E-commerce is booming, but online sellers aren’t really raking in big bucks

The Covid-19 pandemic has exposed the opportunities that lie in Singapore’s e-commerce sector. Most retailers realized that going digital was one of the best ways to reach their customers and developed an e-commerce strategy.

Singapore and the world have experienced an e-commerce boom, with consumers buying everything from groceries to home appliances online. According to Statista, the e-commerce market revenue is expected to reach US $ 2,793 million (S $ 3,762.67 million) in 2021.

In addition, Singapore is one of the top five Southeast Asian markets in the growth of the e-commerce market.

Due to the ecommerce boom, it’s reasonable for many to assume that ecommerce sellers are making big bucks, but Atsell co-founder and CEO Jacob Chee sees this as just a misconception.

Therefore, it is reasonable for many to assume that ecommerce sellers are making big bucks due to the ecommerce boom. However, Atsell co-founder and CEO Jacob Chee tells us that this is a misconception, and we are learning more about the issues that e-commerce sellers face.

The Singapore-based company provides end-to-end services, consulting and automation solutions to businesses looking to boost their online sales.

Jacob Chee, co-founder and CEO of Atsell
Jacob Chee, co-founder and CEO of Atsell / Image credit: Atsell

When working at an ecommerce startup before starting Atsell, Jacob witnessed the challenges that sellers face when transitioning their businesses online.

For example, to bring their entire catalog online, business owners need to take professional product photos, create searchable listings, manage inquiries, orders, delivery, and reviews.

On the other hand, the rise of online “e-commerce gurus” who preach the misconception that running an e-commerce business is easy has only compounded this misconception.

He then started Atsell, an e-commerce enabler, which essentially helps make a difference by helping businesses sell better.

It currently operates in two countries, but plans to expand to the Philippines this year.

The challenges of running an online store are numerous

E-commerce Shopee Singapore
Image Credit: Bigstock

According to Jacob, the profit margins of many e-commerce vendors in Singapore are tight and many local businesses can only “get by” with e-commerce.

Here is the breakdown of some of the fees and costs incurred by ecommerce sellers:

  • Platform transaction fees of 2% to 12%, depending on the platform
  • Marketing costs of 5% or more of sales, depending on the salesperson’s budget
  • Shipping costs from S $ 1.50 to S $ 8, depending on weight
  • Warehouse fees from S $ 500 to S $ 1000
  • S $ 5,000 to S $ 8,000 for headcount, if there is a dedicated e-commerce team

Some other intangible costs include resolving customer complaints, responding to customer inquiries around the clock, dealing with fraudulent activity, and fulfilling orders seven days a week.

Even though Singapore leads the pack in growing the e-commerce market, the domestic market is small. So sellers need to go beyond the shores of Singapore and explore cross-border e-commerce to countries like Malaysia, Indonesia, the Philippines, and Vietnam in order to truly thrive.

In addition, competition from foreign sellers is rampant. Globalization offers convenience and choice to consumers, but it also hinders the growth of local sellers who must find ways to differentiate themselves.

When was the last time you remember the name of the store or seller you bought from on Shopee or Lazada? Thousands of new stores are installed on marketplaces daily. It is difficult to create differentiation and brand recall on these platforms.

Jacob Chee, CEO and co-founder of Atsell

Therefore, Jacob shared that a few best practices that all salespeople should follow include clear and relevant product listing titles, display of high-quality images, and well-written product descriptions.

He added that a good performance in e-commerce requires a snowball effect – it is extremely important to gain momentum and continuously sell to do well over a long period of time.

Are Ecommerce Sellers Really Booming?

Shopee and Lazada Singapore
Image Credit: PingWest

The boom in e-commerce has resulted in increased traffic, online footfall, and greater sales volume. Individual sellers thus experience an increase in their income, even if they only have a small percentage of the e-commerce pie.

On e-commerce platforms, customers are independent of the seller and are drawn through the platform’s marketing efforts, not the sellers themselves. However, Jacob tells Vulcan Post that markets “will always favor consumers over sellers, and this is evident in the platform’s policies.”

For example, the platforms engage third-party logistics partners to provide services to sellers. Once sellers have handed over their items to third parties, they have no control over delivery issues, delivery failures, lost packages, or damaged merchandise.

In such cases, sellers will face the brunt of consumer complaints and could face negative feedback for fault of their own.

Although a system for resolving exams is in place, it is cumbersome to present evidence and resolve it. In most cases, sellers still have to absorb the cost of damaged products and returned items. While

Although the platforms have invested heavily in detecting copyright infringements, it is not uncommon to see duplicate listings by overseas sellers. In extreme cases, there are even entire stores duplicated.

Finally, although income statements are available to sellers, they are not always intuitive. Sellers need to factor in platform fees, discounts, and fees, and it’s sometimes difficult to determine the profit margin, Jacob said.

This then begs the question: How much do eCommerce sellers actually earn?

In general, e-commerce markets benefit sellers with lean transactions. Small traders also have the opportunity to operate more flexibly within market guidelines, especially in areas such as shipping and returns.

Nonetheless, it is evident that even though e-commerce has exploded considerably over the past year, individual sellers still face a whole host of challenges, and the surge in online sales does not necessarily translate into profits. for traders.

Featured Image Credit: SBR

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