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How to start an eCommerce business in Singapore

by Uneeb Khan
eCommerce business in Singapore

E-commerce was catapulted into a growth overdrive due to the global pandemic, which resulted in firms reorienting themselves online to survive and develop.

The concept of ways to make money online is becoming increasingly popular, and establishing an online storefront is still considered cutting edge. It will likely continue to be successful for the foreseeable future thanks to its low overhead costs, numerous business strategies, and global clientele.

The value of Singapore’s e-commerce market is estimated at SGD4.9 billion, and it is expected to continue expanding as internet usage continues to rise. The market volume is anticipated to reach 8.6 billion Singapore dollars by 2023, hence providing enterprises with stable income revenues.

For this, the retail industry is about to undergo a profound transformation as the pace of losing traditional brick-and-mortar stores quickens. By the year 2040, it is anticipated that nearly 95 per cent of all retail on a global scale will be conducted via e-commerce.

As a result of the fact that everyone and their neighbour is hopping on the digital train, competition in this business is quite fierce. You will require useful insights to differentiate yourself from the crowd, make an impression, and maintain compliance.

We have addressed all of the pertinent topics in this guide t

o put you ahead of the pack and give you an advantage over the other competitors. 

What is an E-commerce Business?

The term “e-commerce” refers to all economic dealings and activities that take place online and is an abbreviation for “electronic commerce.” It is considered a subset of e-business, a broader term for all enterprises conducted online.

E-commerce consists of e-tailers (online services, such as virtual tuition), e-goods (digital things, such as online courses), and traditional retail establishments selling real goods. These kinds of companies can utilize any one of the following organizational structures as well:

  • Direct-to-Consumer or D2C
  • Consumer-to-Government or C2G
  • Business-to-Government or B2G
  • Government-to-Business or G2B
  • Business-to-Consumer or B2C
  • Consumer-to-Business C2B
  • Consumer-to-Consumer or C2C
  • Business-to-Business or B2B

There are many different kinds of businesses that can be conducted through e-commerce; some examples of these categories are as follows:

  • Dropshipping, Affiliate Marketing, and Print-on-Demand are popular choices that need little to no initial investment and do not require inventory. Still, margins are low, and competition can be intense for popular products.
  • Wholesaling is a fast method to get started selling various products, but it involves a substantial financial investment, effective inventory management, and extensive marketing.
  • Private or White Labeling – Although this option can be more expensive, it provides greater control over the brand, the quality, and the pricing of the product. 

Why Start an E-commerce Business in Singapore?

If you’re looking to start an online business, Singapore is perhaps one of the best countries.

This island nation ranks first in the world regarding the ease with which business may be conducted, in addition to having strong governance and world-class infrastructure.

 On the other hand, and most importantly for companies that deal in e-commerce, Singapore possesses the fastest internet download speeds available anywhere in the globe.

According to the available data, Singapore’s business-to-consumer (B2C) online retail is experiencing an annual compound growth rate of 8.35 per cent (compound annual growth rate).

With about 90 per cent of the population having access to the internet by 2025, market volume estimates for that year are approximately 4,079 million USD.

Government initiatives are directly addressing challenges posed by e-commerce. These include forming a partnership with Google Inc. (Skills Ignition SG) and organizing the E-commerce Expo Asia for October 2021.

The government is rolling out multiple 5G networks to improve connection and infrastructure. Singapore is well on its way to becoming a technologically advanced nation and the e-commerce capital of Southeast Asia, thanks to its robust regulations and strategies.

Benefits of Starting an E-Commerce Business in Singapore

 The following are benefits and reasons why eCommerce store is ideal n Singapore.

Low Cost

Rent, store design and construction, maintenance, and repairs are all costs associated with opening a physical retail location. You won’t need to factor these high costs into your overall spending plan

 when you shop at an online site.

Compared to the cost of opening a physical business, the startup expenses for an online store are far lower. If you choose to sell your products through an e-commerce platform such as Shopee or Lazada, you won’t even have to spend money on creating and maintaining your website if you choose that choice. Joining these sites is free of charge.

A Government Is Conducive To Business

Policies in Singapore conducive to business are largely responsible for the city-status state as the financial capital of Southeast Asia.

