Singapore has some of the strongest and the most developed eCommerce markets in Southeast Asia, growing by 8.35% a year. A benefit of selling on platforms like Lazada in Singapore is that you can clone your stores and get access to other ASEAN markets.
Even if it’s fairly straightforward to start selling in Singapore, it’s important that you understand your market entry options, the obstacles, and more. In this article, I cover the basics and explain the key information when entering the Singaporean market.
- Market Entry Strategy for Singapore
- Singapore Market Entry Obstacles
- Market Entry Research
Market Entry Strategy
Let’s start and review the options you have when entering the Singaporean market. The choices among sellers relate to their level of commitment, budget, and brand awareness, for example.
As societies become digitized and eCommerce is on the rise, hybrid-solutions of selling both cross-border, on local eCommerce websites, and offline also become more common.
Initial Marketing Campaigns
If you have limited brand awareness in Singapore, you focus on marketing at the start. A benefit of selling in Singapore is that English is an official language, reducing the hurdles to translate promotion materials into different languages.
If you plan to enter the Chinese market, for example, initial marketing costs can be exceptionally high due to competition, entry barriers, the need for translations, and a less transparent system overall.
Initial marketing campaigns can be managed both directly on local eCommerce platforms and through SEO. Offline marketing events can be done with the help of local key-opinion-leaders (KOLs) and pop-up events, for example.
Keep in mind that WeChat is widely used in Singapore as well. As many as 2.5 million Singaporeans use the application, which is a significant amount considering its population of around 5.7 million.
Selling cross-border can be a suitable option if you want to test the Singaporean market and before making a ‘physical’ market entry.
If you sell cross-border on Lazada, one of the most popular eCommerce platforms, you typically use Fulfillment-By-Lazada (FBL) and stock the products in Hong Kong. Lazada later sent the products directly to Singapore with its service Lazada Global Shipping (LGS).
Benefits of selling cross-border from Hong Kong:
- Lazada provides end-to-end services, including pick-up at the harbor/airport in Hong Kong and last-mile deliveries in Singapore
- By selling cross-border on Lazada, you can sell in other ASEAN countries, including Thailand, Vietnam, Indonesia, Malaysia, and the Philippines
- You don’t need a local entity in Singapore
- Lower entry barriers and product regulations
Drawbacks of selling cross-border from Hong Kong:
- Generally, lower sales volumes in single countries as locals prefer local sellers
- Longer shipping lead times
- Costlier shipping
- Limited sales options (only LazGlobal, no possibility to sell on LazMall, for instance)
- Product restrictions (e.g. supplements, food, drinks)
Many Lazada Partners recommend foreign sellers to use local sales channels and avoid selling cross-border. With that said, many sellers still insist to sell cross-border thanks to the many countries available.
Domestic eCommerce Operation
Your final option is to sell through local eCommerce channels. In short, this means that you import the products to Singapore and don’t use LazGlobal, the cross-border version of Lazada.
As mentioned, there are both benefits and drawbacks of using this option.
Buyers typically prefer to use local sellers thanks to the shorter shipping lead times and lower shipping costs. On the contrary to Vietnam where many products are imported from China, Singapore has an abundance of local sellers, offering wide assortments.
By importing the products, you can increase sales by selling in local stores, supermarkets, restaurants, or whatever your options are. While Lazada is one of a few websites that offer cross-border sales in Southeast Asia, you can use several local eCommerce platforms.
Examples include Carousell and Qoo10.
Singapore Market Entry Obstacles
In this section, we review some of the obstacles you encounter when selling on local eCommerce platforms.
Online purchasers are subject to a GST of 7%. Import duties are only charged to the following four product categories:
- Intoxicating liquors
- Tobacco products
- Motor vehicles
- Petroleum products and biodiesel blends
Foreign liquors are becoming increasingly popular in Singapore, particularly craft beers and wines.
The duty payable is calculated as follows:
Total quantity in liters x Customs and/or excise duty rate x Percentage of the alcoholic strength
Company X imports 100 liters of stout with an alcoholic strength of 6%. Assuming the customs and excise duties for stout is S$18 and S$70 per liter of alcohol respectively:
Both customs and excise duties are levied on the imports of stouts, resulting in the following duties payable:
100L x (S$18 + S$70) x 6% = S$528
Importing and distributing products domestically generally requires that you set up a domestic company entity. This results in additional setup fees and running costs. I will cover this in greater detail later in the article.
Product Standards & Labeling Requirements
Before you can sell your products in Singapore, you have to label them according to national and product-specific labeling standards. Even if countries harmonize labeling requirements according to EU and US standards, differences often exist.
The Consumer Protection (CGSR) Regulations are responsible for the enhancement of product safety, covering a wide range of products. The CGSR regulated goods such as electronics, textiles, and children’s products, for example.
