Talk to most experts in Southeast Asia about the potential of ecommerce in the region and they’ll find common ground: the real bottleneck towards growth lies primarily in logistics that can’t keep up.

Decrepit infrastructure, outdated customs processes, and the sprawling landscape all add up to a scenario notoriously murky to navigate. Indonesia, for example, is the largest internet market in Southeast Asia and it’s expected to drive the bulk of growth in ecommerce. Economic indicators are rosy and consumers have higher disposable incomes.

The problem? It’s a massive archipelago consisting of 17,000 islands. Ecommerce deliveries can take up to a week if delivery is even offered at all, leaving customers frustrated and uncertain whether they’d engage in a purchase again.

It’s a similar story in the Philippines, which has over 7,000 islands. Countries like Thailand may be geographically easier to navigate but it’s not without its own set of challenges: the Kingdom witnesses the second-highest road accidents in the world, just marginally behind Libya.

But simply adding more delivery vehicles and hiring people to drive them won’t instantly solve the problem. Within the logistics industry, there are issues such as fuel pilferage, lack of adherence to safety rules and regulations, and rash driving. These problems entail an inherent cost for fleet operators ordinarily passed on to end consumers in the form of delivery fees. And that’s a cost which can be avoided.

Thai company Drvr is trying to tackle these challenges head-on. It uses telematics, which allows devices to send and receive information across large distances, to track vehicle performance, driver behavior, unscheduled stops, and so on. Drvr installs an array of sensors inside vehicles to help managers keep track of the fleet and also provides a SaaS platform that displays an overall dashboard. It can be modified and tweaked according to client requirements, of which Mercedes Benz is one.

CEO and co-founder David Henderson, who hails from Seychelles, first moved to Thailand in 2014 following a stint at a telematics firm in Australia. The challenges of solving mammoth problems in Asia was the primary motive – he had originally pitched the idea to his previous employer but they were far too risk-averse for his liking. So he decided to quit and branch out on his own.

“The product we had two years ago was simply a GPS tracking product,” David tells ecommerceIQ. “We’ve matured significantly as a company since, and it’s fair to say that we have one of the most advanced fleet management and IOT platforms in the world now.”

The Drvr analytics dashboard

Why start in Thailand?

David explains that his target market isn’t just the logistics sector, but any business that owns and operates a large fleet of vehicles. This could entail players in transportation as well as construction. Such businesses need to keep a keen eye on the health of their vehicles to make sure that drivers and support staff aren’t running amok.

“Thailand is a natural market for us because there are over 3 million vehicles manufactured here annually with commercial vehicles accounting for half that number. That’s the primary reason we’re based here,” he explains.

Drvr’s core solution aims to make fleet operators operate efficiently. It achieves this via a number of ways – the first, as mentioned earlier, is via the predictive analytics platform it offers. The driver version of its app also combines gamification elements to help coax drivers into following the rules. There are rewards every time they adhere to a certain standard such as the maintenance of an average speed or keeping unscheduled stops to a minimum – these could be in the form of cash bonuses or enhanced performance reviews, but is agreed mutually between the fleet manager and driver. The company says this helps reduce the element of confrontation between them and HR.

“One of our immediate use cases that we can prove to our customers is in the case of fuel theft. Fuel theft is a major issue, not just in Thailand but right across the world in fact. It takes on different forms in different areas – [in Thailand] it tends to be siphoning but in Australia and other places […] people tend to fraudulently buy fuel or fill up their own car with the company credit card. We can detect these scenarios and prevent them from happening,” says David.

Before Drvr came along, the common solution to this issue was that companies would simply pay their drivers lower. These would lead to distorted economic incentives – drivers would simply shrug their shoulders and pilfer more fuel from the vehicle in order to sell it for cash. And the cycle would worsen.

David doesn’t disclose how many customers he has but does say that the startup turned a profit last month. While they’re based in Thailand, the largest market is currently Myanmar in terms of volume. However, both Indonesia and the Philippines are high on his list of priorities.

“We see Indonesia as the critical market in Southeast Asia – volume-wise, it’s just one with huge potential. Margins are a bit lower, admittedly, but there are big opportunities there,” he adds.

“At the same time it’s very tricky to get a foothold – we’ve failed a couple of times because of the difficulty of finding a reliable local partner. If you’re successful in Indonesia, it’s a massive tick on your profile.”

What trends does he notice?

Fleet analytics companies aren’t exactly mindblowing tech and there’s a few of them around already such as Cartrack and Coolasia. For David, however, they’re trying to set themselves apart in terms of the sophistication of their platform and the clients.

