The Covid-19 pandemic has highlighted the opportunities that lie in Singapore's e-commerce sector. Most retailers have realized that digitization is one of the best ways to reach their customer base and have developed an ecommerce strategy.
Singapore and the world have seen an e-commerce boom with consumers buying everything from groceries to home appliances online. According to Statista, sales in the e-commerce market are expected to reach USD 2,793 million (S $ 3762.67 million) in 2021.
Additionally, Singapore is one of the top five Southeast Asian markets leading in the growth of the e-commerce market.
With the ecommerce boom, it is reasonable for many to assume that ecommerce sellers are making a lot of money, but Atsell co-founder and CEO Jacob Chee thinks this is a mere misunderstanding.
The Singapore-based company provides end-to-end service, consulting and automation solutions for companies looking to grow their e-commerce sales.
Atsell Co-Founder and CEO Jacob Chee / Photo credit: Atsell
When Jacob worked for an e-commerce startup prior to starting Atsell, he experienced firsthand the challenges sellers face when doing their business online.
For example, to put their entire catalog online, business owners need to take professional product photos, create search-optimized offers, process inquiries, orders, deliveries and reviews.
On the other hand, the rise of online "ecommerce gurus" preaching the misconception that running an ecommerce business is easy has only deepened the misconception.
He then founded the e-commerce enabler Atsell, which essentially goes about helping companies sell better.
The company currently operates in two countries but plans to expand into the Philippines this year.
The challenges of running an e-commerce business are diverse
Image credit: Bigstock
Jacob says the margins of many Singapore ecommerce sellers are depressed and many local businesses can only "get away" from ecommerce.
Here is the breakdown of some of the fees and costs ecommerce sellers incur:
- Platform transaction fees from two to 12 percent, depending on the platform
- Marketing fees of five percent or more of sales, depending on the seller's budget
- Shipping costs from 1.50 to 8 S $, depending on weight
- Storage fees from S $ 500 to S $ 1000
- S $ 5,000 to S $ 8,000 for headcount when there is a dedicated e-commerce team
Some other intangible costs include resolving customer complaints, serving customer inquiries 24/7, handling fraudulent activity, and fulfilling orders seven days a week.
Although Singapore is leading in the growth of the e-commerce market, the domestic market is small. So sellers need to go beyond the coast of Singapore and explore cross-border e-commerce with countries like Malaysia, Indonesia, the Philippines and Vietnam to be truly successful.
In addition, competition from overseas sellers is widespread. Globalization offers consumers convenience and choice, but it also hinders the growth of local vendors who need to find ways to differentiate.
When was the last time you remembered the name of the store or salesperson you bought from at Shopee or Lazada? Thousands of new stores are set up in marketplaces every day. It is difficult to achieve brand differentiation and recall on these platforms.
Jacob Chee, CEO and Co-Founder of Atsell
So Jacob shared that some best practices that all sellers should follow include clear, relevant product listing titles, displaying high quality images, and well-written product descriptions.
He added that performing well in e-commerce requires a snowball effect – it is extremely important to gain momentum and continuous sales in order to be successful over the long term.
Are Ecommerce Sellers Really Thriving?
Image Credit: PingWest
The e-commerce boom has resulted in more traffic, online presence and higher sales volume. As a result, individual sellers are seeing an increase in sales even if they only have a small percentage of the ecommerce pie.
On e-commerce platforms, customers are independent of the seller and are involved via the platform's marketing efforts and not via the sellers themselves. Jacob told Vulcan Post, however, that marketplaces "always favor consumers over sellers and this is reflected in the platform guidelines."
For example, platforms hire third-party logistics partners to provide fulfillment to sellers. After sellers give their items to third parties, they have no control over delivery issues, failed delivery, lost packages, or damaged goods.
In such cases, sellers are exposed to the brunt of consumer complaints and can face negative reviews through no fault of their own.
While there is a review resolution system in place, it is cumbersome to submit evidence and have it resolved. In most cases, sellers will still have to pay for damaged products and returned items. While
While platforms have invested heavily in detecting copyright infringement, it's not uncommon for overseas sellers to see duplicate listings. In extreme cases, entire stores are duplicated.
While income statements are available to sellers, they are not always intuitive. Sellers have to consider platform fees, discounts, and fees, and figuring out the profit margin is sometimes difficult, Jacob said.
This then begs the question: how much do ecommerce sellers actually make?
In general, e-commerce marketplaces benefit sellers with lean processes. Smaller retailers also have the option to act more flexibly within the market guidelines, especially in areas such as shipping and returns.
Even so, it is evident that even though ecommerce has boomed over the past year, individual sellers still face a whole host of challenges and the surge in ecommerce sales may not necessarily translate into profits for merchants.
Selected image source: SBR