How Logistics Is Determining E-commerce Growth
Learn how to select the right supply chain provider to help you overcome cross-border shipping challenges and realize your business opportunities.
Despite strong growth in food-delivery services and online grocery-shopping solutions, fashion remains the Asian e-commerce market’s largest segment, with a market volume estimated to be worth US$443 billion this year.
The middle class is making its mark
This rising affluence is translating into dramatic changes in the hottest growth sectors for consumer products, explains Boston Consulting Group in its report How the Digital Revolution Is Integrating Southeast Asia’s Consumers. While demand for modest indulgences such as snack foods and ready-to-drink beverages took off as Southeast Asians entered the middle class, for example, demand is now surging across the region for affordable luxury goods, such as cosmetics and high-end consumer durables, and for “experiential” products like restaurant dining and overseas travel. Moreover, these affluent consumers are internationally minded, discerning, and interested in unique and customized products and experiences – demands that digital commerce is particularly well positioned to fulfill.
Thirdly, it has never been easier to shop online. Globally, more than 50 per cent of traffic to online stores comes via mobile and 32 per cent of spending, but in Asia, smartphones are at the core of interaction between retailers and customers.
Digital wallets and faster connectivity
While internet speed may be a challenge for some, most countries in Asia Pacific are already developing high-speed 5G-generation mobile data networks which will speed both the browsing and ordering process.
Voice-operated technology is also making online shopping more accessible: During the 11.11 Singles Day Global Shopping Festival last November, a popular Chinese marketplace took more than 1 million orders through voice command via an open-platform intelligent personal assistant.
Logistics – a core driver
New York and Hong Kong-based retail thinktank Coresight Research listed speedier logistics and order fulfilment as a key trend in Chinese e-commerce for 2000. We expect logistics providers to offer faster delivery by upgrading their logistics infrastructure and increasing capacity at bonded warehouses. Same-day delivery would then be possible for a broader range of products.
Cross-border challenges and opportunities
With more and more regional and trade deals being negotiated between governments and trading blocs, it has become more attractive for SMEs to expand into new markets.
Logistics companies can help local retailers go global by shipping their products internationally faster. Experienced logistics service providers are dealing with customs departments and other regulatory authorities on a daily basis, providing businesses with established clearance solutions. When it comes to markets like Europe or the Americas, they are well placed to smooth the way for Asian e-commerce companies to develop trans-continental trading partnerships and to ship to markets which are not previously practicable.
Software like FedEx Ship Manager that can be integrated with retailer’s platform also makes it easier for cross-border e-commerce companies to go through the tax refund and foreign-exchange settlement procedures, helping them keep track of export transaction records. With this, businesses will be able to make the most of regional trade deals or localized cross-border agreements designed to encourage trade and cross-border commerce.
Trust and speed
Here is where an experienced and efficient logistics partner plays a huge part in customer satisfaction and thus loyalty: If a retailer commits to a certain delivery date of a product, it must honor the commitment. Delays frustrate consumers and would potentially lead to cancelled orders as they seek an item somewhere else. A reputable distribution partner can reduce the risk of delivery problems by offering shipment personalization options such as delivery notifications, have shipments delivered to a secure location and more – to suit the customer’s needs.
Consumers – especially millennials and their successors from Gen Y and Z – expect instant gratification. If they like something, they want it there and then. This is nowadays being referred to as the “on-demand economy” and here logistics is absolutely critical to satisfying customer expectations. There is evidence that consumers will pay more for speedy deliveries.
A recent study found that 43 per cent of Gen Z, 28 per cent of millennials and 18 per cent of Gen X consumers believe the faster you can purchase something, the better the vendor or product is. As one commentator observed, “that might not be totally fair, but that’s the reality of this new omnichannel world of payments and commerce”.