Setting Up an E-Commerce Company in Singapore

7 min read

The digital market in Southeast Asia is expected to exceed US$200 billion by 2025, according to a report by Google, Temasek and Bain. Singapore has generated at least one-third of total online retail sales in the region. If you are planning to set up an e-commerce company in Singapore, this is the right time and place for you.

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What is E-commerce?
What type of E-commerce products do well in Singapore?
What does it take to make a successful e-commerce company in Singapore?
E-commerce vs Physical retail stores
How does E-Commerce reduce cost?
How do I set up my E-commerce company?
Will E-commerce Overtake Physical Retail Stores Eventually?

What is E-commerce?

E-commerce refers to Electronic Commerce. It’s a business model that allows companies and individuals to sell their goods and services over the Internet. As of 2020, the e-commerce revenue for business to consumer (B2C) market in Singapore is valued at $4.9 billion. This growth is largely dependent on high-speed Internet technology, a young tech-savvy population and the middle-class.

What type of E-commerce products do well in Singapore?

There are plenty of products you can sell on the internet. But not all products do well. It depends on the demand of the people living in that particular country.

So what products exactly do well in Singapore? Here is a non-exhaustive list of products that have done relatively well in Singapore over the last five years:

  • Fashion accessories & clothing;
  • Computer devices & gadgets, such as headphones, cameras, cables and wireless devices;
  • Toys and games;
  • Books;
  • Music;
  • Office supplies;
  • Health & beauty products

Fashion accessories and clothing are the most popular selling items on the e-commerce market. Consumers are finding it more convenient to shop online for these items than stepping into a retail store. Similarly, consumers also find it useful and easier to purchase health and beauty products online due to a wide variety of choices.

What does it take to make a successful E-commerce company in Singapore?

Here are some of the key factors that go into the making of a successful e-commerce company:

  • Know what you want to sell

Knowing exactly what products you want to sell to your consumers makes your e-commerce site stand out from other companies.

  • Have some flexible payment method

Today, internet banking transfer is popular. Consumers are using PayNow to pay for their online transactions.

  • Secure electronic transactions

One way to do it is by getting a TrustSg mark on your e-commerce website. It builds confidence and credibility for your business.

  • Control your inventory

Inventory Management can be a tricky process. You can’t have too many stocks in your inventory as it will affect your capital, but you also can’t have too little stocks in your inventory as you will end up disappointing your consumers.

  • Quick and reliable logistic services

Consumers want an affordable delivery service that is able to deliver their order fast and safely to their doorsteps. Having a quick and reliable logistic service will help to drive online sales.

E-commerce vs Physical retail stores

With many companies moving their businesses to the e-commerce market, it is natural that physical retail stores are feeling the threat. However, there are some differences between these two businesses:

E-Commerce Physical Retail Stores
There is no geographical barrier when you reach out to your customers. Your audience can be based in any part of the world and purchase products from your store. Business is fixed in one location.
There is no overhead cost such as rentals and manpower. You need to employ manpower to man your shop or business.
Consumers are able to view products on their mobile phones and computers. Consumers have to go down to the shop and view your products.
Consumers are able to shop online at their own convenience without any time restrictions. Customer service is involved, as work staff are able to communicate with the customers personally.
Consumers are able to shop online and purchase any goods and services online even during a global pandemic. Consumers are able to bring their paid purchase home without waiting for any delivery. However, retail stores can be disrupted during a global pandemic.

Some companies combine their physical retail stores with e-commerce business models. It gives consumers the flexibility to shop and purchase products online, and to view the items at the physical retail store. Supermarkets, clothes and shoe stores are examples of a hybrid of e-commerce and physical retail stores.

How does E-Commerce reduce cost?

Now that you know how to set up an e-commerce company, you will realise that compared to physical retail stores, it is cost-effective. Firstly, it reduces the cost. You don’t have to pay for any rental, which can be costly. Secondly, you don’t have to worry about manpower cost on-site, as your staff can handle the inventory management or marketing of business in any location. The only concern is the marketing, maintenance of your e-commerce website and advertisement.