In addition to CGSR, Singapore has different acts that are issued by national authorities. One example is the Singapore Food Agency (SFA) that administers the Sale of Food Act and the Singapore Food Regulations.
Example A: Prepacked Food
According to the SFA, all pre-packaged food must be labeled with the following information:
- Name or description of food
- Statement of ingredients
- Net quantity of food in package and
- Name and address of local food business, and
- Country of origin (only for imported food products)
For more information, you can check this page.
Example B: Cosmetics Labeling
Since 2008, cosmetic products such as lipsticks and skincare products have been covered by the ASEAN Cosmetic Directive in Singapore. The directive explains that the following information must be included on the products:
- The name of the product and its function
- Instructions on the use of the product
- Full ingredient listing in descending order of weight
- Country of manufacture
- The contact of the company or responsible person
- The expiry date of the product
Market Entry Research
Below I list different items that are important for a market entry strategy in Singapore.
Before you can start selling online in Singapore, you have to select one or more eCommerce websites to list your product. My general recommendation is to start with one website at a time.
If you plan to sell cross-border in ASEAN, Lazada will most likely be at the top of your list.
Before you select a website, you should confirm what payment options are available. The setup and running fees are equally important, as well as monthly sales volumes.
Lazada.sg is the local eCommerce website where buyers get access to Taobao, LazMall, RedMart, and LazGlobal.
Taobao allows Singaporeans to purchase products from mainland China, while LazMall focuses primarily on premium and 100% authentic brands. RedMart, on the other hand, is solely dedicated to the sales of food and beverages.
LazGlobal is the cross-border eCommerce version of Lazada and where consumers can procure products from overseas.
The payment options available include World First and Payoneer, making international payments easy. Lazada is one of the most popular eCommerce platforms in Singapore and sought-after among foreign sellers.
Shopee has temporarily surpassed Lazada as the most popular eCommerce marketplace and saw a growth of around 80% in 2020 alone. The marketplace hasn’t focused as much on promoting cross-border sales as Lazada, but is indeed a viable option.
Shopee is available in more countries and offers lucrative shipping options with free shipping, for instance. Cross-border sellers can withdraw money in two ways: by bank transfer or by integrating the Shopee store with Payoneer.
Setup costs can differ significantly depending on your sales goals and current brand presence.
If you plan to sell locally, you must allocate financing for the incorporation of your company. On top of that, additional costs for the imports of the products, setup fees on marketplaces, and more should be added.
Naturally, the setup fees will differ depending on if you sell cross-border or locally.
Competitor Cost Analysis Research
You can make a basic competitor pricing analysis by checking available products on Lazada.sg or in stores if you live in Singapore.
Keep in mind that larger brands enjoy economies of scale and can manage to sell both locally and cross-border if they have a registered company in Singapore and sell locally.
For more in-depth information about the market for your specific product, I recommend you contacting a consultancy firm to conduct a more in-depth analysis.
Shipping & Logistics
Your shipping options will vary depending on if you sell cross-border or locally.
If you sell cross-border on Lazada, you will keep your products in Hong Kong and delivery fees can become exceptionally high. This is particularly the case for bulky and heavy products. By selling locally, you can hire a fulfillment center in Singapore.
This can help you save plenty on costs and reduce shipping lead times.
Setting up a company is comparatively easy in Singapore, it’s renowned for being one of the best countries to conduct business in the world.
Setting up a company is needed for exporters who wish to import their products to Singapore unless they utilize their relationship with distributors and importers.
According to the IRAS and the Singapore Companies Act, the following requirements apply when you open a company:
- Company name – Must be approved by the ACRA
- Shareholders – Minimum of one
- Directors – At least one director must reside in Singapore
- Company Secretary – Also must be a Singapore resident
- Paid-up capital – At least SGD 1
- Registered address – A physical office address is required
The documentation required differs slightly depending on if you are an individual shareholder or corporate shareholder.
- Passport copy
- NRIC or Residency card (Singapore residents only)
- Residential address proof (for example, rental agreement)
- Brief professional background (such as a link to your LinkedIn profile or resume)
- Certificate of Registration, where the company is registered
- Company Extract from the Company Registrar of the jurisdiction where the company is registered that contains the following information:
- Company’s name, Registration number, and Registered address
- Paid-up Capital and particulars of all Shareholders and Directors
- Business activities that the Company is engaged in
- Authorized Person Resolution passed by the director(s) of the shareholding company that includes the following:
- Authorization to hold shares in the proposed Singapore Company
- Appointment of an Authorised Person to sign the Singapore Company formation documents on behalf of the shareholding company
- An ownership structure chart that identifies the Ultimate Beneficial Owners (UBO) of the shareholding company
- Identification documents for the key UBOs may be required for KYC due diligence