A survey by Stripe recorded that online businesses in Singapore had the most "international focus" with 88% of businesses had expanded overseas. Almost three quarters of these businesses planned extra expansion in their first year, growing 141% faster than those that had not expanded.
In line with that, our study on the latest report, Top E-Commerce Cities in Asia, found that Singapore is a very mature market for e-commerce and has become one of the most sophisticated markets with its limited but affluent population of almost six million people, supported by well-developed infrastructure and a high income, digitally-savvy population. Singapore is also included as one of the top e-commerce cities in Asia, along with other cities such as Osaka, Jakarta, Seoul, and many more.
The report recorded that Singapore's population is highly proficient in technology, boasting an 81% internet usage penetration, 98% digital banking penetration, and an overall 4.27 million smartphone users out of 5.6 million total population. Coupled with the high usage of credit card, this country has high usage in terms of e-commerce. E-commerce market in Singapore is expected to grow further to a size of USD 7.4 billion in 2020.
However, Singapore's small population and low population growth might poses a threat to the local e-commerce market, limiting the market to grow its local customers base. The high labor cost in the region also means e-commerce company will have to invest heavily to start and operate their business in Singapore relative to nearby regions such as Indonesia, Thailand, and Vietnam.
Regional Hub for E-commerce Logistics
Singapore possesses the infrastructure and workforce to serve as a base to enter the Southeast Asian market, acting as a regional headquarter with a strong infrastructure for the entrance and delivery of products. Singapore's infrastructure and its traditional role as a logistics hub in the region for both air and sea freight becomes a strong driver for it to grow both domestically and regionally. Its great airfreight connectivity offers competitive B2B inbound rates and B2C cross-border last mile into the other major countries in Southeast Asia.
Singapore has the swiftest export and import times, compared to other neighbouring countries, such as Malaysia, Indonesia, Philippines, Vietnam, and Thailand. It takes slightly over 30 hours to clear the border compliance process for goods imported in Singapore. It accounts for almost a third time that goods imported into other countries in the region might take.
The country’s sound financial sector and reputation as a safe haven, positioning Singapore as a regional hub for e-commerce. Its favorable regulatory environment, marked by its tax regime and the Action for Community Entrepreneurship (ACE) program, accounts for Singapore's attractiveness for e-commerce. Moreover, Singapore also has the lowest risk scores when it comes to infrastructure for port facilities, air transport facilities, retail and distribution network, as well as road network.
Download the full report on Top E-Commerce Cities in Asia.