ecommerce market that is already expanding at rapid speed in the region.

According to Frost & Sullivan, the global B2B ecommerce market alone will reach US$6.7 trillion by 2020. This year’s conference will feature a new track “The Future of Ecommerce is B2B Ecommerce”, and include industry speakers from renowned retail, ecommerce and logistics leaders such as DHL, aCommerce and JD Worldwide.

The two-day conference and exhibition, organised by SingEx Exhibitions, comprises of a multi-track component that will dive into topics such as turning fulfilment challenges into opportunities, designing cross-border fulfilment solutions across Asia.

For more event information, please visit the website: http://www.lmfasia.com/

For Logistics related reports, visit our reports section

Disclaimer: ecommerceIQ is LMFA’s official Knowledge Partner for this year’s conference. We look forward to meeting everyone.

Although it is holiday time and the news are rather slow, check out the latest ecommerce news round-up.

1. TOT to install broadband in 24,700 rural Thai villages in 2017

Thailand’s state telecommunications company TOT next year will install internet broadband network in 24,700 villages according to government’s plans to enhance the country’s digital infrastructure and narrow the digital divide according to government’s plans.

The move is expected to foster broader adoption of digital-related services. The investment budget of the project is 15 billion Thai baht ($417 million).

Read the rest of the story here.

2. Singaporeans prefer to shop online on laptops, not smartphones

Singaporeans prefer using laptop for research and online shopping rather than smartphone, found a recent study by Criteo and Edelman Intelligence. 46% of respondents said they preferred using laptop for purchases while only 11% said they better liked using smartphone for online shopping.

Among Southeast Asian countries, Singapore has the lowest preference for shopping using mobile phone. One factor why Singapore’s digital shoppers prefer computers over mobile devices for online shopping suggested by Criteo and Edelman is that the price of an item may impact the device used for purchase.

Read the rest of the story here.

3. Matahari Department Stores up stakes in MatahariMall.com for $12.2 million 

Retail firm Matahari Department Stores (MDS) has increased its ownership in the parent company of Indonesia’s ecommerce marketplace MatahariMall.com, Global E-commerce Indonesia (GEI) to 12%. It has purchased shares equal to 3.62% of paid-up capital in MatahariMall.com for $12.2 million.

MDS last upped its stakes in GEI back in January to 10.33%, but since then, its ownership has been diluted to 8.38% due to investments made by other shareholders.

Read the rest of the story here.

Over the last few weeks, we have looked at the ecommerce landscapes in Indonesia, Thailand, Malaysia, Singapore and the Philippines to see how the five largest markets in the region are faring. The region itself is a diverse and fragmented landscape having disparate infrastructure and fickle government regulations, making it hard for global brands to find a one-size-fits-all solution to conquer $238 billion in market potential.

However, despite the diversity of each country, there is a common theme apparent for ecommerce in the region. Here’s what we have discovered from the Southeast Asian ecommerce landscape in 2016.

1. The domination of Lazada – or soon, Alibaba

One player that has succeeded in making a name for itself in every country across the region is Lazada Group. The company, introduced by Samwer Brother’s Rocket Internet in 2012, has dominated monthly web traffic by millions in almost every country. Their recent acquisition by Alibaba has only cemented their position of power and plays a key role in Jack Ma’s big plan for Southeast Asia.

The only market with local players that puts up a decent fight with the giant is Indonesia. The country has several big players in the B2B2C sector – MatahariMall and Blibli to name a few – backed by big enterprises or conglomerates. But deep pockets is not the only thing that gives these players an upper hand, local knowledge of the market is also a big advantage.

southeast asia ecommerce landscape

With the looming news of Amazon’s expansion into Southeast Asia with Singapore next year, Lazada doesn’t seem to be worried as they have the advantage of years of consumer data and its latest acquisition of Redmart is seen as the latest effort to thwart Amazon at its own game.

2. M&A as a strategy to survive

Ecommerce is a long term game. Even with a good business model, companies need to be able to sustain themselves for the marathon before they even have a chance to make profit, let alone reap the other additional benefits of going online.

This year, the region has seen a lot of acquisitions as players attempt to expand market share or make an entrance. This includes the old news of ‘Alizada’, a $1 billion acquisition that left players in the industry trembling with excitement or the acquisition of Caarly by Carousell to accommodate the growing interest of people looking for cars on the mobile platform.

