Singapore continues to evolve as a major e-commerce market and is expected to grow at a compound annual growth rate of 16.2% from S$7.8bn (US$5.9bn) in 2021 to S$14.2bn (US$10.7bn) in 2025, forecasts GlobalData, a leading data and analytics company.
An analysis of GlobalData’s E-Commerce Analytics reveals that the strong growth will be supported by rising consumer spending, government support and growing preference for online shopping.
Nikhil Reddy, Payments Senior Analyst at GlobalData, comments: “E-commerce sales in Singapore were adversely affected by the COVID-19 pandemic with consumers becoming prudent during the crisis. The pandemic also affected high value purchases such as travel and accommodation further impacting e-commerce sales in 2020.
However, with the easing of COVID-19 restrictions and revival of economy, the market rebounded in 2021. According to GlobalData’s E-Commerce Analytics, e-commerce sales are estimated to grow by 18.3% in 2022 to reach S$9.2bn (US$7.0bn).
Reddy adds: “Although COVID-19 impacted the e-commerce growth, the social distancing measures and lockdown restrictions pushed consumers to online channels even for day-to-day purchases. The shift in consumer buying behavior now continues despite opening of physical stores.”
Singapore has also been taking various initiatives to drive e-commerce adoption among small businesses by offering benefits in the form of subsidies. As a part of its ‘E-Commerce Booster Package’, the government offered subsidies to retailers for opting online channels and selling products online via participating e-commerce platforms such as Lazada, Shopee and Zalora. Eligible retailers were offered up to 80%, capped at S$8,000 [US$6,052.89], of setup and selling costs in subsidies.
The growth in online shopping will benefit electronic payments growth in the country. According to GlobalData’s 2021 Financial Services Consumer Survey* for online purchases, payment cards accounted for 43% of all the e-commerce sales in Singapore.
Additionally, alternative digital payment solutions such as PayPal, Apple Pay, Grab Pay, and Google Pay have gained prominence in the country and collectively account for 30.6% market share, up from 27.6% in 2020. As consumers continue to embrace e-commerce amid pandemic, these payment solutions will be greatly benefited.
“Although e-commerce market growth was derailed by the pandemic mainly due to decline in consumer spending, it also brought a shift in consumer buying behavior towards online channels. This along with the government’s conducive initiatives will support e-commerce growth in the country over the next few years.”