Joaquin Moreno
Feb 7, 2024

How CNY is firing up cross-border e-commerce in Singapore

As the Year of the Dragon approaches, e-commerce retailers stand to soar from an influx of consumer spending, opines dLocal’s Joaquin Moreno.

Photo: Getty Images.
Photo: Getty Images.

Chinese New Year (CNY) is a cultural highlight and the Year of the Dragon is poised to be no different. With Covid restrictions a thing of the past, scores of families will gather together to share dinner, red packets, and mooncakes. Against this backdrop, CNY remains a significant catalyst for growth in eCommerce sales and cross-border online shopping.

Also known as Lunar New Year, it hails the dawn of spring and is one of the most important festivals in Singapore’s calendar. This year will celebrate the Chinese zodiac’s only mythical and most powerful creature: The dragon.

On an individual level, CNY often involves indulging in self-care or dopamine purchases, spanning fashionable clothing, accessories and beauty treatments to prime consumers for the big celebrations.

Gifts also play a central role in CNY, both in showcasing commitments to close relationships and demonstrating respect to elders. Gifts convey wishes of good health, fortune and prosperity, making them a critical buy for consumers. A recent report shows that clothing, food and beauty represent some of Southeast Asia’s biggest purchases.

In the rapidly evolving landscape of global e-commerce, Asia is perhaps the world’s biggest success story, accounting for 61.4% of the anticipated online shopping, according to a PwC report. Meanwhile, Southeast Asia’s (SEA) gross merchandise value (GMV) reached US$218 billion, growing 11% year-on-year as its digital economy hit US$100 in 2023, in accordance with consulting firm, Bain. Amid this regional growth, Singapore stands out as a leader, with its eCommerce market expected to reach US$11 billion by 2025.

While many associate e-commerce with younger consumers, statistics from 2022 found almost a quarter of Singapore’s cross-border online shoppers were aged between 55 and 64 years, the largest share of the market. In contrast, just 13% of cross-border eCommerce users were between 11 and 24 years old.

Southeast Asia's e-commerce success over recent years is unsurprising. Having leapfrogged the early 2000s dotcom boom, the region has extremely high smartphone penetration and, as a result, a thriving mobile commerce economy that far outstrips its Western peers in QR code-based payments and e-wallets usage. Its ease of use and availability have therefore made e-commerce highly available to all ages and demographics in SEA.

In addition, almost all SEA markets have their own payment solutions: There is Singapore’s PayNow, Malaysia’s DuitNow, Indonesia’s BI-Fast and Thailand’s PromptPay. The region is also home to ‘super apps’ such as Grab and GoTo, alongside China’s Alipay and WeChat.

Despite the convenience these payment solutions offer with cross-border e-commerce, shoppers continue to face challenges such as delivery times and shipping fees.

A 2022 Mckinsey survey found delayed deliveries to be SEA’s biggest eCommerce pain point, alongside slow speed, poor customer service, damaged packages and poor tracking functionality.

Moreover, given CNY’s importance in uniting people and brands across Singapore and SEA, it begs the question as to why businesses still face so many hurdles in buying and selling goods across the region. Is it not time SEA’s payments ecosystem reflected its geographical and commercial interconnectivity?

Time and time again, consumers are discovering that their payment apps may only work in one or two markets. Despite its e-commerce prowess, SEA unfortunately still lacks wide-scale digital payments interoperability and uniformity.

Given that the regional and global payment landscape points towards contactless and cashless options, both payment providers and merchants will need to align in order to maximise their sales and profitability while e-commerce’s growth continues.

However, merchants can be hopeful that the Year of The Dragon will see a rise in interconnected payment platforms and e-commerce applications. When consumers can use their locally-preferred national platform without either incurring fees for themselves or the merchant, all parties win and contribute to the sector’s economic success.

The dawn of a new lunar calendar should inspire Singaporean businesses to be optimistic and chase prosperity in the year to come. Although e-commerce competition remains high, merchants deploying seamless, cost-effective, and innovative payment methods will have a significant advantage in achieving success this zodiac year and beyond.

Joaquin Moreno is head of APAC for dLocal.

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