Online shopping will kill off many retailers in Singapore, but that is a good thing.

Why pay $120 for a pair of jeans here when the same pair is $60 online?

Jonathan Lim| October 09, 10:55 AM

Singaporeans live in a country that has one of the highest GDP per capita in the world. That is to say, we are supposed to be quite rich compared to others.

Being in a supposed 'shoppers' paradise' and coupled with high income, we should be happy, no?

So why do average Singaporeans like to lament about how poor they are almost on a daily basis?

One big reason - retailers who add zero value to their lives.

 

The people bringing in consumer goods are a big part of why Singaporeans feel poor

It is common knowledge that most of the products in shopping centres are more expensive if bought here than overseas.

The prices here take into account shipping, rental of shop spaces, employing salespeople, advertising, profits for the businessman/distributor. All these things add costs to the final product.

With shopping centres popping up everywhere, Singaporeans are constantly exposed to these overpriced retail goods, contributing to their perception of being poor.

 

But how much more of a premium are Singaporeans paying and is that premium worth paying for in the first place?

Take for example a pair of Levi's 501 jeans. In Singapore, its retail price is $100 - $130. If bought off Amazon.com, the jeans will cost $60 (if it qualifies for free international shipping) or $80 (all-in price).

The only compelling reason Singaporeans are willing to pay $20 - $70 more is because the stores in Singapore allow them to try on the jeans. They also don't have to wait for the jeans to be shipped to their homes. Is that value for money?

Another common item that is sold at a premium in Singapore are DVDs and Bluray discs. A Bluray summer blockbuster could cost anywhere between $30 - $70 here, while the same disc costs $7 - $30 (again only if it qualifies for free international shipping) on Amazon.com. What can consumers possibly gain from the shop to spend $40 more for the same Bluray disc?

 

What value-add do businesses provide Singaporeans?

The short answer is - very little. Aside from a convenient place to return/repair faulty products, local retailers provide little value-add for the premium they command on goods sold.

A good service experience is one reason to choose a retailer over another, but is good service worth a 30 - 120 per cent premium?

Singapore shoppers are basically paying more to line the pockets of retailers who believe they should be rewarded for bringing those goods into Singapore. That is not value to consumers.

That belief of these retailers will have to change soon or they will be waiting for online retail giants to kill them off.

 

Online shopping is the future of retail in Singapore

With the advent of iTunes and digital music sales, we saw the closure of many CD and music retailers in Singapore. Music retailers just could not offer anything more to consumers. Consumers wanted music, they did not want to pay extra for other frills.

The same could be said about how Amazon.com killed off Borders.

So the question is - will Singaporeans miss walking into a Levi's store and paying $60 more for a pair of jeans they know they can get cheaper off Amazon.com?

Online retail giants like Amazon.com or Taobao are becoming more popular with Singaporeans. From CDs to diapers to shampoo to toilet bowls (yes toilet bowls) and even beds, these online retailers are offering a wider variety of products at a much lower price. The only drawback is the shipping times.

SingPost has begun taking its automated parcel stations to the mainstream, a sign that consumers are becoming warmer to the idea of shopping online. There is a huge market for SingPost to tap into - who knows, they may launch an overseas personal shopper service in the future competing directly with local retailers and even the likes of Amazon.com.

 

One positive case study

All is not lost for some retailers. Board game shops have long been unable to sell board games as cheaply as online retailers. These board games are anywhere between 10 to 100 per cent more expensive.

Successful shops survive by providing shop space its customers who use that space as a convenient venue to play board games with their friends. These shops strive to make the venue as friendly and as conducive as possible, and there is some kind of a 'gentlemen's agreement' that the premium on the board games is used to pay for the shop's rental.

One innovative shop in Paya Lebar has started a club membership model where members pay a monthly fee to use the shops tables and games. That is to say, their model has shifted from pure retail to space rental instead.

If a niche industry such as board games can think of innovative ways to survive, big retailers such as the fashion chains had better up their game before consumers get sick of paying more for nothing.

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