This article aims to provide a step-by-step guide for individuals looking to start an ecommerce business in Singapore. In recent years, Singapore has emerged as a thriving hub for ecommerce, offering ample opportunities for entrepreneurs to tap into a digitally-savvy consumer market. We will delve into the latest statistics and trends of ecommerce in Singapore, and discuss the key factors to consider when launching your venture in this dynamic marketplace.
4 Reasons will convince you to start ecommerce business in Singapore
Singapore’s ecommerce market is expected to generate US$8.23 billion in revenue in 2023 (Statista). This makes Singapore an excellent location to launch and expand an online business, together with a pro-business atmosphere, helpful government laws, and a growing digital ecosystem. Here 4 positive impactions to start ecommerce business in Singapore:
Reason 1: Prime location
Singapore’s strategic location in the heart of Asia positions it as an ideal base for targeting expanding markets. The ecommerce market in Singapore was valued at US$5.9 billion in 2021 and is projected to soar to an impressive US$10 billion by 2026. This exponential growth can be attributed to the increasing digitalization trend, with over 90 percent of Singaporeans owning smartphones or tablets. As a result, companies may benefit from this digital transformation and access Singapore’s burgeoning ecommerce market .
Furthermore, Singapore boasts a well-established infrastructure system, including a wide range of logistics and transportation services. This robust network ensures seamless support for your ecommerce business based in Singapore.
Reason 2: The premier center for international transition
As a prominent international transportation hub, Singapore is renowned for its seamless connectivity to over 600 ports across 120 countries. It consistently ranks among the top destinations for international business operations, maintaining its allure even in 2022 post-pandemic.
Singapore’s extensive network of fulfillment centers, such as Allsome, WhiteBox, and uParcel, presents abundant opportunities for businesses to provide comprehensive services to end consumers. This trend is further exemplified by the presence of major global logistics agencies like FedEx, UPS, and DHL, who have established their operations in Singapore. These factors contribute to the city-state’s reputation as a prime location for businesses seeking efficient logistics and supply chain solutions.
Reason 3: Governmental assistance for ecommerce business incentives
The Singapore government offers supportive incentives for ecommerce businesses, allowing your Singapore-based venture to benefit from these programs. One notable initiative is the startup tax exemption scheme, which provides a 75% tax exemption on the first $100,000 of chargeable income and a 50% exemption on the subsequent $100,000.
Additionally, Singapore provides funding and grants to assist businesses in their establishment and growth, fostering close collaboration with industry players. Among these initiatives, the ecommerce booster package stands out, specifically designed to assist brick-and-mortar retailers in transitioning to the online sphere. Eligible individuals or organizations can receive one-time support. This covers 90% of eligible costs (up to S$9,000) for a duration of up to six months.
Singapore Startup schemes and SMEs Go Digital are further government initiatives aimed at supporting entrepreneurs. These schemes offer various forms of assistance, including mentorship, funding, and access to resources, to facilitate the success and growth of businesses in Singapore.
Reason 4: Singapore is a certified digital-friendly nation
Singapore has established itself as a digitally advanced nation, with the second-highest rate of online usage in Southeast Asia as of July 2022 (Statista). With over 4.5 million internet users in Singapore, the population exhibits a strong inclination towards embracing new technologies and digital platforms.
The Singaporean government recognizes the importance of digitalization and is actively investing in initiatives to further enhance the digital landscape. The launch of the Digital Economy Framework is a testament to the government’s vision and commitment to creating a conducive environment for ecommerce businesses.
Singapore boasts a renowned telecommunications infrastructure and exceptional digital connectivity, positioning it as a global leader in terms of Internet speed. With an average median fixed broadband speed of 239 Mbps, Singapore holds the distinction of having the fastest home internet speeds.
Excitingly, Singapore has plans to roll out 5G connectivity nationwide by 2025, making it one of the pioneering countries in the world to achieve this milestone. This development will further solidify Singapore’s position as a digital powerhouse and provide even greater opportunities for ecommerce businesses to thrive in a technologically advanced ecosystem.
Up-to-date ecommerce in Singapore statistics and trends
1. Ecommerce Market in Singapore statistics
Singapore, a highly advanced nation with a remarkable internet penetration rate of 92%, stands as a technologically savvy country. Furthermore, a staggering 97% of Singaporean internet users are actively engaged as digital consumers, participating in online buying and selling activities. This thriving digital landscape has paved the way for Singapore to establish itself as a leading player in the eCommerce sector, particularly in the Asia Pacific region.
