Conducted by Nielsen in January and February 2011, the wide-ranging PayPal Online and Mobile Shopping Insights Study sampled 407 Singapore shoppers for their online and mobile shopping transactions over the past 12 months, exploring potential growth and respective trends in Singapore.

It is PayPal’s first ever comprehensive consumer survey in the country to measure local attitudes and behaviours when shopping online and on mobile devices.

The research confirms that online shopping is increasingly gaining popularity in tech-savvy Singapore, which is no surprise, but what is amazing is how fast it has grown. According to PayPal’s study, the size of the Singapore online shopping market reached S$1.1 billion in 2010 and is forecast to reach S$4.4 billion in 2015. Even though 1.2 million Singaporean online shoppers (above the age of 18 years old) had an average spend per head of S$1,492 over the past year, two-thirds of the online shopping spend (S$730 million) came from the middle income and above groups in Singapore.

The study also reveals the unique preferences of Singaporean online shoppers and the business implications for local retailers, strengthening Singaporeans’ reputation as being one of Asia Pacific’s most affluent and sophisticated online shoppers.

Contrary to popular belief that Singaporeans shop online primarily on overseas websites, a significant portion of online retail purchases are domestic as online shoppers spend nearly 40% (approximately S$420 million) on local websites. Even when Singaporean online shoppers do buy from overseas websites, they cite “unavailability” (58%) and “greater choice” (48%) as more important reasons than “less expensive” (44%), “better discounts” (42%) or “strong Singapore dollar” (35%). Therefore, local merchants can benefit from the growth in domestic online spending as well as offer a wider choice and selection of goods (instead of competing on price) to get a larger slice of the online shopping market.

Elias Ghanem, PayPal’s General Manager for South East Asia and India, said, “With the online shopping market growing so quickly and breaking through the billion dollar mark, Singaporeans are clearly finding great value and a wide range of products and services on the Web, be it on domestic or overseas websites. The study results prove to local merchants that they should embrace a multi-channel approach for both in-store and online retail experience, with mobile as an emerging platform, in order to be wherever their customers are.”

Some of the key findings for domestic and cross-border online shopping in Singapore:

• Online shopping is more than just airline and hotel bookings. While the travel category is tops, it only accounted for S$307 million or 28% of the online shopping market in Singapore. Other key online shopping categories include: Fashion/Beauty (S$146 million, 13% share), Entertainment/Lifestyle (S$143 million, 13% share), IT/Electronics (S$117 million, 11% share), General Insurance (S$83 million, 8% share), and Gifts/Collectibles (S$75 million, 7% share).
• Singaporean online shoppers buy different items between domestic and overseas websites. Movies/events tickets (S$36 million) and general insurance (S$36 million) are top categories for domestic online shopping, while books (S$41 million) and movies/music/video games (S$24 million) are top categories for cross-border online shopping. In addition, online shoppers buy nearly double the amount of clothing (S$84 million) and travel packages (S$38 million) on overseas websites compared to domestic sites.
• Enhancing security can boost online spending, especially for the high income group. Slightly more than 4 out of 10 say that current credit/debit card security measures for online transactions are inadequate and half believe they are taking a risk every time they transact online with their credit/debit cards. Yet, increasing safety measures would convince nearly 6 out of 10 to spend more online. In fact, the high income group was the most concerned about security measures (57%), but are the most willing to increase their online shopping if safety is improved (65%).

In addition, these were the key findings for m-commerce and mobile shopping:

• Mobile shopping is in its infancy stage. Over 364,000 Singaporean online shoppers spent S$43 million on their mobile devices last year, approximately 4% of the online shopping market. Mobile shoppers bought low-priced items like movie tickets, fashion items and mobile apps, leading to an average spend per head of S$119 over the past year.
• Growth potential for mobile shopping is significant. 4 out of 10 online shoppers in Singapore are willing to make a purchase on their mobile phones. More importantly, nearly 6 out of 10 of the high income group would be interested to do so, and they accounted for more than half of the mobile spend last year. In addition to more Singaporean online shoppers interested in buying on their mobile devices, they would like to buy higher-priced items like IT/electronics, general insurance and collectibles, boosting the potential size of the mobile shopping market.
• Convenient, safe, and fast mobile shopping experience will be critical for mass adoption. The top three barriers to mobile shopping are small screen size (55%), security concerns (52%) and slow mobile Internet connection (42%).

Based on the online and mobile shopping study results, Elias concluded, “The strong call-to-action for local merchants is to quickly adopt a multi-channel retail strategy, provide greater choice in their online product offerings and offer more secure online payment options. In order to sell to mobile shoppers, they should choose a safer mobile payment method that can be completed in as few clicks as possible.”