Singapore is reviewing whether local guidelines should be updated to address potential competition and consumer issues that may arise from the proliferation of e-commerce platforms. These include a need to provide "greater clarity" with regards to the role of data in the sector, as marketplace operators may move to refuse access as a competitive measure.
For now, at least, there are no major competition concerns involving e-commerce platforms in the country, according to the Competition and Consumer Commission of Singapore (CCCS), citing feedback from the industry. It noted that its existing competition framework was "sufficiently robust" to address major competition issues that might arise from the proliferation of e-commerce platforms that competed in Singapore's multiple market segments.
The commission conducted a study, carried out by Frontier Economics, that comprised interviews with industry stakeholders, an online survey of e-commerce users, and a review of other overseas jurisdictions.
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Amongst its key findings, the study revealed that e-payment services by e-commerce platforms were unlikely to be a prerequisite for these marketplaces' success in Singapore, where there was a wide variety of digital payment systems and most consumers leant towards those operated by banks or credit cards for their transactions.
The lack of data also was not deemed a critical barrier to entry for e-commerce platforms, though the role of data might be increasingly important for these operators with the further use of artificial intelligence (AI) and algorithms, CCCS said in a statement Thursday.
It added that while data protection was not a key competitive factor, e-commerce platforms appeared to view it as essential in building trust with their users. However, consumers currently did not perceive data protection to be a key feature in choosing an e-commerce platform, the commission noted.
Incidentally, the top three factors that influenced consumers' choice of e-commerce website or app were best price offerings, ease of use, and good reputation.
According to CCCS, e-commerce platform operators analysed the data they collected to help them establish more effective strategies to drive customer loyalty and improve service quality.
With the increased importance data will play in digital markets, there could be a potential for data to be a barrier to entry, the regulator said.
"This is especially so where access to data confers a competitive advantage upon an incumbent market player, and where new entrants are unable to either collect or obtain access to same volume or variety of data as the incumbent," the commission explained.
It added that as data ownership or control could represent a barrier to entry, its role in market dominance should be assessed.
The study identified several areas where further clarity and guidance by CCCS could help businesses in "the application" of Singapore's Competition Act in the digital space.
For instance, it noted that access to data could confer a competitive advantage to digital platforms, especially where a platform had exclusive access to a large amount of data on each consumer. "Such large caches of data could be used by machine-learning algorithms deployed by digital platforms to better customer insights and improve their services, which in turn attracts more users, who could then contribute more data on an ongoing basis," it said.
The study suggested that the importance of data would likely increase over time, as more data is collected and becomes increasingly integrated with AI. Data insights could then be tapped to drive the e-commerce platform's business strategy, it said.
CCCS said competition concerns might pop up when a dominant platform refuses to supply or provide access to key data. "In this regard, existing case precedents indicate that a dominant firm's refusal to supply or provide a competitor access to data may constitute abusive conduct, and thereby infringe section 47 of the Competition Act," it said.
In addition, the increasing integration of AI to make pricing decisions could drive the likelihood of other forms of potential collusion between sellers, including e-commerce platforms.
"In view of the increased importance of data as an input, and the potential for the refusal to supply or provide access to data by a dominant undertaking to constitute abusive conduct, CCCS has considered that it may be opportune to update the CCCS Guidelines on the Section 47 Prohibition to provide greater clarity in relation to the role of data as an input, and the competition concerns that may arise from limited access to data.
"The amendments would serve to balance the flexibility for CCCS to intervene in appropriate circumstances, without being unduly restrictive of innovative data collection or use by undertakings," it said.
Meanwhile, a separate study revealed a need for e-commerce marketplaces to do better in their service delivery. According to a reported released Thursday by Blackbox Research and Toluna, 39% of consumers in Asean said they were less than satisfied with their digital commerce experience. They pointed to concerns about delivery costs and services, product reliability, and the authenticity of in-app reviews.
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Conducted in June, the online survey polled 4,780 respondents across six Asean markets including Singapore, Vietnam, and Indonesia.
Indonesia and Malaysia clocked the lowest satisfaction rates at 54% and 57%, respectively, with regards to their online experience.
The report noted that while major e-commerce brands including Shopee, Lazada, and Grab, enjoyed high usage rates in the region, this growth had come at the cost of greater scrutiny from consumers.
Blackbox Research's international commercial director Yashan Cama noted that consumer frustrations about service quality could become "make or break" for major e-commerce brands.
"We expect some of these cornerstone brands to experience a shake-up in the coming months if these existing problems are not quickly addressed," Cama said. "Our report has shown that consumers expect more from the e-commerce experience and will only become more discerning in future. Online retail has transformed from a niche operation to a key consumer service, and standards must improve in line with these expectations."
He urged e-commerce players to rectify key components in the customer journey and the fulfilment cycle to address the painpoints. "With consumers now better educated and informed, and 5G technology on the verge of transforming platform capabilities, current market leaders may fall by the wayside if they don't shift to a more seamless experience." he noted.
According to the study, 59% of consumers across the region are now spending more online, with the average shopper's total online spend up by 32%, suggesting that there are growth opportunities within e-commerce.
Cama said: "Southeast Asia's retail landscape has undergone a seismic shift since COVID-19 hit the region. While it has been clear for some time that consumers are more digitally adept, it is also clear that older consumers have grown in comfort with digital tools and services. That generational gap really has shrunk in recent months."
The study found that 56% of Gen Z consumers were spending more online, but the increase in spending also was evident amongst their older peers too, where Gen X clocked the largest increase at 60%.