Online Shopping Predicted to Plateau in the Short Term, With Growth to Lag Physical Retail Sales

Jun 2022

The growth of online shopping has been predicted by market watchers to flatten out, as Singapore’s borders reopen and measures ease, allowing more shoppers to return to physical stores. Online retail, which enjoyed a boom during the pandemic, made up nearly a quarter of all sales in May 2020, when Singapore was in the midst of an 8-week ‘circuit breaker’ that saw the closure of non-essential businesses from early April 2020 to stem the spread of Covid-19. That proportion has since fallen to somewhere between 10 and 15 percent, and although a gradual upward growth has been observed, online sales could be dwarfed by sales at physical stores, particularly with the return of tourists, which means online sales as a proportion of total sales are likely to stay at current levels.

Various factors have been attributed to this trend, such as supply chain disruptions, rising inflation, predictions of a possible recession, and uneven recovery from the Covid-19 pandemic in the region. However, the drive to digitalize is expected to stay even in the post-pandemic world, as the implementation of technology-enabled operations helps improve the overall efficiency of businesses, and an e-commerce platform serves as a good marketing and branding channel for retailers.

E-commerce platforms have also remained optimistic about their outlook. For example, a Lazada reported a 20 percent year-on-year increase in monthly sales after November 2021, while Amazon reported that the number of Singapore sellers in Amazon’s local and international stores had increased by more than 45 percent from 2019 to 2021. Additionally, certain product categories are likely to continue to perform well online, such as computer and telecommunications equipment, as these items are becoming more affordable and it is not critical to see the product physically before purchasing. On the other hand, perishables may not fare as well in e-commerce as consumers are likely to want to inspect their food items before purchasing them at the supermarket. However, this does not appear to have stopped supermarkets and hypermarkets, which have continued to implement improvements to their mobile applications and delivery modes for essential goods, likely due to the potential for delivering significant increases in revenue.

(Source: Business Times)

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