Techblog
From e-commerce to logistics – what SMEs should know
Companies looking to ride Southeast Asia's e-commerce boom need to address the region's next big challenge: logistics. Fortunately, the options are growing in Southeast Asia for small businesses to ensure timely deliveries and happy customers.
Building robust logistics
There’s a reason small businesses are going online in Southeast Asia, the new frontier of e-commerce, as described by The Wall Street Journal. While the region’s e-commerce market is still woefully small, according to Bain, it’s ripe for growth. With unmatched digital adoption, 250 million smartphone users and 150 million people researching products online, all of these signs point to an e-commerce boom ahead.
However, a key hurdle is the region’s logistics network. Shipping an item within Southeast Asia can take days and be prohibitively costly. This is why when your setting up an e-commerce store, ensuring robust logistics capabilities is essential to meeting online shoppers' demands for faster deliveries.
Thankfully, investors have been betting big on Southeast Asia’s e-commerce future and logistics to support it – last year saw record-breaking investments in regional logistics at US$28 million (S$38 million), according to Tech in Asia. Innovative startups have sprung up and even postal agencies such as Singapore Post are investing in e-commerce logistics.
For e-commerce entrepreneurs, this all means you have numerous options to build logistics capabilities that enable growth.
DIY logistics
You can keep logistics in-house and invest in your own fleet of delivery vehicles. As consulting firm Oliver Wyman pointed out, handling logistics yourself gives you end-to-end control of quality and branding, as well as flexibility to respond to customers. However, as an expensive and complex operation, it's only really viable for large, high-volume businesses.
Outsourcing
For smaller businesses, it’s more cost effective to outsource logistics.
Local courier fleets can deliver goods to the consumer from the point of sale, typically completing this within a specific time frame, such as two hours. As a logistics solution, it’s quicker to implement and allows you to offer speedy deliveries. The downside is that it can be costly if you ship minimal value items, which doesn’t make it scalable.
Parcel carriers are usually more cost efficient as they bundle deliveries and integrate routing. This solution is also more scalable than courier services. However, it can be less flexible when it comes to pick-up times. As a relatively new model, it may also be hard to find services.
Anticipatory shipping
If you sell fast-moving items in a crowded area, one way to meet demand for faster deliveries is to send them before customers place orders. This 'anticipatory shipping' is based on data analysis, with shipments triggered by ordering thresholds. For example, Amazon's anticipatory shipping system ships products it expects customers in a specific area will want based on previous orders and other data.
In the region, there are also logistics companies that can help small businesses build anticipatory shipping capabilities.
Key logistics players
Thanks to the logistics investment rush, there are a number of companies offering innovative services in Southeast Asia. Here are some of the top players to check out.
aCommerce sells itself as a one-stop shop for e-commerce retail services, including warehousing, fulfillment, cross-border management and last-mile delivery. With offices in Thailand, Indonesia, Singapore and the Philippines, you can ship items regionally and globally. It also provides reverse logistics for returns, next-day delivery and cash-on-delivery, for shoppers who prefer to pay cash.
Another option is Deliveree, which matches drivers in Thailand and Indonesia to your logistics needs. It offers same-day shipping or advanced bookings of up to two weeks, as well as business plans, which include discounted fares and damage warranty.
In Singapore, Ninja Van specialises in same- and next-day deliveries for e-commerce. Businesses can use Ninja Van’s API to create delivery orders and receive real-time tracking updates. It also provides cash-on-delivery and reverse logistics.
While TheLorry provides on-demand cargo transportation in Malaysia, it also offers a specialised product for businesses, which allows you to book transport, track drivers and receive invoices.
Finally, consider HappyFresh, which operates in Malaysia, Indonesia, Thailand and Taiwan. Not technically a logistics company, HappyFresh delivers groceries to customers purchasing from its online platform. However, grocery retailers and micro farms can join the platform to reach more customers. HappyFresh will digitise your products, market them online and take care of delivery.
For entrepreneurs looking to ride Southeast Asia’s online shopping boom, robust logistics is critical. With the right set-up, you can entice customers with faster deliveries and grab a bigger share of the online shopping pie. The first step is to determine which logistics option best suits your business and then look for partners that can support your goals. Bear in mind these tips:
- DIY logistics suits businesses that want end-to-end control.
- Outsourcing is more cost effective for smaller businesses.
- Anticipatory shipping reduces delivery times.
- Research logistics players that suit your needs.