Key figures highlight the significant growth and potential of Singapore’s eCommerce market. According to the 2021 Economy Southeast Asia report, a collaborative effort by Google, Temasek, and Bain & Company, the sector experienced an impressive year-on-year growth rate of 106%. In terms of value, the Singapore eCommerce market was estimated to be worth 5.9 billion U.S. dollars in 2021, with a projected growth to reach a remarkable 10 billion U.S. dollars by 2026.
Supporting these numbers, a Statista report revealed that Singapore’s gross merchandise volume (GMV) in 2021 amounted to 7.1 billion U.S. dollars. Looking ahead to the future, the forecast predicts the GMV to reach 9.8 billion U.S. dollars by 2025.
Consumer preferences in Singapore also reflect the dominance of eCommerce platforms. An overwhelming 90% of Singaporean consumers favor shopping through eCommerce platforms, with 73% turning to social media, 45% opting for retail websites, 43% choosing brick-and-mortar stores, and 21% expressing a preference for coupon websites.
These statistics highlight the robust and promising nature of Singapore’s eCommerce market, making it an attractive and lucrative environment for businesses operating in the online retail space.
2. Latest Ecommerce Statistics in Singapore
What percentage of Singapore’s population shops online?
Eight years in a row have seen a rise in Singapore’s ecommerce penetration rate. A total of 59.05% of Singaporeans made purchases from an online business in 2022. 3.33 million people live in Singapore. Singapore’s ecommerce penetration is anticipated to reach 67.26% by 2025.
What is Singapore’s eCommerce revenue?
Singapore’s eCommerce industry generated $7.29 billion in sales in 2022. That is a 16% increase from the preceding year. A Statista analysis projects that in 2025, eCommerce sales will total 11.45 billion US dollars.
Ecommerce Trends in Singapore
1. Mobile business
51% of Singaporeans prefer to use their mobile phones to conduct their online shopping, according to the JPMorgan 2021 eCommerce Trends research. Singapore’s mobile commerce sector, which was valued at 3 billion dollars in 2020, is expected to increase by 10.1% a year through 2024. The nation’s high mobile penetration rate of 158.8% and its quick internet speed both contribute to the growth of mobile commerce.
2. Live streaming
In Singapore’s eCommerce sector, live streaming has become a thriving trend. By 2020, there will be 40 times as many eCommerce companies adopting live streaming. As consumers spend more time at home, this interactive method of marketing things through video content has grown in popularity. Through chat features, viewers may communicate with merchants in real time and make purchases right away. A key part in presenting and modeling the items is frequently played by influencers and content producers. ECommerce sites like Lazada have integrated live streaming capabilities, which has over 27 million monthly viewers and has seen a 45% increase in gross merchandise volume (GMV) month over month.
3. Social trading
The social commerce GMV in Singapore was 940.9 USD in 2022, and by 2028, it is anticipated to reach 7,411.1 USD. This is when products are sold using social media channels. 89.5% of all Singaporeans and 97.3% of all internet users in the nation use social media. The popularity of live streaming, mobile devices, and social media are major drivers of this development.
4.Cashless transactions
The ease of cashless transactions has been embraced by Singaporeans as the city-state undergoes a digital revolution. In Singapore, there are 1.47 credit cards and 1.61 debit cards for every 1,000 people. When making online purchases, 63% of Singaporeans prefer to use a credit card, 21% use digital wallets, and 10% utilize bank transfers.
5.Vocal business
60% of Singaporeans made purchases using voice assistants like Google Home and Amazon Echo every day or once a week in 2021. Nowadays, the majority of smartphones come equipped with voice assistants, and most individuals own one. A widespread eCommerce trend that has altered how eCommerce organizations do marketing is the advent of voice search. A business engaged in eCommerce can benefit from it by focusing on voice search SEO. Users using voice search form their queries differently from those using web-based search engines.
How to start an ecommerce business in Singapore
Ater the general information of ecommerce in Singapore that we understand the immense potential of ecommerce in Singapore, let’s explore the essential steps to start your own ecommerce business in Singapore:
Step 1: Conduct Research and Develop a Plan
Every business venture begins with an initial idea. Start by conducting comprehensive research to understand your target customers, current market trends, demands, and competition. This can involve studying your potential competitors’ business strategies, conducting interviews with relevant sources, and analyzing financial statements to gauge demand within your target niche.
After thorough research, you should be able to accomplish the following:
- Identify the products or services you intend to offer.
