Business giants eye S’pore as springboard into South-east Asian e-commerce market

SINGAPORE — With South-east Asia’s Internet economy set to rocket to hundreds of billions of dollars by 2025, international business giants are eyeing Singapore’s strategic location to gain access into the region’s e-economy, in particular, e-commerce.

In recent months, the Republic has seen several big names pump billions worth of investments into local e-commerce companies, including one investment by Chinese e-commerce giant Alibaba in Singapore online shopping website Lazada.

This comes as brick-and-mortar retail giants pump up efforts to take their offerings online to ride the digital retail wave.

The potential for growth, government assistance and Singapore as an entry point into South-east Asia make the Republic attractive, experts say.

“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 companies, just like Alibaba did,” said e-commerce and online retail expert Chu Junhong, associate professor of marketing, 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 South-east Asia. However, they have to be ready for the increased global competition when they go online,” Ms Chu added.

According to a report by Internet giant Google and Singapore state investment firm Temasek Holdings in May, South-east Asia’s Internet economy is expected to surge to nearly US$200 billion (S$273 billion) by 2025, up from US$31 billion last year.

The e-commerce segment alone is expected to make up almost half of the entire Internet economy in the region, with its value estimated to jump to US$88 billion by 2025, a 16-fold increase from US$5.5 billion last year.

Filtering down to Singapore, the e-commerce market here is expected to grow more than five times to about US$5.4 billion, the report showed.

Singapore has plans to increase that figure even further.

Last month, at the launch of the retail industry transformation map (ITM), the Government said it would look at e-commerce as a key enabler for retail businesses to transform, with the aim of growing the e-commerce share of total retail receipts from the current 3 per cent to 10 per cent by 2020.

Some brick-and-mortar retailers are embracing the digital wave in bold moves.

Local tech retailer Challenger opened its online store hachi.tech in April, saying that the new portal would deliver 50 per cent of its revenue in just three to five years.

It also set up a unit — Challenge Ventures — last year with a budget of S$20 million to invest in online companies and enable the firm to expand its e-commerce strategy.

International companies are also investing or participating in Singapore’s local e-commerce platforms, as a means to tap into both the local and SEA markets.

In April, Alibaba agreed to buy a controlling stake in privately owned Singapore company Lazada for US$1 billion. Lazada is a pioneer of e-commerce in many South-east Asian countries, with a presence in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

This month, Chinese gadgets company Lenovo launched an e-store on Qoo10, a Singapore-based e-commerce platform. With the opening of the e-store, customers will be able to browse Lenovo’s range of mobiles, tablets, PCs and accessories on Qoo10’s platform.

Other than Singapore, Qoo10 has marketplaces in Indonesia, Malaysia, Hong Kong, Japan, Korea and China.

Mr Max Bittner, CEO of Lazada Group told TODAY in an interview: “We believe that there are still significant opportunities for online shopping in South-east 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.”

Mr Bittner added that the deal with Alibaba would help Lazada accelerate its goal of providing 560 million consumers in the region with access to the broadest and most unique assortment of products, bringing significant synergies that would enhance the online experience for both buyers and sellers.

Mrs Kee Ai Nah, group director (industry & enterprise), Spring Singapore, said: “For both sellers and buyers, e-commerce has opened up options that were not possible in the physical world. To grow topline and stay competitive, businesses have to reach new customers through multiple channels. As e-commerce platforms allow businesses to internationalise without a physical footprint, and since this channel is already well-developed, Spring encourages all enterprises to explore the possibilities of selling online.”