Mercedes Benz trucks, one of their key clients, actually ships all vehicles in Myanmar with Drvr sensors pre-installed. This provides a certain degree of validation when pitching to other companies. Drvr is also helping facilitate the growth of a subscription vehicle model – whereby fleet owners ‘rent’ vehicles from manufacturers as opposed to simply buying it outright and then allowing it to depreciate over its lifecycle.

This scenario – which David claims is already happening in markets like Australia – necessitates razor-sharp analytics so manufacturers know how to charge on an hourly or monthly basis. Analysts need to understand costs specifically and it’s simply not possible to do that without carefully monitoring existing vehicles to figure out when it’s liable to break down, what the fuel costs are, and other predictive analytics.

He claims Drvr is working with manufacturers interested in this model – the sensors and analytics will help them build a financial model – but doesn’t name names.

Will IOT engulf Asia?

Some people might scoff at the idea of high-tech commercial vehicles plying the backwaters of Asia given how cheap labor costs are, but David doesn’t believe it’s so far-fetched. He agrees on the fact that the economic imperative, for now, is missing but says the costs of devices and provisioning the service is “much lower than what it was in the past.”

“If you’re in ecommerce or logistics, the reality is that customers expect goods to be delivered the same day or as quickly as possible. In order to facilitate that you can’t have drivers sleeping on the side of the road or stealing fuel. It damages your brand and the perception of your service. Even the most old-fashioned Thai companies are beginning to realize that,” he explains.

ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest growing market.

A shopper tapping the ‘buy now’ button is often seen as the last stage in the ecommerce funnel, but companies should understand that it doesn’t stop there.

The warehouse hustle bustle, weight of package, and even presentation of the delivery man not to mention the possibility of a return all can determine the extent of local success a company finds and whether if their operations make expansion plausible.

In the eighth week of eIQ x Sasin: LEAP, lecturers stress the details that make e-fulfillment successful and how each tiny misstep can lead to additional man power, longer work hours and missed deadline.

1. Setting Up a Fulfillment Center Requires A Lot Data and Elbow Grease

Kenneth Thean, aCommerce Regional Director of Solutions Design

 

LEAP2017, ecommerceIQ, aCommerce

Ask anyone about a warehouse and they’ll probably draw a building with some shelves and people in it. While these elements exist, creating the right framework to manage the flow of inbound and outbound goods means companies need accurate data.

ecommerceIQ, LEAP2017

First step in designing a fulfillment center, analyze. Source: aCommerce

Before investing in a large costly warehouse, sophisticated technology and assets, use data to assess your actual requirements. Kenneth shares a few mistakes clients often make when planning.

“Very commonly, companies expect to see exponential growth and overestimate order volumes. Always consider the accuracy of your data, do a check to avoid unrealistic forecasts to ensure the sustainability of your fulfillment center.”

2. Kerry Express: How We Grew From Nobody to Somebody

Alex Ng, Kerry Express Executive Director

 

LEAP2017, ecommerceIQ

Kerry Express launched in Thailand in 2013 and in four short years, the company ships 500,000 packages a day, operates 500 distribution centers and is the number one parcel delivery company in the country.

How did they grow and ensure customer satisfaction at the same time? Alex attributes it to having the best people and keeping it ‘stupid simple’.

ecommerceIQ

The growth of Kerry Express in five years. Source: Kerry Express

A student asked Alex, “how do you ensure that the workplace environment is genuinely a happy one?”

“Reduce the mundane routines, bureaucracies and eliminate workplace politics. There is no room for politics at Kerry, only for real work.”

3. Market Expansion? It’s Ok to Copy and Paste

Kawin Prachanukul, Country Head and Co-founder ShopBack Thailand

 

LEAP2017, ecommerceIQ

The components Kawin had to assess when launching UberX in Thailand in only 10 days.

 

“Uber has its ups and downs, but what they have been able to accomplish in terms of market expansion is admirable,” says Kawin, ex-Uber Thailand Operations Manager.

While at Uber, Kawin shared how his first major task was to launch UberX in only 10 days. How?

“It was only possible because the company’s global team has documented and tracked each and every one of their multiple steps when launching a new market, including learnings and failures. It makes expansion easier because all the local market needs to do is copy and implement.”

The last in-class session of the program will finish on Thursday November 9th, covering payments with case studies by global unicorn, Adyen. Stay tuned for next week’s takeaways!