- Define your target customers.
- Evaluate potential competitors, including their strengths and weaknesses.
- Establish relationships with suppliers.
- Determine the unique advantages of your business.
- Develop a contingency plan in case of unforeseen challenges.
Once you have a well-defined business idea and have completed your market research, it’s time to create a comprehensive business plan. This written document will outline your business roadmap, including your goals and strategies to achieve them.
Step 2: Acquiring Financial Support
The next crucial step involves securing funding for your ecommerce venture. Regardless of the quality of your products or the market demand, having adequate capital is essential for starting and sustaining your business.
If you possess sufficient monetary resources to launch and sustain your business for at least six months, consider yourself fortunate. However, if you require financial assistance, there are several avenues available to support your business endeavors.
- A common approach is to obtain a loan from financial institutions, such as commercial banks. By exploring various lending options, you can compare interest rates and loan terms to find the most favorable option. As a startup, it is advisable to apply to multiple banks and assess their willingness to offer you a loan.
- Seeking investors is another viable option. Many successful startups owe their accomplishments to investors who believed in their exceptional business ideas. The repayment terms for investments vary and can be negotiated. Typically, investors may not expect immediate repayment but instead acquire a stake in your ecommerce business.
- Government funding programs are also worth exploring to kickstart your online business. Singapore offers several renowned grants ( such as Startup SG Tech, Enterprise Development Grant, Startup SG Equity Programme, and Market Readiness Assistance Grant) which can provide valuable support and resources for your venture.
Step 3: Select Your Business Structure and Model
- The first step in this phase involves choosing the appropriate business structure for your ecommerce venture in Singapore. There are three common options to consider. The first is a sole proprietorship, where a single owner has complete control over the business. Sole proprietorship is suitable for individuals with low-risk tolerance and limited capital, but it is available only to Singapore residents.
- The second option is a limited liability partnership (LLP), which offers liability protection and requires a lower setup cost. However, owners are personally liable for taxes and must pay personal income tax, which is higher than corporate tax. LLP is also restricted to Singapore residents.
- Lastly, a private limited company (Pte Ltd) is a popular choice for ecommerce entrepreneurs in Singapore due to tax exemptions and other benefits. This structure allows up to 50 shareholders and provides limited liability. Under Singapore’s startup exemption rules, private limited companies have favorable income tax rates based on revenue thresholds.
- Next, consider your business model within the ecommerce industry. This may involve dropshipping, white-label, or manufacturing. Dropshipping involves acting as a storefront between suppliers and buyers without stocking products. White-labeling entails rebranding products sourced from manufacturers. Manufacturing is the most complex model, involving overseeing the entire production-to-sales process, requiring physical factories and substantial capital.
Step 4: Incorporate Your Business
Incorporating your ecommerce business in Singapore requires specific paperwork. The following requirements are necessary:
- Company Name: Prepare a shortlist of names in case your preferred choice is not available.
- At Least One Director: The director must be a Singapore local or permanent resident, at least 18 years old, and have no disqualification record.
- Company Secretary: This person manages communication between the company and the government, ensuring compliance with policies.
- Registered Singapore Address: Even without a physical store, you must declare a Singapore address to establish legal presence.
- Company Constitution: This document outlines the business structure, share distribution, and paid-up capital.
- IDs: Provide proof of identity for all directors and shareholders.
- Submit the application and required documents to the Accounting and Corporate Regulatory Authority (ACRA). The application fee is dependent on the consultant company agencies.
Step 5: Establish Infrastructure and Accounting Syste
While preparing for company registration, begin planning and setting up your business infrastructure. If you intend to sell products exclusively on established ecommerce platforms, infrastructure requirements may be minimal as these platforms offer built-in transaction tools.
For those building their own brand, consider hiring a web developer to create a website and address aspects such as domain name, hosting, and design. Subscription-based ecommerce software like Shopify can simplify store setup.
Developing an advertising and marketing strategy is crucial. Utilize social media advertising, online promotions, and creating a business page on platforms like Facebook to increase brand visibility. Implement search engine optimization (SEO) techniques for improved search engine visibility, especially on Google.
Finance-related matters can be outsourced to an agency or managed in-house. Maintaining accurate bookkeeping and accounting records is vital to ensure compliance with tax and accounting policies. Cloud-based payment software like Spenmo can help track transactions and reconcile them with accounting software. Additionally, consider using virtual or physical cards for payments to suppliers and freelancers.
