As the Internet economy skyrockets to hundreds of billions of dollars by 2025, South-east Asia has become the focus for international business giants, with Singapore their strategic choice as a location to access the region’s e-commerce economy.
According to a report by Singapore state investment firm Temasek and Google, revenues from Singapore’s e-commerce market is expected to grow to 5.4 billion USD by 2025. The countries potential for consumer growth can be enhanced by government assistance to spur even higher economic growth.
Singapore’s location as an entry way to Southeast Asia and the fact that English is the official language makes Singapore an ideal location to create and manage regional e-commerce efforts for global players.
“If you compare the overall share of e-commerce in Singapore to its overall economic development level, it is quite low. (But) Singapore has the potential because it is a hub for the South-east Asian economy. (And) because there is market potential for Singapore, of course foreign companies will come here, either independently or in collaboration with local companies. They can acquire local or regional companies, just like Alibaba did,” said Chu Junhong, associate professor of marketing and e-commerce and online retail expert, National University of Singapore Business School.
“E-commerce is a trend, (retailers) cannot avoid it. They must take advantage of this trend; it is good for them. The good news is that if retailers go online, they can open their market to the whole of Southeast Asia. However, they have to be ready for the increased global competition when they go online,” Ms Chu further added.
From another report by Temasek and Google published in May2016 ... the value of Southeast Asia’s Internet economy is expected to increase from US $31 billion last year to US $200 billion by 2025. E-commerce is expected to be almost half of the entire Internet economy across the region, and in Singapore, it is expected to grow more from US $1 billion to US $5.4 billion.
In September 2016 the Singaporean Government announced that it would consider e-commerce as the key enabler to transform retail business and aim to grow e-commerce share from 3 per cent to 10 per cent by 2020.
International firms are investing and participating in Singapore’s e-commerce market so that they can tap into both the local and SEA markets. In April 2016 Alibaba bought a controlling stake of e-commerce company Lazada for $1 billion. Lazada is a pioneer of e-commerce in many SEA countries and has active operations in Indonesia, Malaysia, The Philippines, Singapore, Thailand and Vietnam.
This October, Lenovo launched an online shopping store on Qoo10, a Singapore-based e-commerce platform. With this launch, local customers can browse Lenovo’s products such as mobiles, tablets, PCs and accessories. Besides the main market in Singapore, Qoo10 also has presence in the China, Hong Kong, Indonesia, Japan, Malaysia and South Korean markets.
Max Bitter, CEO of Lazada said “We believe that there are still significant opportunities for online shopping in Southeast Asia and the six markets that we are in. Our focus remains on these six markets where we are raising the customer experience and becoming the leading one-stop online shopping and selling destination of choice for consumers. Alibaba’s partnership is helping us in this goal by providing the know-how, systems and processes to enhance the online experience for our customers and sellers in these markets.”
As well as e-commerce retailers, Singapore is also active in identifying start-ups and providing financing to companies both through Singaporean companies and as an enabler to global funds. As reported by Tech In Asia ... “Silicon Valley VC firm 500 Startups is doubling down on Southeast Asia with the launch of a second 500 Durians fund targeted to be worth US$50 million.” The company has said that it will invest US $50,000 to $150,000 in 200 seed-stage companies in the region and will provide additional investments of US $500,000 in those that show exceptional progress. Many of these companies hope to become local and regional players in the e-commerce market.
E-commerce has enabled many companies to have the option to do what was once unthinkable, to take their local products and services global and create customers throughout the world. As we have moved to a digital economy, consumers interacting with e-commerce companies locally, regionally and internationally will become the new normal. The integration of the ASEAN countries that began this year will speed up regional development and Singapore will continue to leverage its economic, government and talent resources to position the country as SEA’s hub for e-commerce and the digital economy.