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand
[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy
[LEAP Week 3] eIQ Insights: Market-Product Fit First Before Anything
[LEAP Week4] eIQ Insights: Central Marketing Group’s Shares Phase II of Digital Strategy
[LEAP Week 5] eIQ Insights: Startups Need to Have an Independent Source of Income to Survive
[LEAP Week 6] eIQ Insights: In Mobile Commerce, App Install is Only the Starting Point
[LEAP Week 7] eIQ Insights: Logistics and Fulfillment, The Other Side of The Ecommerce Coin

The popularity of  ‘click and collect’ has grown among consumers worldwide as it offers them more flexibility in retrieving their online purchases. More importantly, the reason why consumers prefer this last mile method is because they avoid the delivery fee.

A growing number of companies like Japanese fashion retailer Uniqlo are letting customers pick up online purchases in 400 of its 500 stores in China to help tackle problems such as delayed deliveries. Retailers generate foot traffic and sales to offline stores.

67% of shoppers purchase an additional item while collecting their items in store.

It’s no wonder 51% of CEOs plan to offer click and collect in the next 12 months, while investment into same-day delivery only attracts 31% of them.

However, retailers need to keep in mind that to provide a positive experience for consumers using the service, simply relying on existing infrastructures such as the physical store isn’t enough.

The latest report from JDA & Centiro found that among the most common problems in the last 22 months that often occurred with click and collect included long waiting times and unsynchronized inventory between online and offline stores.

Retailers planning to provide click and collect as part of their ecommerce strategies need to allocate enough resources, whether it be data systems or software, to have a clear snapshot of real-time inventory to improve the entire retail process for both on the ground employees that need to fulfill incoming orders and the consumers standing in line waiting to spend their hard-earned cash.

Deliveree logistics marketplace

Deliveree’s Group CEO Tom Kim and Group Head of New Product Nat Atichartakarn at Deliveree’s Jakarta HQ

The current state of logistics in Southeast Asia is often bemoaned as one of the main challenges holding the region back from its full economic development.

Alibaba founder and chairman Jack Ma remarked that with Indonesia’s geographical state, a comprehensive logistics network is needed to stimulate growth.

His assessment is also applicable to other emerging markets across the region.

But these types of infrastructural projects in the Philippines, Thailand or Vietnam is not an easy, and certainly not, cheap feat. Here are a few examples of current plans in the works:

  • World Bank estimates $500 billion is needed in Indonesia over the next five years to bridge the infrastructure gap
  • President of the Philippines, Rodrigo Duterte, proposed a $161 billion six year plan to improve railways and ports to connect the archipelago’s islands
  • Thailand’s government has also started 20 infrastructure projects worth $50.2 billion to improve the country’s current rail lines

This regional bottleneck has opened opportunities for startups to figure out the cheapest and quickest way to get a package from point A to point B.

Companies solving last-mile headaches for ecommerce companies have attracted a lot of investor money like Lalamove and NinjaVan with $100 million and $30 million funding rounds, respectively.

But a logistics technology company that recently raised $14.5 million is looking to tackle another problem.

“We’re interested in solving bigger, bulkier problems that sit further upstream from your last mile delivery challenges,” explained Tom Kim, Group CEO of Deliveree. “With marketplace technology, we want to fundamentally challenge the way companies approach first and mid-mile bulk logistics.”

Deliveree logistics marketplace

ecommerceIQ speaks with Tom and the Group Head of New Product, Nattapak Atichartakarn, to discover how the logistics company found success in Southeast Asia by helping businesses reduce costs for first and “mid-mile” goods transport and what they plan to do with the recent Series A injection from Gobi Partners.

Logistics but focus is on technology

Through the Deliveree mobile app and web marketplace, customers have access to screened qualified drivers of commercial vehicles to move their merchandise and/or cargo.

The company’s new marketplace model houses 15,000 commercial vehicles consisting of cargo vans, pickups trucks, small-large box trucks, as well as economy vehicles such as MPVs and hatchbacks on its platform — covering three metro cities in Southeast Asia; Bangkok, Jakarta, and Manila (the company operates under “Transportify” due to a trademark issue in the Philippines).

Having started with serving end-customers, the company realized in order to grow its business, it had to focus on serving corporate clients.

“The bread and butter of our business is goods, merchandise, and cargo — bulk movement from outer provinces to warehouses in the cities, factories to distribution centers, and distribution centers to retail stores, or what we call modern trade,” explains Nat.

Now, nearing the end of its third year of operations, the company says it is close to financial break-even in its core markets. Nat credits this success to the quality of technology and drivers that Deliveree provides.

