As ecosystem of e-marketplaces, fulfilment companies, merchants and online shoppers develop
e-Commerce is often touted as the future of retail – a limitless catalogue of goods easily accessed and purchased through the internet and then delivered right to the customer’s doorstep. A seamless shopping experience without the physical hassle, the digital experience of online shopping seemed tailor-made for tech-savvy millennials who prefer convenience and speed.
Brick-and-mortar brands, on the other hand, either shun the idea completely or embrace it reluctantly. Self-cannibalism or new, unchartered grounds – retail companies seem uncertain about the impact of e-commerce on their businesses.
Plotting the growth trajectory of e-Commerce in Singapore
According to PayPal, the size of Singapore’s online shopping market is forecasted to have reached S$4.4 billion in 2015, citing a shift in consumer spending from physical stores to online stores because of lower prices, greater convenience and a broader selection.1
Mastercard also saw a 27 per cent year-on-year increase in Black Friday transactions made by Singapore cardholders on local e-commerce sites. The amount spent in Singapore dollars on these sites also increased by 17 per cent, while the total number of transactions on Black Friday was 47 per cent higher than an average Friday.2
For its Black Friday and Cyber Monday campaign, local e-commerce platform Qoo10 saw more than half a million unique visitors to the site daily, proving that the online sales season is no longer just a Western trend.
Indeed, UBS reported that Singapore’s e-commerce sector accounts for around 1% of the retail pie and looks set to grow to be on par with mature e-commerce markets like the US and China, where online sales account for around 8% of the total retail pie.3
Entering the Fray
Sensing the growth potential of the sector, a number of regional e-marketplaces and local upstarts have entered the market in the last few years, along with fulfilment players.
SingPost, the nation’s postal services company, is also leading the charge, pursuing a slice of the e-commerce pie with its unique retail mall concept combining brick-and-mortar shopfronts and online shopping under one roof.4 Its recent launch of SP Commerce division to become an omni-channel enabler for global brands and retailers across China and the rest of Asia Pacific also points to signs of emerging growth.5
In the physical retail space, rents have dipped by more than 0.7% across prime and suburban areas, with islandwide retail space occupancy rates hitting a four-year low of 92.6%6 while retail giants are facing lower sales and tourist numbers.7
Necessity of omni-channel retail strategy
Playing catch-up, established department stores like Metro, Tangs, Isetan and Robinsons are beefing up or revamping their online services.8 Unlike their capital-rich counterparts, smaller companies may find it expensive, time-consuming and technically challenging to develop a robust e-commerce platform of their own.
Leading e-commerce marketplaces provide an integrated one-stop solution covering digital infrastructure, logistics and payments. Also, pureplay e-tailers garner an average of 41 times more traffic than that of individual brands’.9
Thus, this may be a speedier and more cost-efficient approach to e-commerce, allowing merchants to gain access to a large database of customers already primed to make purchases online.
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