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Fri, Mar 28, 2014
Digital Life, The Straits Times
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E-shopping goes viral
by Irene Tham

The optimistic projections of local e-tailers make Singapore appear like a boom town for e-commerce. It has drawn many new e-stores to the local scene in the last three years.

Many claim they are selling millions of dollars worth of merchandise and doubling their sales every year.

Luxola, a Singapore-based online cosmetics retailer, said it hit its first $1 million in sales within two years of its April 2011 launch. But its most recent million-dollar revenue was achieved in under two months, said its founder and chief executive, Ms Alexis Horowitz- Burdick.

She said she expects its annual revenue to hit $100 million by 2016.

Sosoon, which launched its website last December, said it expects sales to hit $1 million a month within six months. It said that for the full year, it expects sales to reach $20 million from selling apparel, household appliances, consumer electronics and baby products.

Even e-marketplaces that represent individual sellers and retail entrepreneurs claim to be going great guns.

Singapore-based Qoo10, for one, said transaction volume on its site grew from under $100 million in 2012 to $150 million last year and it expects this to double to $300 million this year.

Online marketplace has also seen significant growth in its ad listings, from 30,000 in 2009 to more than 180,000 last year.

Cheaper, better variety online

E-tailers say the reasons for their online success are better prices, greater variety and a fuss-free experience.

Customers agree.

"The variety online is just amazing," said Ms Kismet Heng, 42, a sales support manager. She buys clothes for her three children from e-marketplaces such as Qoo10.

Ms Shirley Kin, 33, a quality test specialist, said: "Diapers, milk powder and baby clothes are at least 20 per cent cheaper online and it is convenient to pay by credit card."

Housewife Sakura Siow, 40, said she has no time to run to the malls. "It is easier and, often, cheaper to shop online as I know what I want," she said.

Euromonitor International, a British-based market research firm, predicts that consumers here will spend more than $1 billion online this year on purchases such as clothes, consumer electronics and media products.

This will be 9 per cent more than the $960 million they spent last year, which, in turn, was 12 per cent up from $855 million in 2012.

Mr Kelvin Chan, Euromonitor International's head of research here, said greater access to the Internet via mobile devices is a key contributor to more online buying.

"Consumers are able to compare prices easily," he said.

Strong consumer confidence here has drawn more e-commerce players to target the local market.

Last September, Taobao Marketplace, owned by China's e-commerce giant Alibaba Group, opened its South-east Asia headquarters here to get a piece of the action.

It also created a local website and customer hotline for its 280,000 registered users here.

Two months ago, Japanese e-marketplace giant Rakuten launched its Singapore website to connect more individual buyers and sellers.

Mr Shingo Okamoto, head of e-commerce for Rakuten Singapore, cited Singapore's Web-savvy population and "sophisticated entrepreneurial culture" as key reasons for locating its South-east Asia headquarters here.

Rakuten has also partnered Toys 'R 'Us selling the latter's goods on its website. The toy store declined to be interviewed.

Like Toys 'R' Us, local brick-and-mortar store Planet Telecoms has also entered the e-commerce fray.

Last month, the mobile phone retailer launched its eplanetworld website to provide more brand owners with more space to showcase their full range of products - space which Planet Telecoms' physical retail stores may not have.

"E-stores are not constrained by shelf space," said Mr Raymond Lum, vice-president of business development at Planet Telecoms' parent company TeleChoice International.

Rent up, labour down

Another driver of the e-store boom here is rising rentals for retail space.

Mr Robert Van Lith, general manager of Sosoon's parent company Uitox, said it went online because "the viability of brick-and-mortar retail outlets is under pressure from rising rents and the labour crunch".

Rents for prime retail space in Orchard Road today exceed $35 per sq ft (psf).

In suburban regional centres, rents top $30 psf.

This is more than twice the 1998 average in the Orchard Road area. Rents in this area even plunged as low as $12.90 psf after the 1997 Asian financial meltdown.

The labour shortage is another factor. Said Euromonitor's Mr Chan: "Companies turned to Internet retailing to tackle the issue of difficulty in hiring service staff, as consumers are able to read up about the products online."

Digital Life takes a look at the hottest e-stores here.


Launch date: April 2011

Offers: Beauty products

Cost of delivery: Free local shipping for orders above $10

As convenient and cheap as online shopping can be to the delight of customers, e-retailers may trip up on fulfilling orders - sometimes for reasons beyond their control, and often because delivery is outsourced.

So Luxola has acquired a fleet of 10 delivery cars and scooters to ensure that its customers get what they have bought and on time. "Our delivery service is a huge differentiator," said Luxola's founder and chief executive, Ms Alexis Horowitz-Burdick.

Such control allows the cosmetics and skincare e-tailer to offer same-day delivery here at a fraction of what Singapore Post and DHL charge.

The firm prides itself in going the extra mile for customers. For instance, its delivery man is supposed to text customers before arriving at a delivery location. The company also claims that it answers almost 90 per cent of e-mail queries in under an hour.

The online retailer also ships to Malaysia, Indonesia, Thailand, the Philippines, Brunei and the United Arab Emirates, but Singapore accounts for about half of its sales.

Ms Horowitz-Burdick said the company has expanded its range to 2,500 products. Many of them are hard to find and not distributed in Singapore, she said.

She said that customers' hot favourites include the Alpha-H skincare range from Australia and the Sigma Beauty make-up series from the US.

Luxola's business seems to be thriving since it was launched in April 2011.

Ms Horowitz-Burdick said Luxola took two years to sell its first million dollars' worth of products and claimed that its most recent million dollars was made in under two months.

To date, she said, it has raised about US$13 million (S$16.3 million) in funding from investors, including a Japanese-based venture capital firm Gree Ventures; Singapore-based venture capital firm WaveMaker Labs; and Singapore's National Research Foundation, a department within the Prime Minister's Office.

Luxola said it expects annual revenue to hit $100 million by 2016.


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