It is easy to conduct business in Singapore; many multinational businesses have chosen to locate their headquarters there. However, small businesses, as well as larger ones, stand to gain from the supportive ecosystem that Lion City provides for its business owners.

Because it has many commercial and merchant banks, fund managers, and capital markets, Singapore makes it simple to access much-required funding at competitive interest rates.

Additionally, the government spearheads several programs to encourage firms to expand their internet presence.

Singapore’s tax system is one of the most advanced in the world, yet another advantage of establishing an online storefront there.

 Your company may be eligible for tax breaks if it satisfies the criteria outlined in the city-free state’s trade agreements with other nations.

 In addition, launching a new company in Singapore is uncomplicated. Compared to other places, where registering a business can take months or even years, you can register your corporation in a matter of days here.

People’s Lives Are Inextricably Intertwined with the Internet.

The majority of Singaporeans depend on the internet for virtually everything, including but not limited to paying bills, shopping, scheduling a service, communicating with friends, and so on.

 This gives you a wider reach to sell your products without the restrictions of owning a physical store, which is primarily dependent on foot traffic.

It is also more efficient to sell your products through e-commerce because more advanced advertising tools can analyze your target population. This makes promoting your products online more effective.

You may effectively communicate with customers interested in technology by combining promotions on social media with your e-commerce site.

You can choose how you would like your advertisements displayed by your goals and target certain demographics such as age brackets, locations, interests, and behaviours.

How to Start an E-commerce Business in Singapore

If you go into the process how to start an eCommerce business in Singapore should not be a difficult procedure for you.

This necessitates paying close attention to the tiniest of details and reading the rules in their entirety to verify that you comply with them.

In the next part, we will review the many stages of activating your e-commerce business in Singapore.

Step 1: Research and plan

An idea is the foundation of any successful business. Carry out in-depth research to gain an understanding of your target clients, as well as the current trends and desires and the competition.

You can accomplish this by observing the business practices of your potential competitors, conducting interviews with relevant sources, and reviewing documents (such as financial statements) that can provide you with an idea of the demand within your target niche.

After establishing a viable business idea and having finished conducting market research, the next step is to develop a business plan. This is a written document that outlines the roadmap for your company, including the goals and plans you have for it.

Step 2: Securing Funding

The next level is focused entirely on financial matters. If your e-commerce firm does not have the financial resources necessary to launch your business, it will not matter how fantastic your products are or how much of a need there is for your company. Neither of these factors will be of any use.

Consider yourself fortunate if you already possess the financial resources necessary to launch your business and keep it running for the next six months. However, even if you don’t have any of these things, there are many other methods to acquire financial aid to get your business started.

The most usual method is to obtain financing from a financial organization, such as a commercial bank, in the form of a loan. You are free to visit various financial institutions to determine which has the most favourable terms and the lowest interest rate.

If you are just starting a business, you must apply for loans at several different banks to see which ones could be willing to work with you.

The search for financial backers is yet another alternative. Many of today’s most successful new businesses were launched due to innovative business concepts that received financial backing from investors.

Your talks will determine the conditions of repayment, but in most instances, your investors will not ask you to reimburse them the amount of money that they loaned to you. Instead, they will ask for a part in your e-commerce business as payback for the loan.

Last but not least, you might try to get money from the government to help you get your online business off the ground.

 You may want to investigate the Startup SG Tech Grant, the Enterprise Development Grant, the Startup SG Equity Programme, and the Market Readiness Assistance Grant in Singapore. These are some of the most well-known government-sponsored programs in the country.

Step 3: Choose Your Business Structure and Model

In Singapore, the most popular types of business structures are the following: The first type is a sole proprietorship, characterized by the fact that a single owner has full authority over the company.

Individuals with low-risk tolerance and little capital are good candidates for this category. Sole proprietorships can only be applied for by citizens or permanent residents of Singapore; businesses owned by non-Singaporeans or corporations are required to hire local management.

The second kind is a limited liability partnership (LLP). This takes the form of a partnership, in which the legal responsibility of each owner is restricted to the proportion of their total investment in the company. This structure involves a lesser initial investment while simultaneously protecting liabilities.

