Boom predicted for Singapore e-commerce market
Predictions around the future of the Singapore e-commerce market include research portal Statista saying there is likely to be about 11 per cent growth each year until at least 2021.
By then, it expects the market to be worth US$5.1 billion. Already the market is estimated to be worth $3.3 billion.
Singapore has already made bigger strides in e-commerce than any other Southeast Asian market, with the average person in Singapore reportedly spending $1022 on products bought from e-commerce sites last year.
With more than 60 per cent of Singapore’s population already regular online shoppers, a combination of the growth in people who shop online and the online audience making more of their purchases on the internet would lead to the kind of upward trend Statista is expecting.
This means investment in e-commerce could be a very wise choice in the medium to long term, including more investment in smaller or new e-commerce ventures.
Already, global consumer giant P&G has invested a whopping $140 million into a digital innovation centre in Singapore to “reaffirm its commitment to Singapore” and aimed at strengthening the country’s standing as a leading digital and e-commerce global hub.
Could this growth be harmful to Singapore and other retail markets?
Despite the enormous potential of e-commerce, there has been a strong sense of worry that traditional retail is heading the other way. While e-commerce growth does influence the physical retail industry, several initiatives put into place by Singapore’s government to combat this decline. Also, selling products via e-commerce to overseas customers brings money into the Singapore economy, and when currency conditions are favourable, businesses can make more money on their overseas sales.
Strategies that include both e-commerce and physical retail are also helping many Singapore brands innovate so they don’t lose out in the shift toward increased online shopping.
So which e-commerce sectors are most interesting for investors?
Analysis of the Singapore e-commerce market shows the biggest demand is for electronics and gadgets, a sector which also includes media outlets like bookstores in Statista’s report. The sector currently makes up 27.6 per cent of the e-commerce spend, and this is expected to stay constant as the market itself grows through to 2021 – ultimately going from a value of $918 million this year to $1.345 billion in 2021.
Big brands in this sector include Geeky Mart and Singtel, as well as global brands Microsoft and Philips.
Meanwhile, the home and living sector is expected to grow by 15 per cent a year, which is well above the predicted e-commerce industry average. Fashion also offers investment opportunities as it is set to have the second-largest growth after home and living to become the second biggest vertical overall.
Marcus Turner Jones graduated in economics from the University of Sheffield before becoming a market analyst in London. Now a freelance writer based in Harrogate, he has his own website, Turner Jones Finance.