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More S'poreans shop online, but mobile buys still nascent

update Over 1.2 million locals made online purchases worth US$871.4 million last year but shopping via mobile devices remains in infancy stage, PayPal survey finds.
Written by Jamie Yap, Contributor

update SINGAPORE--Some 1.2 million Singaporeans shopped online in 2010 spending a total of S$1.1 billion (US$871.4 million), and the number is expected to hit S$4.4 billion (US$3.5 billion) by 2015, according to a new survey by PayPal. However, mobile shopping remains nascent, indicating "significant" growth potential for mobile commerce (m-commerce).

In a media event Wednesday, PayPal executives revealed that about 364,000 Singaporeans used their mobile devices to shop online last year, spending S$43 million (US$34 million). This accounted for approximately 4 percent of the overall online shopping market, according to the payment services provider, citing findings from its first "Consumer Online and Mobile Insights" report.

Conducted by the Nielsen Company, the study took place between January and February this year, polling 407 Singaporeans including both PayPal users and non-users, aged 18 and above, who had shopped online in the last 12 months.

According to the report, while online shopping is on an upward trend, mobile online shopping is in its "infancy stage".

Strong potential for m-commerce
However, mobile shopping has "significant" growth potential, according to Elias Ghanem, managing director and general manager of PayPal Southeast Asia, India and Korea, who presented the findings.

Online shoppers here are "keen to try out mobile commerce", Ghanem said, with study results showing that four out of 10 are willing to make purchases using their mobile phones.

Furthermore, nearly six in 10 from the high-income group expressed interest in mobile shopping, he said, noting that shoppers in this demographic accounted for more than half of the overall mobile spend in 2010. PayPal defined high-income earners as those with a monthly salary of S$6,000 (US$4,755) and above.

Merchants, too, held positive sentiments toward m-commerce, the PayPal executive added. "Merchants look at PayPal as a mobile enabler; they want PayPal to help them mobilize payments," he said.

Pointing out that the line between online and offline shopping is blurring, with mobile "the way to go in connecting the two", Ghanem urged local merchants to reach buyers in new ways. To do this, they need to adopt a multi-channel approach tapping both online and offline environments in order to provide a "seamless retail experience and stay connected with their customers wherever they are", he advised.

Lack of security, variety hamper online buys
Ghanem also highlighted that security is a "top concern" for online shoppers in Singapore. According to the survey, four out of 10 online shoppers felt that current credit and debit card security measures for online transactions are inadequate. Sixty percent of those polled would be willing to spend online if safety measures were improved, the company added.

Besides security, Ghanem said small screen sizes and slow mobile Internet connectivity also hindered mobile shopping from gaining traction. Hence, security, convenience and speed are critical factors to drive mass adoption, he pointed out.

The survey also revealed that nearly 40 percent of Singaporean online shoppers made domestic purchases on local Web sites.

According to Ghanem, the main reasons why shoppers favor overseas portals over local sites are product availability and greater variety. This "debunks the myth" that Singaporeans turn to foreign sites because of cheaper prices, better discounts or a strong Singapore dollar, he said.

To boost Web sales, local retailers should offer better variety and secure payment options in their online stores as well as optimize their sites for mobile users, Ghanem recommended.

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