Tom has an e-commerce store selling headphones. When he started out, he spent an estimated $3,000 on setting up his e-commerce store. He pays a monthly subscription of US$30.00 for the maintenance of his e-commerce store. On top of that, he pays his delivery vendor for every delivery he made every month, which amounts to $500. Some days, he earns some profits and some days, he doesn’t. At the end of the day, he saves cost on rental and manpower.

Here are some of the most important steps to help you with the setting up of your business:

How do I set up my E-Commerce company in Singapore?

Step 1: Incorporate your e-commerce company - choosing a company structure

Before you set up your company, it’s important to choose a business structure that meets your business’s needs. A private limited company is the most common business structure for its limited liability and tax benefits. Limited liability means, if things go wrong, the owner would pay all the debt from his pocket. A company, being a separate legal entity, protects you from that. We strongly recommend a private limited company structure for e-commerce business owners.

To incorporate your e-commerce business, you will need to file with the Accounting and Corporate Regulatory Authority (ACRA). We would gladly assist you in filing the application. But if you would like to do it on your own, you can log in to Bizfile+ using your SingPass to submit your online application.

Here are the steps:

  1. Decide on the company name;
  2. Decide which company structure to open (Sole proprietorship, private/public limited liability company, or subsidiary/branch/representative office).

Here are the requirements for setting up a private limited company in Singapore.

  • At least one shareholder;
  • At least one ordinarily resident director;
  • At least one company secretary;
  • Minimum of $1 as initial paid-up share capital;
  • A registered office address. P.O. Box address is not valid.
  • A Constitution


To find out how to prepare a Company Constitution, read our guide. There’s also a Model Consitution for you to refer to.

Step 2: Establish your e-commerce infrastructure

A good infrastructure will help your e-commerce business to run effectively. Infrastructure refers to things that generate sales and delivery of your products to your online customers. This can be IT systems, business processes, staff and facilities.

We have put up a list to help you think about the various elements for your infrastructure.

Think about:

  • How are you going to design and host your e-commerce?
  • How are you going to market and advertise your e-commerce site?
  • What is the infrastructure of your website going to be like?
  • How will you fulfill the deliveries of your products and services?

Step 3: Manage your accounting right from the start

Like most businesses, planning and managing the finance aspect of your e-commerce business is crucial. Launching an e-commerce business requires several thousand dollars. This includes start-up costs, marketing, advertising, IT system, inventory, staffing and office rentals.

Keep your accounting accurate by keeping tabs on your revenue streams, keeping track of invoices and receipts, preparing financial statements, tracking deductible expenses and preparing tax returns. Our experienced accountants specialising in e-commerce accounting can help you with this, while you focus on growing your business.

Step 4: Understand the regulations in Singapore that your e-commerce company will operate in

The Singapore government has implemented regulations to protect the business and customers. As a business owner, it’s good to familiarise yourself with various rules and regulations which your e-commerce company will operate in.

These are some of the examples:

Web Advertising

Online advertisements for products such as medications, beauty products, electronic goods and household appliances have to comply with the Singapore Code of Advertising Practice. The basic premise of it is that you should ensure that all advertisements should be legal, decent, honest and truthful.

Protection and Security of Data

With more people shopping online these days, their personal data will be stored online. As e-commerce business owners are able to gain access to these data, it is important for them to safeguard their customer’s database from being misused or stolen.

This prevention can be in a form of corporate audits and encryption technology. Similarly, when a customer pays for their purchases through credit card payment, you must ensure that the transaction is transmitting to you, and not to anyone else.

Read: PDPA and GDPR: Does my company have to comply?

Will E-commerce Overtake Physical Retail Stores Eventually?

Shopping has become an experience. Consumers want to buy goods and services with good quality, but also at their convenience. They do not have to leave their house to purchase gifts for family and friends. As people are increasingly on the move, the next trend of e-commerce looks set to be mobile, social and augmented reality (VR) e-commerce. However, e-commerce businesses can’t form a human connection with consumers, which physical retail store is able to. For example, if a consumer wants to try a few pairs of shoes, he is able to try at the store and speak to a member of the staff. If the consumer has any doubts about the goods, he can approach the staff.

Despite the growth of the e-commerce market, physical retail stores are still likely here to stay. The best way to look at it is that e-commerce compliments the physical retail stores and will eventually help to drive sales to the business.

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