Huge potential for local SMEs with B2C e-commerce export value in Singapore forecast to grow from S$1.4B in 2021 to S$3.5B by 2026, per Amazon’s first-of-its-kind report.
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.
This is according to 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’.
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, Amazon said in a press release.
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 ofsmall 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.
Amazon said that the report, prepared by consulting firm AlphaBeta, is the first-of-its-kind in analysing the size of Singapore’s e-commerce export potential, the perspective of local MSMEs, and best practices to achieve that potential.
Tackling current challenges: Start local, go global with Amazon
Amazon said it offers various resources for thousands of local sellers to tackle their current barriers and complement existing efforts by industry and government agencies.
Most recently in Singapore, Amazon launched its IP Accelerator programme to make it easier and more cost-effective for small businesses to protect their brands by obtaining trademarks and tackling goods infringement in Amazon’s stores. ESG will also support Singapore businesses defray some of the costs associated with internationalisation, such as Intellectual Property Protection services in North America offered under the Amazon IP Accelerator programme.
Amazon said it has supported many homegrown businesses such as Hegen, Malt and Wine Asia, and Tack. Details on the success of these MSMEs is included in appendix A.
To further help sellers manage cross-border shipping costs and logistics, Amazon said it has over 225 tools also include the Fulfilment by Amazon (FBA) service through which Amazon picks, packs, and ships products, as well as takes care of customer service and returns, across its 20 stores globally. Locally, Amazon is also waiving its monthly seller subscription fees until 31 December 2022.