Generation Z is leading the way in online shopping in Singapore

SINGAPORE – As more businesses turn to social media to sell their goods, online shoppers in Singapore are exploring new buying experiences – and Generation Z is leading the way.

According to a 2023 report by Meta and Bain & Company on the digital consumer landscape in Southeast Asia, 72% of Generation Z in Singapore prefer to shop online.

The report showed that Generation Z, who were typically born between 1997 and 2012, lead other generations in discovering, evaluating and purchasing online, with 45% of them doing so via social media.

Many social media sites have introduced e-commerce features on their platforms, providing an alternative to popular online shopping sites like Lazada and Shopee. For example, users can purchase directly from the TikTok Store or Facebook Marketplace without navigating outside the app.

Social media shopping contributes to the social commerce industry, which is expected to grow significantly in Singapore over the next five years and is expected to reach $6.99 billion by 2028, according to a report published last year on Research and Markets.

A 2023 survey by British analytics firm YouGov showed that Generation Z prefers to shop on TikTok and Instagram rather than Facebook, which is more popular among older generations.

More than 15 million businesses in Southeast Asia use TikTok to promote their businesses to an audience of 325 million monthly users, the content platform said in a statement.

Videos that use entertainment and informational value to stimulate online purchases, also known as “shoppertainment,” have created a market on the platform worth $500 billion today, according to a 2022 report from TikTok.

Such a strategy enables businesses to attract buyers by creating fun, reliable and inspiring content that meets customers’ emotional needs, TikTok said.

Emotional involvement in “leisure shopping” attracts Gen Z because they prefer to buy from content creators who bring a dimension of authenticity to the product, said Lawrence Loh, professor of strategy and policy at the National University of Singapore (NUS) Business School.

“Compared to other generations, they prefer to be realistic about what they buy,” he said.

Content creators promoting products can also appeal to Generation Z’s preferences for authenticity by using live streaming functions on social media platforms.

Tracy Loh, a senior lecturer in communications management at Singapore Management University, said that unlike the static shopping experience of e-commerce sites such as Lazada or China’s Taobao, TikTok live streamers talk to their audience for three or four hours at a time.

She said it’s like getting a recommendation from a friend, as it helps the buyer gain more user trust over the brand. “You want someone whose trust factor is high, especially when it comes to personal or intimate products, like cosmetics or health,” she said.

Frequent online shopper Wu Zuo’an said she created her first social media outlet Purchasing through TikTok after watching a creator test a specific cosmetics product during a live stream.

“I saw that the product actually works once I put it on my face,” the 22-year-old Singaporean said.

Wu said she plans to use TikTok to shop for cosmetics from now on.

Influencers with 1,000 to 10,000 followers who create content, also known as nano-influencers, make up the largest share of accounts on TikTok and Instagram, according to Statista’s e-commerce database.

These micro-influencers appeal to Gen Z shoppers because they offer specialized recommendations that cater to Gen Z’s eclectic preferences, said Loh of the National University of Singapore.

Because Gen Z is digitally savvy, they rely more on social media influencers to guide their purchasing decisions, he said. “They want to find something that matches their attitudes and preferences.”

In contrast, millennials born between 1981 and 1996 prefer big brand names or people with great influence, such as celebrities or sports figures.

SMU’s Loh said traditional e-commerce sites have begun to emulate social media by expanding their influencer reach, using smaller influencers to counter local campaigns and appeal to Generation Z.

“Shopee is using younger local artists instead of people like Cristiano Ronaldo in more of its campaigns in Singapore,” she said.

Social commerce also makes it easier for Gen Z to follow influencer recommendations by combining information-seeking tools with the ability to make direct purchases.

For example, Instagram’s “Shopping Posts” feature allows businesses to tag products directly in their photo or video posts, taking users to the checkout page in just a few clicks.

“It’s a one-stop shop for Gen Z where they don’t have to go to additional platforms,” she told CNBC. “The fewer hurdles a person has to jump through, the more likely they are to make a sale.”

Generation Z is an increasingly important consumer segment as their purchasing power has steadily increased over the past decade. The average graduate salary in Singapore was S$4,200 ($3,181) in 2022, up from S$3,700 in 2020, according to Meta’s Digital Consumer Report.

Young shoppers have increasing amounts of disposable income and are “no qualms” about spending it on certain items, SMU’s Loh said.

“Although it has not been fully reached, there is great potential there… Give them a few more years for their income to grow,” she said.

Generation Z doesn’t just have money, they also have social influence. They are young people who have the potential to influence the purchasing decisions of other generations, said Loh of the National University of Singapore.

“Gen Z are articulate and act as opinion leaders. Many of them are influencing the shopping habits and lifestyles of their parents or grandparents,” he added, noting that some older Singaporeans are starting to use the same platforms as Gen Z to shop.