BY TAN WEIZHEN - JULY 12

business
singapore
Logistics challenges could stie
Singapores e-commerce boom
SINGAPORE As e-commerce continues to takes off in a bigger way than
before, e-retailers and delivery rms alike are scrambling to put together a
variety of solutions to beat a way through the logistics jungle that could put
a dampener on the potential boom.
SINGAPORE As e-commerce continues to takes off in a bigger way than before,
e-retailers and delivery rms alike are scrambling to put together a variety of solutions to
beat a way through the logistics jungle that could put a dampener on the potential boom.
Here and internationally, e-commerce players are confronted by a slew of logistics-
related challenges that some say present the only stumbling block to growth, as
customers increasingly demand shorter lead times and complain about unreliable or
inexperienced third-party logistics providers, especially in this region.
The lines are blurring between logistics and e-commerce, said Mr Roger Egan,
co-founder and chief executive ofcer of local online grocery store RedMart. There is a
misconception that e-commerce is all about the front end website design and mobile
applications. But those who can control the entire supply chain and logistics will win.
Some players in the eld are thus seeking to beat the game by creating their own supply
and logistics chain, including having their own eet of delivery vehicles and customised
delivery times, and partnering brick-and-mortar rms to provide pick-up points.
Much of the e-commerce business really is about the last mile end of the entire process:
Delivery. Unfortunately in Asia, there arent very many well-developed third-party
logistics companies that are used to business-to-consumer (B2C) deliveries, he said.
To cater to an increasing volume of online shopping packages, SingPost which
recently agreed to sell a 10.35 per cent stake to Chinese e-commerce giant Alibaba for
S$312.5 million will be reinstating Saturday deliveries from today. The postal service
provider had ceased collections and deliveries in 2010, citing low mail volume. But
reecting the growing trend in online shopping, local delivery of mail packages jumped
more than 50 per cent between FY2007/08 and FY 2013/14, SingPost said.
By year-end, SingPost will also double the number of POPStations a network of
24-hour automated kiosks across Singapore where consumers can pick up their
e-commerce parcels from to 100 from the current 47.
A S$45 million investment to upgrade its mail sorting infrastructure will see the
processing rate of packages improve from 85 to 90 per cent, said a spokesperson.
The deal with Alibaba which also involves discussing a possible international
e-commerce logistics venture will allow SingPost to leverage off the Chinese
juggernauts customer base and scale up its regional e-commerce logistics operations,
analysts said.
To ease their delivery load and shorten lead time for their customers, online retailers
such as apparel e-store Zalora have taken to dropping off packages at pick-up points.
Last year, Zalora struck up a partnership with 7-Eleven to allow its customers to pick up
their online orders at 18 convenience stores. That gure has now grown to 72 outlets.
Ms Rostin Javadi, managing director of operations, said between 12 and 14 per cent of
its customers opt for such a delivery method.
We understand that for shoppers, getting their items quickly is important. As such, we
set our target high for the warehouse, ensuring that we process up to 99 per cent of the
orders on the same day that they come in, so long as they are placed before our evening
cut-off, said Ms Javadi.
Online luxury goods store Reebonz said it, too, is seeking collaborations with partners to
create pick-up points, as well as even drop-off points for its reseller programme.
Even brick-and-mortar retailers are getting in on the action. Electronics chain Courts, for
instance, has created pick-up points at all its outlets for its online customers in response
to burgeoning online sales volume.
Mr Tim Luce, country CEO of Courts Singapore, said its online sales has increased 89
per cent from 2012 to last year. Half of our online customers choose to collect. We have
a massive eet of vehicles on the road, we are moving our warehouse operations
towards a 24-hour one, and we deliver at night and over the next day.
Elsewhere, e-commerce giant Amazon is experimenting with neighbourhood grocery
stores and petrol stations as delivery points.
At the same time, online providers are also beeng up their in-house logistics operations.
Stated Mr Egan of RedMart, which has 25 delivery vehicles: Consumers here have
become more and more demanding. They want two-hour delivery and they dont wish to
wait all day.
Ms Javadi said Zalora is growing its own eet of vehicles rapidly.
It has also developed a modular approach to warehousing and logistics, which means it
would be easy and fast to scale up operations. In warehousing, it has doubled its
capacity by building new inbound and outbound stations.
We have a very gifted team of analysts and statisticians in the group, building reliable
forecasts, allowing us to anticipate the volumes and plan accordingly, always staying one
step ahead of the order growth, said Ms Javadi.
As e-commerce continues to grow, other challenges, such as cross-border compliance,
are bound to crop up.
Forecasts from market research rm Euromonitor International show Singapore
consumers will spend more than S$1 billion online this year, up 9 per cent from last year.
A White Paper published this year by payment solutions provider Payvision found that
Singapore and Malaysia make up the largest e-commerce markets in South-east Asia,
generating almost half of total online retail sales in this region. These two markets are
expected to show double-digit growth in the next few years.
It also found that an estimated 55 per cent of all e-commerce transactions in Singapore
are cross-border, much higher than in Japan, South Korea and even China.
Said Mr Shingo Okamoto, head of Singapore e-commerce business at Japanese
e-commerce giant Rakuten, which recently set up a presence here: Cross-border
e-commerce logistics more specically cross-border shipping may become a
challenge as it often involves compliance with each countrys different set of rules and
regulations.
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