Even as shopping centers continue to be crowded, a quiet change is going on in the background.

Yes, shopping is still one of Singaporean’s favourite hobbies and thousands of people head out regularly to indulge in their beloved pastime. Yet an increasing number are heading online and shopping from the comfort of home.

A survey by PayPal earlier this year showed that an estimated 1.2 million people in Singapore shopped online last year, spending $1.1 billion. PayPal expects an increase by 300 percent to about $4.4 billion by 2015.

The rapid growth in online shopping contrasts sharply with the increase in retail sales of about 3 percent per year recently.

And while the total of more than $26 billion in retail sales may not be measured exactly the same way that PayPal measures online sales, it’s clear than any retailer who aspires to grow faster may want to go online.

It’s not just a small coterie of people here who shop online, either. ComScore reported that over 60 percent of Singapore’s internet users shop online, and data from both Comscore and MasterCard last year showed that more women than men shop online.

While it’s true that consumers made nearly 60 percent of their online purchases at overseas websites, the volume on local websites is also growing.

And even though a big percentage of the purchases are still airline tickets and hotel reservations, Singaporeans buy everything from apples to zithers online. 13 percent of the shopping was for fashion items, according to a Nielsen survey, and another 13 percent was for entertainment.

Knock-on effects

The growth in online shopping isn’t just changing how retailers and shoppers operate. Companies like SingPost are feeling the impact of online shopping too.

Post & Parcel reported in January that SingPost said the volume of parcels it delivers increased by 90 percent in November 2010 from a year earlier due to a big jump in online shopping, and it had to hire more staff to handle the increase.

Postal workers can only deliver 18 packages an hour compared to about 750 letters, so SingPost had to add more staff to handle the volume.

Even though the forecast of a 300 percent increase in online sales in four years might seem high, e-commerce may well increase even faster.

This year, for example, Computerworld reported that “statistics released by Singapore PayPal show that online shopping during the GSS [Great Singapore Sale] was up 236 percent from last year”.

And there is a multitude of drivers behind that trend, ranging from greater reach and higher efficiency for retailers to convenience, better deals and safety for consumers.

One driver is simply that more retailers are going online and promoting their online sites actively, using everything from search engine optimization to online ads. Any company that sees online sales increasing far faster than the pace of total retail sales may well try to attract more online shoppers.

Indeed, companies ranging from supermarkets like Cold Storage and electronics stores like Challenger to department stores like Robinsons are online. Even tiny stores like bicycle retailer Hon Kah and specialist Select Books are online.

Another driver is that consumers here are doing their buying research online and then getting comfortable with shopping online too.

Online research

A recent study by Google and IAB showed that 85 percent of consumers research products online before making a purchase, and 64 percent of Singaporeans feel that “online shopping is convenient and a time saver”.

About the same numbers of consumers already buy travel services online as offline, and shopping in other categories could start to equal out too.

New models for online shopping can also drive sales. It’s little more than a year since online group buying sites like Groupon and Deal.com.sg started to offer daily deals.

By July this year, according to Retail Asia, Groupon was one of the top 20 websites in Singapore with 150,000 webpage hits per day and was ranked as the number 1 e-commerce website here by Hitwise. Consumers who go for the deals online may well purchase more elsewhere too.

Online security

Furthermore, the 88 percent of consumers who said in a recent PayPal survey that they want a more secure way to transaction online have fewer reasons to be concerned about the security of local online shopping.

Even though the one-time PINs (OTP) that Singapore banks introduced last year may make online shopping more cumbersome, they also make transactions more secure.

The shift to online shopping doesn’t mean that Singaporeans won’t continue going to shopping centers, of course.

The benefits of good deals at the store, actually being able to try on clothes or read part of a book and the excitement of the shopping centers means that inveterate shoppers will still go to physical stores. As more deals go online and shopping gets even easier, however, online shopping looks likely to zoom ahead for shoppers and retailers alike.

Richard Hartung | 12 December 2011