The company’s tech team of 30 developers in Vietnam is responsible for building, managing, expanding, and innovating the company’s marketplace tech capabilities and solutions that focuses on businesses needs:

  • Batch booking toolsets for high volume customers
  • Flexible booking scheduling from immediate to two weeks in advance
  • Drop off package at multiple destinations up 10 locations
  • Real-time tracking of driver and package location
  • In-app chat between customers, drivers, and customer support
  • Cash on Delivery and original document return services
  • Contract logistics option for businesses that need dedicated resources
  • Full commercial insurance

In addition to targeting SMEs, Deliveree also partners with transportation and logistics companies without their own technologies to connect them to new customers on its platform.

“People think these big logistics companies own their whole logistics network, when in fact, many don’t. A lot of them outsource ground transportation elements of the business and they use us as a provider of ground transportation for bulk goods and cargo so we address the gap and needs of the industry,” says Tom.

Capitalizing on quality

Deliveree logistics marketplace

The company takes pride in the high quality of its drivers, achieved by imposing a high standardized screening process, something Tom doesn’t skimp on.

It’s easier to get into most colleges than to get into our driver pool.

“We only invite a third of the driver applicants to training — it’s less than the acceptance rate at the most universities,” says Tom.

Calling it the “best trained fleet on the market”, every single driver must endure six hours of in-class training, which includes customer etiquette, and pass a 50 question final exam with 80% score or higher.

The company also enforces additional training for drivers with low satisfaction scores and regularly do real-time quality checks with a mystery shopper.

While not the most scalable process, Nat says it’s a price the company’s willing to pay.

Growth without quality is more of a step backward for us.

With such high investment in human resources, is the company worried about “leakage” – the shift of user-driver relations moving off the platform?

“There will always be a case or two of customers trying to work with our partners directly, but most of them end up coming back to our platform. Why? Because one of the reasons they come to us in the first place is they don’t want to, or can’t, manage this specific part of the business,” said Tom.

“And with the added value we provide for them, I don’t see why businesses would want to even bother.”

Ride-hailing apps aren’t built for cargo

With the heated war between ride-hailing companies in the region, parcel delivery is one of the added value services that is being offered by Uber and Grab to capture a wider clientele.

But Deliveree isn’t worried.

“These ride-hailing companies have always been doing logistics but they haven’t been doing it right,” said Tom.

According to Deliveree, the services provided are not comparable as the requirements for logistics is radically different than the passenger business.

“If you’re looking at the value of delivery bookings in Uber and Grab, it’s probably not more than a few dollars. Our average booking value is more than 10 times the amount and at the same time, our resources and costs to support each booking are higher than what a passenger app would expend per booking,” said Tom.

Tom also pointed out the security risks highlighted by a recent ruling in the Philippines by the country’s Land Transportation Franchising and Regulatory Board (LTFRB) that banned any package delivery through ride-hailing apps accompanied without a passenger. The reason? Drug-trafficking concerns.

“Trust me, it won’t only be the Philippines that will apply this rule,” commented Tom.

Small ecommerce pie for Deliveree

With the current state of ecommerce in Southeast Asia where fashion still tops all categories in popularity and ordering large items like bicycles or washing machines is still uncommon, the pie for Deliveree’s business is not that big.

“Ecommerce is primarily a business comprised of small things, and we don’t move small things — we move big things,” says Tom.

But Tom believes the company will eventually grab their share of Southeast Asia’s ecommerce pie.

“Our company is not closely aligned with the ecommerce industry today because the items that people buy are still small parcels and it isn’t our specialty because of the challenging economic units,” said Tom. “Ordering anything and everything online is an evolution that will probably happen in the next over ten years or so.”

“This is when we (Deliveree) will likely play a much bigger role in the ecommerce value chain.”

Growing its current markets

With new funding from its Series A round, Deliveree is exploring some interesting growth plans.

The company hasn’t ruled out M&A to grow the business in key markets and although expansion to new cities and countries are in the cards, Nat said that Deliveree is more interested in growing the cities where it is currently operating at the moment.

Deliveree logistics marketplace

“Imagine if Asus, Lenovo, and Acer compete with each other in the tablet market in Jakarta,” said Tom. “When the sales start, there’s a limit to how far the competitors can go because they have inflated costs the further the consumers. If we can bring down the cost base and give them more margin latitude, the competitive playing field will force some of those savings into discounts, sales, promos, even lower everyday pricing and ultimately the consumer wins.”

