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Daptiv Insight: State of Digital Among Singaporean SMEs

Daptiv Insight: State of Digital Among Singaporean SMEs

In November 2018, Daptiv conducted a survey of 100 leaders in Singaporean Small & Medium Enterprises (“SMEs”) of different sizes and across different industries, including both B2B and B2C companies, to learn more about the state of digital among Singapore-based SMEs. This report is a summary of our findings.

 

Cover of "State of Digital Among Singaporean SMEs"

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Executive Summary

From our research, we find that the fastest growing Singaporean SMEs are those who embrace several key foundational elements of digital. These companies have a cohesive digital presence, leverage online demand generation, and rely on e-commerce to power their growth.

A good portion of Singaporean SMEs have yet to jump on the digital bandwagon (60% still do not have a website; 38% do not engage in online lead generation; 62% do not practice e-commerce). However, in taking a closer look at those SMEs which have more developed digital practices, we find useful insight relating to the type of Digital Presence, the range of Online Demand Generation activities, and e-Commerce models that these SMEs choose for their businesses.

Digital Presence

Digital Presence

Digital Presence among Singaporean Small & Medium Enterprises (“SMEs”) is low with only 40% of SMEs having a website(vs. 60% in Australia)

  • Facebook business pages are more popular than websites (with a penetration rate of 43%); the website penetration rate is well above average among retailers (64% penetration); Instagram is the most popular channel for SMEs selling direct to consumers (at 28%).
  • The fastest growing SMEs tend to have more developed and complete digital presences (70% adoption), with a much higher website penetration rate of 53%.


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Online Demand Generation

Online Demand Generation

Online Demand Generation is common among Singaporean SMEs, with 62% of SMEs engaging in some form of online demand generation.  However, there is a large variability in the extent and sophistication of online demand generation activity across SMEs

  • 29% of SMEs use online advertisingas their key demand generation activity.
  • Medium and larger SMEs (those with 25-199 employees) tend to invest in multi-pronged demand generation strategies; these involve several channels and strategies, including online ads, content marketing, and email marketing.
  • Up to 74% of the SMEs with growing revenues engage in various demand generation programs.


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e-commerce

e-Commerce

e-Commerce adoption is an area where Singaporean SMEs excel in, with 38% of SMEs saying that they have some online sales capability either through their websites or through third party marketplaces.

  • Retailers frequently leverage marketplaces to complement their online sales capabilities.
  • Online sales are a clear differentiator when it comes to business growth. SMEs who experience declining or stagnant sales have the lowest e-commerce penetration rates (25%), while SMEs growing faster than 15% per year have the highest penetration rates (53%). 


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Digital Presence

Digital Presence

Digital Presence among Singaporean Small & Medium Enterprises (“SMEs”) is still spotty with only 40% of SMEs having a website (vs. 60% in Australia)

The Singaporean government has recently spearheaded several initiatives to encourage digitalization among SMEs, including the Info-communications Media Development Authority (IMDA)’s SMEs Go Digital initiative.Despite these campaigns, digital presence among Singaporean SME remains low. More specifically, 21% of Singaporean SMEs report having no form of digital presence at all, and only 40% of Singaporean SMEs have a website (vs. 60% of SMEs in Australia-according to Deloitte “Connected Small Businesses” 2017). 

Facebook pages vs websites: which is more popular among Singaporean SMEs?

The number of Singaporean SMEs that have a Facebook page outstrips the number of SMEs that have a website (43% vs 40%).While this may mean that some SMEs prioritize Facebook as a communication channel, one can also consider that establishing a Facebook page is easier and faster than creating a standalone website.

Chart of Overall Digital Presence by Singaporean SMEs

The difference in digital channels adopted by B2B, B2C and retailer SMEs

All in all, there is little difference in the penetration and type of digital presence across SMEs of various sizes. There are, however, some differences in digital presence across B2B, B2C and retailer SMEs; these are outlined in the following diagram.

Chart of Digital Presence by Audience

At 32%, LinkedIn is the most popular digital channel adopted among SMEs in the B2B industry (with 80% of B2B marketing leads coming from LinkedIn-according to LinkedIn itself).  Among Retailer SMEs, websites are the preferred channel. For SMEs selling directly to consumers, Instagram is the most popular channel.  The least popular channel across these SMEs is Twitter; while Twitter is frequently used by businesses in the US and other countries, it does not have the same traction for SMEs in Singapore as a digital marketing channel.

The correlation between growth and digital presence

In our research, we find that growth is a strong predictor for digital presence. The fastest growing SMEs tend to have more developed and complete digital presence—with 90% of them having some form of digital presence. This suggests that businesses that diversify their digital efforts and create multiple online touchpoints are at an advantage over those that focus all their efforts on one specific channel.

