The annual value of business-to-consumer (B2C) e-commerce exports in Singapore is estimated at S$1.4 billion in 2021 and could reach S$3.5 billion in 2026 if micro, small, and medium-sized enterprises (MSMEs) accelerate their pace of using e-commerce to sell overseas.
Currently, MSMEs are estimated to contribute 45% of Singapore’s B2C value of e-commerce exports in 2021.
These are findings from Amazon’s new ‘Local Sellers, Global Consumers: Capturing Singapore’s e-commerce export opportunity‘ report, which surveyed over 300 MSMEs from Singapore, and was released at the inaugural ‘2021 Amazon Expo, Seller Boot Camp‘.
The report, prepared by consulting firm AlphaBeta, analysed the size of Singapore’s e-commerce export potential, the perspective of local MSMEs, and best practices to achieve that potential.
Over 3,000 SMEs from Singapore, Malaysia, and the Philippines were expected to join the Seller Boot Camp, a 3-day virtual event hosted by Amazon from 11-13 October 2021, to equip themselves with the tools, resources, and knowledge to seize cross-border opportunities, increase their customer reach, and expand their business globally.
During the event, Enterprise Singapore’s (ESG) Executive Director (ICM & Digitalisation), Mr Lee Yee Fung, also shared how the Singapore government and industry experts are working together to help local businesses unlock opportunities with e-commerce.
Mr. Bernard Tay, Head of Amazon Global Selling, Southeast Asia, said, “We are on a mission to help MSMEs start local, grow global. Local businesses of any size can benefit from this report to understand a range of topics, from business models and export regulations to consumer needs and foreign competition.
“Along with the report insights, our first-ever Seller Boot Camp comes as a timely opportunity for small enterprises to identify the current gaps in their operations and arm themselves with the knowledge, resources, and connections to sustainably expand their business.”
Sizeable regional growth opportunities for e-commerce exports
According to the report, if current e-commerce adoption trends continue, the annual value of B2C e-commerce exports in Singapore is expected to grow at 5% per year to reach S$1.7 billion in 2026, from S$1.4 billion in 2021.
However, if MSMEs accelerate their use of e-commerce to export, this value is projected to increase more than two-fold and reach S$3.5 billion in 2026.
Singapore MSMEs surveyed anticipate greater sales growth prospects overseas (35%) than at home (13%), with Asia Pacific countries – Malaysia, China, Australia, Indonesia and Thailand – seen as the top five e-commerce export markets in five years’ time, by 2026.
Currently, close to one-quarter (24%) of MSMEs in Singapore conduct B2C e-commerce, of which, more than 90% use it for export.
87% of those surveyed locally agreed that e-commerce is critical for their ability to export, with top motivations including the ability to reach overseas customers, access to sales and marketing tools that are available on e-commerce marketplaces, and support for logistics and payments provided by these marketplaces.
For 35% of surveyed Singapore MSMEs that export via e-commerce, more than half of their annual e-commerce sales were generated from abroad.
Key challenges faced by local MSMEs in e-commerce exports
Amidst the opportunities for growth and global expansion through e-commerce, MSMEs surveyed in Singapore revealed that key challenges can be narrowed down to three categories – barriers in cost, regulation, and information and capabilities.
High cross-border shipping costs is the most common challenge faced by Singapore MSMEs surveyed, with 81% citing it as a major barrier. While Singapore offers a robust range of grants to support local businesses on their e-commerce export journeys, about one-third of small enterprises (32%) surveyed admitted that they will find further support valuable.
Additionally, over three-fourths (78%) of MSMEs surveyed cited a lack of clarity in import regulations as a key barrier to selling overseas via e-commerce. Only 19% believe that current advisory support on importing regulations is sufficient.
Lastly, 72% of MSMEs surveyed believe they lack the ability to compete with other sellers globally, and 71% admitted that they are unsure of foreign consumers’ demands and preferences.