Singapore’s e-commerce market is predicted by Statista to grow at a rate of 14.7 per cent from this year through 2023 on a CAGR (Compound annual growth rate) basis.
This growth potential – in additional to the nation’s strategic geographic location with close access to Asia’s key e-commerce growth markets such as India and Indonesia – makes Singapore a fertile environment for internet retailers with ambitions to significantly scale their operations.
However, running a successful e-commerce business out of Singapore, with its small and highly competitive domestic market, is not a simple task. Singaporeans are hard to tie down and ‘convert’ into buyers. More than half (56 per cent) of Singaporean online shoppers abandon their carts “sometimes, or all the time”, ahead of the average for Asia-Pacific (52 per cent), the Americas (46 per cent) or Europe (43 per cent), according to research by SAP.
These factors make international expansion an imperative for Singaporean merchants with significant growth ambitions. However, Asia-Pacific is one of the world’s most diverse and fragmented regions – you can experience incredibly variations in language, cultural norms, technology infrastructure and legal frameworks over the span of just a few hundred kilometres.
For online retailers, the biggest challenge is getting payments right. Up to 16 per cent of shoppers abandon their cart if their preferred payment option is not available. And in this diverse region, the shopper’s preferred option could be any one of hundreds of different methods.
For success in this incredibly fragmented environment, getting the payment experience right is critical. To do so, merchants in Singapore need to focus on three main factors:
Continually optimise the checkout experience
With cart-abandonment rates far higher in Singapore and Asia-Pacific, compared to other areas in the world, checkout optimisation is crucial for merchants here. If a poor checkout system impacts the overall experience, the retailer will not just lose that single purchase, but the entire potential lifetime value of that customer.
Checkout experiences must be quick and intuitive, offering multiple payment methods – beyond just traditional card payments – to appeal to local consumers. In particular, you need the ability to quickly accept new payment types, connect to your acquirers of choice, and deliver a fast, seamless experience in a secure environment.
To reduce complexity, retailers should look to adopt a unified payments platform that provides a single customer view, reduces costs and ensures an optimal shopping experience across all target geographies.
Have the flexibility to cater for local market preferences
E-commerce in Asia-Pacific is no fairy-tale story where one size fits all. Payment preferences across the region range from bank transfers, eWallets, debit and credit cards, and a growing array of alternative payment methods. Even cash on delivery is still very popular for e-commerce transactions in markets where consumers do not trust that they will get their shopping in a timely manner or in a satisfactory condition.
Added to this, there is the challenge and opportunity presented by Asia’s “unbanked” population – more than 1 billion people within the region still have no access to formal financial services, according to the World Bank. This is leading to the rise of local online payment options that aren’t linked to bank accounts or credit cards, allowing people to make purchases through virtual accounts without identification
Providing seamless and secure payment options for emerging shopping channels, payment types and for cross-border transactions can be a daunting task for merchants who need to be able to deliver this service efficiently and at minimal cost. However, by adopting a payments gateway based on open payments architecture and an extensive international network, merchants can gain access to an extensive network of hundreds of local and cross-border card acquirers and alternative payment methods to power simple, global and secure payments almost anywhere in the world.
Reduce the risk of fraud
Consumers are now engaging with merchants through multiple channels, using an ever-expanding choice of payment methods. Coupled with the demand for ever-faster order fulfilment within and across borders, this brings heightened exposure to fraud risk and complex fraud management challenges.
In fact, trust is particularly low in Singapore. According to ACI Worldwide’s Global Consumer Card Fraud Study, only half (51 per cent) of Singaporean consumers think that most sites where they shop online use security systems that are able to protect their card/account information – the lowest in the Asia-Pacific region.
This further highlights that security and fraud management are not only a necessity but also a differentiator for growth today. To protect and grow business online, merchants need an agile, multi-layered fraud management solution closely tailored to their individual needs, capable of evolving and scaling with their business. Machine-learning capabilities are becoming an important element within such solutions, which should enable genuine orders and promote customer loyalty, while reducing fraud losses and minimising costs.
A smooth customer journey
The most successful merchants will be those that understand how a smooth customer journey and optimised checkout experience make a huge difference to conversion rates and therefore to the bottom line – as well as long-term growth. In Asia Pacific’s hugely diverse and fragmented landscape, achieving this is hard. But for those that can achieve payment experiences that are smart, simple, flexible and secure, the rewards will be massive.