However, each owner is responsible for their tax payment at the individual level. A personal income tax, which has a higher rate, must also be paid by them. The corporation tax rate is lower. LLPs, similar to sole proprietorships, can only be formed by citizens of Singapore.

In conclusion, a private limited company, often known as Pte Ltd, is a privately owned corporation with limited responsibility. There can be no more than fifty stockholders in this particular structure at any given time. As a result of tax advantages and other enticing incentives, this scenario presents the greatest potential for business owners interested in launching an online retail operation in Singapore. The income tax rate for private limited firms in Singapore is 4.25 per cent for the first S$100,000, 8.5 per cent for the following S$100 00, and 17 per cent for revenue beyond S$200,000 after that. These rates are by the new startup exemption regulations that have been implemented.

The next item you should consider is your firm’s model. Your business strategy for e-commerce may take the form of dropshipping, white-labelling, or manufacturing, depending on your preferences.

When using dropshipping, it is not necessary for business owners to maintain stock of the products being sold. The only role owners play that of a storefront or bridge between the primary goods suppliers and the customers. White labelling is the practice of purchasing goods from a manufacturer and rebranding those goods under the name of your own company.

Manufacturing is the most successful company strategy, despite being the most difficult. Because of this, business owners must control the entire process, beginning with production and ending with sales. It goes beyond the realm of e-commerce, necessitates the existence of actual factories, and calls for a significant investment.

Step 4: Incorporate Your Business

To start up an online store in Singapore, this stage requires filling out the necessary documentation. When a company is incorporated, the government requires the following from the business owner:

• Company name: Prepare a shortlist of potential options if the first one you choose is rejected for reasons such as having been used before.

• At least one person in charge: The person must be at least 18 years old, a citizen or permanent resident of Singapore, and have no previous convictions that would disqualify them from having a directorship.

• The company secretary is the individual who is in charge of the communication that takes place between the company and the government. Additionally, they will be in charge of the documentation to verify that the company continues to comply with the regulations set forth by the government.

To establish yourself as a legitimate business in Singapore, you must provide a physical address there, even if you do not operate a brick-and-mortar establishment there. You can use a virtual office or register your address at home.

• The company constitution is the document that explains the structure of the business, including the method by which the shares are divided among the many owners. In this form, you must also specify how much of your capital has been paid.

• Identification Documents: You will be required to provide evidence of the identities of all of the directors and shareholders of the company.

The next stage in registering your company is to submit your application to the Accounting and Corporate Regulatory Authority. Once you have gathered all these documents, you may move on to the next step (ACRA).

The total cost of the application is S$315, consisting of S$15 for the reservation of the business name and S$300 for the registration of the firm. The ACRA only requires a couple of hours to complete the processing of these kinds of applications.

Step 5: Set Up Your Infrastructure and Accounting System

You can start designing and putting together your firm’s infrastructure at the same time that you are completing the documentation necessary to register your company Read more

If you intend to sell your products through e-commerce websites, then the infrastructure may not be as important, given that these platforms already provide capabilities that help expedite transactions from beginning to end.

It is recommended that if you want to construct your brand, you pay someone else to develop a website for you.

It would help if you thought about the style of your website, as well as your domain name and website server. You might also want to consider using subscription-based e-commerce software like Shopify when building your store.

Your strategy for advertising and marketing is another element that needs to be developed at this stage. You can promote and sell your products and services in various methods, such as by putting an ad on social networking websites and promoting your page online. These are just two examples.

You can also make your brand more visible to your target demographic by creating a company page on Facebook and sharing it with them.

 Websites can benefit from utilizing search engine optimization (SEO) strategies to improve their exposure to results returned by search engines such as Google.

Regarding finances, your options for handling bookkeeping and accounting are to either do it in-house, hire an outside agency, or have a combination of the two.

This is of the utmost importance since, in addition to helping you maintain control of your company’s cash flow, these positions ensure that your company complies with the tax and accounting laws of the government, hence lowering the risk of incurring any penalties.

Startups in e-commerce may want to investigate cloud payments software to monitor their financial dealings in real-time.

Your company’s payments can be processed automatically, and your accounting software can promptly rectify any discrepancies.

You can also request actual and virtual payment cards for use when paying your freelancers and vendors.

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