Mixed outlook for S'pore's e-commerce industry

Rising competition, economic uncertainty among factors affecting sector's growth

- Timothy Goh

Increasing competition and an uncertain economic outlook have dampened growth prospects for Singapore's e-commerce industry.

Observers told The Straits Times that while the industry is expected to expand in the coming years, it remains vulnerable to headwinds.

Professor Lawrence Loh at the National University of Singapore Business school noted that e-commerce companies saw a surge in hiring during the pandemic to meet sudden spikes in demand, but shoppers are returning to physical stores, creating a likely oversupply of workers.

"E-commerce is an industry that is heavily dependent on economic growth fluctuations," Prof Loh said.

"Its imports may also be subject to tariffs in the US, which is expected to intensify such tariffs soon, this is why these companies will be even more vulnerable to revenue shocks in the near future."

Prof Loh said the demand for e-commerce is expected to keep expanding over the next decade, but its growth rate is projected to be far slower than the surge during the Covid-19 pandemic, when consumers flocked to online platforms for purchases.

A report published in November by Google, Temasek and Bain & Company found that Singapore's e-commerce sector grew from US$8 billion (S$10.7 billion) in gross merchandise value (GMV) in 2023 to US$9 billion in 2024. GMV refers to the total value of goods sold between customers or from e-commerce platforms.

E-commerce sales here stood at US$4.9 billion in 2020, during the height of the pandemic, and ballooned to around US$8 billion in 2021 and 2022.

The expansion in 2024 comes after several layoffs and payment delays in the sector.

In January, regional e-commerce company Lazada axed around 100 employees in Singapore, with sources indicating that the company planned to reduce its South-east Asia headcount by 25 per cent to 50 per cent.