Singapore Prefers Local When It Comes To Online Shopping – But Could Amazon’s Entry Change That?by Fintech News Singapore November 16, 2017
The love of Singaporeans for shopping is no secret – but they are used to navigating vast malls and handpicking their favourite brands. E-commerce has really taken off in the last few years, as you can tell by the recent decision of global e-commerce giant Amazon to test the waters of Southeast Asian markets by trying its luck in Singapore first.
But in a country where local brands are doing particularly well, could Amazon challenge that monopoly?
7 out of 10 Most Popular Online Shopping Providers Are Local
E-commerce in Singapore is a booming market: it is estimated to reach a value of US$5.4 billion (S$7.35 billion) by the year 2025 and, currently, the country finds itself at the forefront in Southeast Asia, displaying an internet penetration rate of 82%, among the highest in the region. A survey by iPrice has shown that, to date, the market is dominated by local players, as 7 out of top 10 companies are local.
Lazada, which came under the control of Alibaba in April 2016, takes up the biggest share of local firms, with 4.3 million visits on average per month while it also has the most followers on Facebook at almost 18.2 million. The most followers on Instagram though naturally belong to Love, Bonito of the fashion world: the local blog that evolved into a fashion retailer currently has the lead with 122,000 followers.
Qoo10 Dominates Singapore E-Commerce Market
However, the peak of e-commerce giants is still a foreigner: Qoo10, which boasts a record 8.4m average visits each month – a number even more impressive if you consider that Singapore’s current population stands at a little over 5.7 million. But Qoo10 were the first to enter the game and it seems that customers value familiarity and the trust they have established with the network.
After all, customers want to feel secure in their online transactions, which is why protocols and security standards such as PCI DSS – which was developed in 2004 by major credit card companies such as Visa and MasterCard – are tremendously important when it comes to buying online.
PCI is a requirement for any business that processes credit or debit card transactions and includes best practices such as installing firewalls and encrypting transmitted data, which helps firms build long lasting and trusting relationships with their customers – and see them return often.
Amazon Breaks into Singapore Market
Qoo10 seems to be relying on such a strong relationship built over time with their customers. According to iPrice’s survey, 75% of its clients are female and around the age of 27. This also explains its focus on health and fashion products, as opposed to Lazada’s lead in electronics and gadgets. But Amazon is an all-encompassing service and has the know-how and infrastructure of a global leader in e-commerce to back its operations – so could it challenge this hegemony?
Amazon entered the market in July but got off to a rocky start, with complaints about delays in deliveries tarnishing the surprisingly high demand for its Prime service. As it stands, the online shopping giant stands behind local Lazada – for the time being.
Yet Amazon is Amazon: it has the resources to play the long game and it needs to keep expanding. Singapore is just the test tube for its expansion into Southeast Asia, not counting its stronghold in Japan and its defeat in China by local Alibaba, which means that Amazon is bent on making this relationship work – and that it might be too early to judge if it has what it takes.
Featured image via Pixabay