Digital Presence by Growth Rate

Finally, websites are the most popular form of digital presence among Singaporean SMEs with high growth rates; these high grow rates are also strong predictors for adoption of other digital channels (such as LinkedIn, Facebook, and even Twitter). On the flip side, businesses with slower growth rates have the lowest rate of digital presence, with 30% of them saying that they do not have any form of digital presence. 


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Online Demand Generation

Online Demand Generation

Online Demand Generation is common among Singaporean SMEs, with 62% of them using some, however, there is a large variability in the extent and sophistication of online demand generation across SMEs.

When it comes to online demand generation, there are multiple approaches adopted by SMEs.The most popular online demand generation channel is online advertising platforms such as Google; 29% of SMEs use channels such as Google to generate demand.Email marketing is also critical; 20% of SMEs use email for lead generation and conversion. While creating content is considered important for SMEs, content marketing as a full discipline has not yet matured to the same level as in other regions. We will explore the different types of content created by SMEs.

The content marketing opportunity

The relative lack of interest in content marketing presents a great opportunity for Singaporean SMEs who want to reach out to a wider audience.Content marketing has been widely proven to be highly effective in generating leads and can generate 3x more leads as opposed to traditional marketing (according to Demand Metric).

When it comes to content, video is the most widely adopted content format in Singapore, with 13% of SMEs using videos.Note that this is still below the U.S. benchmark for SMEs (U.S. SMEs are at an 81% video adoption rate) and represents another opportunity for SMEs to explore, given that studies have shown that 72% of people would prefer to watch a video rather than read an article (Wyzowl “The State of Video Marketing 2018”). In addition to videos, Singaporean SMEs also experiment with other forms of content formats such as webinars, eBooks and blog articles.

Overall Demand Generation among Singaporean SMEs

23% of Singaporean SMEs are intending to adopt online demand generation strategies in the near future

Once SMEs embrace online demand generation, they often achieve promising results. Approximately half of those doing online demand generation, for instance, report that they generate more than 50% of their business leads from online channels. SMEs who aren’t currently using online demand generation strategies say that they intend to get started on this soon. Of the 38% of Singaporean SMEs who don’t currently utilize online generation methods, 23% are intending to embark on these methods soon. Intent is exceptionally high in B2B SMEs, with 35% of them saying that they are considering online demand generation within a year.

Chart of Demand Generation by Size of SME

In looking at online demand generation in the context of SME size, we’ve identified two key insights. First, the overall popularity of online demand generation varies slightly with size (overall adoption is at 62%; at 59% for businesses with less than 25 employees; at 73% with those with 100-199 employees). Second, medium and larger SMEs with 25-199 employees have more balanced demand generation strategies involving a combination of online advertising, content marketing, and email marketing. 


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e-Commerce

e-Commerce Icon

e-Commerce adoption is an area where Singaporean SMEs lead, with 38% of them saying that they have some online sales capability either through their website or through third party marketplaces.

One area in which Singaporean SMEs are ahead of the curve is e-commerce. 38% of Singaporean SMEs say that they have online sales capability through their website or third-party marketplaces. As a benchmark, the European Union estimates that only 29% of medium business and 18% of small businesses in the EU sell online (Eurostat “e-Commerce Statistics”). An additional 16% of Singaporean SMEs state that they’re working on integrating online sales capability and will soon be able to sell online to customers.

Chart of Overall e-Commerce among Singaporean SMEs

Selling via a website vs a third-party marketplace

23% of Singaporean SMEs sell exclusively via their websites; 8% sell both via a website and through marketplaces; 7% sell exclusively through marketplaces. There is little difference in the overall penetration rates by SME size, but SME size does affect the online channel that SMEs adopt. More specifically, SMEs with less than 100 employees are likely to sell through a marketplace, instead of direct-to-consumer.

B2B, B2C and retailers’ platform of choice

Daptiv Insight: State of Digital Among Singaporean SMEs

Out of the different categories of businesses, retailers are the most likely to sell on a marketplace (that said, they use these marketplaces to complement and not replace their online stores, with zero respondents stating that they sell exclusively on marketplaces). While both B2B and B2C SMEs prefer selling on e-commerce stores, a greater proportion of B2B merchants are likely to sell on both their website and marketplaces, and a greater proportion of B2C merchants are likely to sell on marketplaces alone. All in all, B2C SMEs have the highest e-commerce overall participation rates of 50% overall penetration.

e-Commerce adoption and business growth

Online sales are a clear differentiator when it comes to business growth. SMEs who are experiencing stagnant or declining growth rates have the lowest e-commerce penetration rates (25%), while SMEs who are growing the fastest have the highest rate penetration rates (53%). On top of that, SMEs who are growing at a slower pace tend to rely more heavily on marketplaces, while the vast majority of faster growing SMEs choose to focus their energies on selling via their own websites.

Chart of e-Commerce by Growth RateBack to Top 

 

Looking for more suggestions about your digital journey, beyond knowledge of the SME space in Singapore? Click here to check our “Digital for Singaporean SMEs: Practical Guide for founders and CEOs.

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