5 reasons why Singapore is an e‑commerce gateway to Southeast Asia
As international regions and markets continue to develop economically and technologically there are increasing opportunities for Canadian brands through e‑commerce. One region that is currently experiencing significant growth in e‑commerce is Southeast Asia (SEA).
According to a 2020 report from Google, Temasek and Bain & Company, e‑commerce sales in the region are expected to more than quadruple from US$38 billion in 2019 to US$172 billion in 2025Footnote 1. The rise in online sales is fueled by rising incomes and spending power as well as digital adoption, with 70% of the region’s population now online.
Another factor that has accelerated e‑commerce sales in SEA is the COVID‑19 pandemic. More than a third of the region’s e‑commerce sales in 2020 were generated by new shoppers, and 8 in 10 intend to continue buying online going forwardFootnote 1.
Comprised of 10 different countries, languages, cultures, business environments and customs policies, you can’t take on the whole region at once.
“Canadian companies interested in Southeast Asia should focus their strategy on one market before looking to expand,” says Olivia Lee, trade commissioner responsible for consumer products and financial services in Singapore.
Here are 5 reasons why Singapore is an e‑commerce gateway to Southeast Asia.
1. Singapore is a digital society
Singapore is a global leader in technology and innovation with a strong domestic market. They have the second highest internet penetration in SEA at 88.4% (Approximately 5 million users). This digital infrastructure and active online population make it a promising market for e‑commerce.
“Singapore is a smaller market but it’s dynamic and ready to buy, we see it as a good testing ground for Canadian brands and a gateway to the rest of Southeast Asia,” says Lee.
2. Ease of payments
Online shoppers in Singapore prefer similar digital payment methods to those of North America, including credit and debit cards, mobile wallets and bank transfers.
This is not the case everywhere as consumers in SEA markets such as Indonesia, the Philippines and Vietnam still prefer to pay for online purchases with cash upon arrival due to a lack in banking services.
Getting paid accurately and in a timely manner is important for small and medium-sized enterprises (SMEs) and Singapore’s developed payment infrastructure helps facilitate that for international sellers.
3. Strong e‑commerce sales and ecosystem
Singapore’s demographics and urban landscape make it well positioned for growth. The market value of their e‑commerce industry is expected to reach US$8 billion by 2025Footnote 1.
The top selling product categories in Singapore are:
- food & personal care
- electronics & media
- furniture & appliances
With evolving COVID measures and regulations still in place, the food & personal care category is expected to continue growing as consumers look online for everyday items. There is an ecosystem of e‑commerce marketplaces in the region and Singapore offers access to popular platforms like Shopee and Lazada.
“Online shoppers in the Singapore usually scan 3 to 5 e‑commerce sites before making a purchase. A thorough understanding of your target audience is important for finding the right pricing and marketing strategies,” says Lee.
4. Market access and connectivity
Singapore is a global shipping hub, easily accessible by air and sea. They are the second largest container handling port in the world and also offer more flights to China and SEA markets than any other country in the region.
“Having a reliable partner in-market that can handle distribution and logistics is another key to success for Canadian brands,” says Lee.
“Trade commissioners can help connect Canadian SMEs with local market intelligence and the right contacts for their strategy.”
5. Singapore is part of the CPTPP
Canada has a free trade agreement with Singapore through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This allows Canadian SMEs to claim preferential treatment for their products to reduce or eliminate tariffs.
CPTPP also provides a single set of standards and procedures for clearing goods through customs which provides more predictability for Canadian SMEs.
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1 Source: Google, Temasek and Bain & Company report, 2020
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