The e-commerce landscape in South-east Asia has never been more buzzing. With a total market size of about 200 million individuals spread across the top six economies in Asean, the region recorded a more than 40 per cent growth in e-commerce transactions in just two years from 2015, and hitting US$11 billion (S$15.2 billion) in 2017.
The e-commerce pie is expected to grow even further as more consumers in South-east Asia turn to online shopping. E-commerce has been a great leveller for small businesses looking to tap the region’s growing middle class. It has allowed smaller brands to go toe to toe with the big boys in pushing their products online.
Integral to this is ensuring efficient supply chain networks that are able to meet the burgeoning demand. Many promising new brands have failed because of backlogged deliveries or inefficient inventory processes that cannot cope with the exacting demands of e-commerce. With a firm foundation in place, it’s half the battle won.
As the engine powering the growth of the e-commerce industry, logistics companies such as UrbanFox and our parent company, Keppel Logistics, have been doubling efforts to ensure that our partners can deliver on expectations and ensure customer satisfaction as e-commerce volume continues to grow – it’s no walk in the park but we’re committed to deliver.
Here are five logistics trends that small businesses should know and prepare for to stay ahead in the highly competitive e-commerce landscape.
1. Evolving retail patterns
The reports of brick and mortar retail’s death are, to paraphrase Mark Twain, "greatly exaggerated". Indeed, the fast-growing popularity of e-commerce has presented a challenge to traditional stores and the distributor-driven sales model. Physical stores are simply unable to compete with online marketplaces where there is a virtually endless array of choices.
However, the modern shopper does not shop exclusively online. What we see in reality is a mixed-bag of behaviour ranging from consumers conducting online research on a product before making a purchase at a physical store, to consumers using stores as "showrooms" to try out products which they then buy online. The trend has come to be known as online-to-offline or O2O commerce, and it is creating new demands on warehousing and last-mile delivery.
2. Increasing B2C customer demands
The expectations of both individuals and businesses with regard to the last-mile will continue to get more challenging. They now expect to get goods faster, with greater flexibility, and in the case of end consumers, at low or no delivery cost. Soon, same-day delivery service will cease to be a service differentiator and become a norm in the business-to-consumer (B2C) world.
Catering to evolving expectations will remain a challenge. Many brands still adopt a siloed approach to online and offline channels. Today’s supply chains are largely designed to meet yesterday’s consumer purchasing habits. Therefore, inadequate infrastructure, warehouse readiness and less than efficient last-mile delivery are issues that will continue to hinder delivery effectiveness and hence, customer satisfaction.
3. Increasing adoption of technology by logistics companies
The deployment of technology, or digitisation, offers tangible solutions to tackle many of these issues.
The blurred lines between logistics companies adopting technology, and companies hawking technological software services catering to the logistics industry, will be even harder to distinguish moving forward as traditional logistics companies continue to leverage technological platforms as major service selling points.
Digitalisation has been streamlining business processes within the company and lubricating the engines of business with even more efficiency. Beyond that lies an even bigger picture, that of digitalisation as an enabler, facilitating the growth of the interconnected logistics ecosystem with business partners and companies as nodes within a vast value chain.
For example, the Info-communications Media Development Authority (IMDA) has spearheaded the development of Dock Scheduling & Queue Management (DSQ) to support in-mall distribution projects. The goal is to solve issues of delivery truck congestion around malls, lengthy loading/unloading times, and the consequent inefficient use of delivery vehicles
It is easy to be enamoured with the concept of digitisation and the wonders of new technology.
However at its core, we must always be aware that the deployment of technology is about people and processes. New technologies are forcing logistics companies to rethink the way people, business models and processes come together, to cater to the service levels, speed, flexibility and costs required with the demands and expectations from growing e-commerce activities.
4. Emergence of new distribution models
As the line between technology and logistics companies continue to get even fuzzier, new distribution models that address the gaps in the traditional logistics supply chain will continue to emerge.
Often considered the most inefficient leg within the e-commerce logistics value-chain, last-mile delivery services in Singapore face limited delivery consolidation and a low utilisation rate of trucks – all of which contribute to high delivery failure rates. It is a common conundrum for logistics companies serving the e-commerce segment due to its seasonal nature. This, however, is the most important component to creating end-consumer value, being the last touch-point before the entire service chain is complete.
The need to improve the last-mile experience gives rise to companies such as UrbanFox, an omnichannel logistics and channel management solutions provider that we unveiled last year. UrbanFox’s crowdsourced delivery platform provides elegant solutions for companies to cope with fluctuating and peak demands that come with last-mile delivery.
What is crucial to stay ahead is an innovative mindset, as well as the determination to shake up the status quo, and push the industry to reimagine new ways of solving issues.
5. Multi-stakeholder collaboration becomes more important than ever
The challenges mentioned above require collaboration across the industry and across channels.
Multiple stakeholders - from shippers, carriers, service providers and government -will have to collaborate and develop interoperable platforms and standards that facilitate information exchange and communication.
In pursuit of this larger goal, UrbanFox is working to achieve gains in efficiency by enhancing its analytics and parcel sorting technology platform with automatic geospatial and chronological delivery clustering.
More importantly, Singapore has the potential to become a living laboratory for experimentation with innovative urban logistics concepts. A digitally enabled distribution ecosystem can help to address current challenges and achieve a systemic improvement that can be exportable to other urban cities.
Multi-stakeholder collaboration will be the key factor to optimising logistics deliveries in Singapore, and supporting the overall growth of the e-commerce industry.