Some of the acquisitions were done by non-ecommerce players hoping to expand their reach. There is the latest move by K-Fit, a subscription fitness startup, acquiring Groupon in Indonesia and Malaysia; and the exit of Zalora in Thailand and Vietnam to Thailand’s conglomerate, Central Group, earlier this year.

With hundreds of players clamoring for a chunk of market share, it’s only time before natural selection leaves only the strongest and most committed players in the arena.

3. Payments sector is saturated, but no true problem-solver

Payments is still one of the largest hurdles for ecommerce in the region despite the financing boom for Southeast Asian fintech startups in 2016. Numerous startups are attempting to create a payments product for the sake of ‘doing fintech’ but aren’t addressing fundamental payment issues like a high unbanked population.

All across the region we see players in every market trying to address local financial challenges with little success. In Thailand, the government’s effort to create a cashless society with PromptPay has been halted indefinitely when Government Saving Banks (GSB) ATMs fell victim to the cyber criminal.  

Coins.ph in the Philippines is using bitcoin to increase financial inclusion in the country but is still at a nascent stage. In Indonesia, Telcos and even ride-sharing apps are fueling the high-profile race of mobile wallets – no doubt inspired by Alipay’s and WeChat early days strategy in China – but not a single e-payment option has become widespread.

southeast asia ecommerce landscape

Bank transfers and cash-on-delivery (COD) still remain the top two most preferred payment methods and continues to cripple ecommerce.

4. The key to C2C is through mobile

Consumer-to-consumer is estimated to make up at least 30% of ecommerce market share in the region but is tricky to measure because it happens on social channels like Facebook and Instagram and payment typically happens offline.

In Thailand, around 50% of online shoppers make purchases through a social network – making it the biggest social commerce market in the world. Consequently, it has attracted Facebook to make the country its first test base for social commerce payments and Facebook Shop.

This habit of preferring social commerce pushes players to focus on mobile to be able to capture the customer in an already familiar environment. In Singapore, 38% of online shoppers are making purchases through mobile, higher than the global average of 28%, and inspires home-grown companies like Imsold, Shopee and Duriana to focus on mobile platforms to appeal to more customers.

singapore ecommerce landscape

C2C players are also seen dominating Google Play Store in the Shopping category for every market, with Shopee being the most favored in almost all the countries. In the Philippines, the platform has become the answer to the high demand for popular international brands that only recently available in the country through official offline channels

5. Delivering ecommerce packages gets easier

The rise of ecommerce in the region has also boosted logistics infrastructure. The sector has reached an all time high of funding at $28.16 million in 2015 – led by aCommerce, the tech-logistics ecommerce solutions provider, with $20.2 million before its bridge series of $10 million earlier this July.

Meanwhile, JNE, the largest logistics company in Indonesia, stated that 70-80% of its revenue came from the retail sector dominated by ecommerce and hopes to maintain its annual growth of 30-40%. German-based DHL is also reportedly raising the stakes to grab market share, including the opening of a hub in Singapore.

The on-demand delivery service, led by ride-hailing apps like Gojek and Grab, is also thriving in markets where traffic congestion is distressing like in Indonesia and Thailand. Their motorbike fleets allow them to achieve same day delivery.

Where in the Philippines, cross-border package forwarding services like ShippingCart and POBox.ph are targeting the unique high volume of cross-border transactions in the country to fuel their businesses.

The many facets of Southeast Asia’s ecommerce landscape

Despite the warnings about the region’s diversity, the core ecommerce bottlenecks in Southeast Asia boil down to one – poor infrastructure. Lazada’s strong footprint in the region did not happen overnight, its early-adopter status enabled collection of customer data and the ability to build its own infrastructure – logistics (LEX) and payments solution (Hellopay) – in almost every market. But it almost cost them its business before getting swept off its feet by Alibaba.

southeast asia ecommerce landscape

It comes to show that regional players need to be able to adapt their strategies by keeping tabs on the dynamic trends and consumer behaviors. They need to prepare for a long-term investment before hoping to make their mark in the region and if not – better stick to just one market.

Find the ECOMScape series here: Indonesia, Thailand, Malaysia, Singapore, and the Philippines.

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