Singapore telecoms: Retail revolution

Take-up of smartphones is driving the growth of mobile commerce in Singapore. So, too, are company innovations.

Singapore is emerging as one of the world’s fastest-growing markets for online commerce. That is unsurprising, given that Singapore is one of the most connected countries in Asia and indeed the world. More remarkable, though, is the rapid growth in m-commerce (via mobile phones), which now accounts for nearly a quarter of Singapore's online sales. As a result, online payment firm PayPal is just one of the companies using Singapore as a location to test out new m-commerce technologies.

Singapore boasts excellent telecoms infrastructure, with a wireless broadband penetration rate of 162%, and a mobile penetration rate of 150% in October 2012, according to government figures. A study called Online and Mobile Shopping Insights 2011, released in May 2012 by PayPal and research company Nielsen, put total online spending in Singapore at S$1.4bn (US$1.1bn), up by 33% on 2010. The total number of online shoppers grew by 50%, to 1.8m shoppers. With little sign of growth slowing, the report predicted that the market will expand to S$4.4bn by 2015.

Airline tickets, fashion, financial services, travel packages and books were the top five online spending categories. But the online market for groceries is also booming, given the convenience of home delivery. According to PayPal, Singaporeans spent three times more on this category in the first eight months of 2011 than in the whole of 2010, focusing on bulky essentials such as rice, milk powder and diapers, and mineral water. Virtual retailers such as household.sg, thebutcher.com.sg and supernature.com.sg are benefiting as well as supermarket chains like FairPrice, Cold Storage and Carrefour.

But it is the m-commerce market that is proving particularly buoyant, driven by the proliferation of mobile phones. According to the Mobile Marketing Association of Singapore, there were 7.8m mobile phones in Singapore in late 2012, while 90% of the population owns a smartphone. Little surprise, then, that PayPal/Neilsen’s study reported that Singapore’s m-commerce market grew by an eye-popping 660% in 2011, to S$328m. It also forecast that the m-commerce market will grow ten-fold by 2015, to S$3.1bn.

That means that m-commerce's share in all online shopping will grow from 23% in 2011 to over 70% in 2015. That is up from just 4% in 2010, while mobile shoppers made up 48% of all online shoppers in 2011 compared to 29% in 2010. The majority (75%) of purchases made using mobile devices were via smartphones. However, the average spend per head by shoppers using tablets was much higher than that of shoppers using smartphones, at S$380 against S$274.

The top m-commerce spending categories were fashion and accessories, movie tickets, books, applications and food and groceries, with travel bookings much more commonly made online. But a good chunk of the mobile shoppers said they wanted to buy airline tickets using their smartphones, while tablet users said they would like to buy higher-value items like automotive goods and computer hardware. Moreover, consumers aren't just using their phones while on the move: according to Forrester, 40% of Singaporeans use their mobile to shop at home, while 18% shop via mobile at the office.

Taking advantage

Singapore's rapid take-up of m-commerce has attracted investment from local, regional and global companies eager to use the city-state to experiment with new technologies. Asian women’s clothing retailer Qoo10 reported that by mid-October 2012, Singapore was its fastest-growing market, contributing 37% of its US$15m in mobile sales across the Asia-Pacific region. The retailer launched a Qoo10 mobile application a year earlier, and reports that Singapore accounted for 64% of the 700,000 downloads in the region. That means that every fifth Singaporean woman had downloaded the application.

Several new online retailers, such as Home24.sg, Clozette and Zalora have also emerged, with business models based on bringing together suppliers. Home24.sg, which opened in mid-2012, works with local furniture and home product suppliers to present their products on its site. Clozette, which opened in mid-2011, promote about 100 suppliers of clothes, shoes and jewellery, this time by redirecting users to their websites. It also uses social media techniques to develop a user community.

Others, like Emall.sg and Livejournal, use blogshops, while daily deal sites such as AllDealsAsia are also expanding. Intense competition has reduced the number of bulk-buying companies from 72 in 2010 to around 19 at present, but the survivors - including Groupon Singapore – are reporting impressive growth.

Singapore’s government is also encouraging the industry's growth. The Infocomm Development Authority of Singapore's Digital Concierge is helping to standardise the development of mobile applications so that businesses can create them more easily, adding in their own custom features. Singapore is also running a pilot project that will allow shoppers who are not often at home to collect their goods from lockers by keying in a code they receive from the retailer.

PayPal is also doing its bit to facilitate growth, not least by helping businesses to convert their online shopping websites to more mobile-friendly ones. The company's study found that nearly two-thirds of mobile shoppers in Singapore have encountered problems using a small screen, for example when entering 16-digit credit card numbers.

In response, PayPal launched two new m-commerce products in 2012. One automatically redirects mobile shoppers to a mobile-optimised payment page during checkout. The other allows merchants to convert their site into a mobile-optimised one. These are the kind of simple innovations that should keep Singapore at the forefront of m-commerce development.