Deliveree logistics marketplace

“These are the kind of big problems we love to be involved in solving,” concludes Nat.

Smart lockers were a big topic at Last Mile Fulfillment Asia this year.

What are they you ask? They are the tech-world’s equivalent of high school cubbies but out on the street, in your condominium lobby or shopping mall accessible only to users with the right digital passcode.

smart lockers Southeast Asia

POPStation lockers in Singapore. Source: SingPost

Many e-locker providers such as PopBox in Indonesia, Box24 in Thailand and POPStation in Singapore talk about the future of their businesses as the best solution to the region’s ‘last mile’ problem. But is it that simple?

Let’s disassemble the smart locker.

How it works

As online retail grows in the region, it’s understandable that more packages need to be delivered to end consumers. Nomura International (Hong Kong) projects that the package delivery market for the six major Southeast Asian countries will more than double from 2015 levels to over $7.5 billion in 2020.

The last mile becomes costly for companies because of how geographically vast countries such as Indonesia and the Philippines are and the broken address system across Southeast Asia.

While the last mile of the supply chain may be the shortest physical stage in a package’s journey, it represents about 30% of total delivery costs.

“Delivery cost per package a few years ago used to be 60 THB and now, logistics companies in this red ocean are subsidizing costs to charge only 30 and even 20 THB to grab market share,” said Paul Srivorakul, aCommerce Group CEO, at LEAP by ecommerceIQ and Sasin SEC.

Enter the smart locker, a new delivery option that promises less failed deliveries, flexibility for customers, and cheaper last mile costs.

smart lockers Southeast Asia

Benefits of a locker-bank i.e. smart locker.

For couriers to deliver the package:

  1. Login with company’s credentials
  2. Access data and address customer’s information
  3. Choose an available compartment
  4. Scan the package
  5. Put the package in the compartment, lock it and confirm delivery

For recipients to pick up the package:

  1. Internet shopper selects the “parcel locker” while checking out online
  2. Shopper receives an email confirmation and SMS (or in app) with details and code on package pickup
  3. Customer can track shipment to know when package has been dropped off
  4. At the smart locker, customer provides the code and other details using the touch screen
  5. If a package is not picked up, it will be transported to the nearest branch of the logistics partner

 

In Indonesia, PopBox Asia allows customers not only to pick up packages but as well make payments and return packages. In Thailand, WashBox24 (now Box24), lets shoppers pick up groceries and washed laundry ordered in app through partnerships with supermarket Tesco Lotus.

In North America, 7-Eleven has opened its doors to partners like Amazon interested in renting lockers to stay relevant as commerce moves online.

smart lockers Southeast Asia

Source: WSJ

But lockers are risky for 7-Eleven as each locker takes up about the same amount of space as one large shelf, holding dozens of lockers, which by some estimates could represent thousands of dollars in lost sales each year.

Do they actually solve any problems?

In many ways, smart lockers sound like a perfect last-mile solution. Available 24-hours, simple to use, convenient for the consumer and cheap fee for ecommerce businesses as packages are consolidated at one drop-off point.

smart lockers Southeast Asia

SWOT analysis of e-lockers.

But do they work?

Based on recent app reviews for POPStation and Box24, the service and ‘seamless’ pick up experience have faced some problems.

smart lockers Southeast Asia

Source: Google PlayStore, POPStation (left), Box24 (right)

While understandable to have hiccups with the introduction of new technology, the hardware heavy system has proven to work well in markets like Europe. But in a unique market like Southeast Asia, there are a few factors unaddressed by most reports.

Apart from the fact that the lockers require prime real estate and are costly to build and maintain – $5,000 to $35,000 per piece – these machines don’t accept cash.

smart lockers Southeast Asia

Source: WashBox24

Given that majority of Southeast Asians, with the exception of Singaporeans, still prefer cash-on-delivery, this last mile option is not viable for many ecommerce companies whose customers want to see the item before committing to purchase.

smart lockers Southeast Asia

Source: aCommerce

In China, 15,000 lockers were put in place in 2014 but handled only roughly 1% of all deliveries.

As Lazada Vietnam Gerald Glauerdt commented LMFAsia 2017 to ecommerceIQ’s question if he believed lockers were a good solution for last mile, “these lockers are more expensive than couriers that can take the package directly to the door.”

Operating in low-labor markets such as Southeast Asia gives companies the luxury of re-thinking their last mile strategies. As logistics networks expand their networks in the region, such as hubs on Indonesia’s scattered islands, costs will decrease to reach customers in remote locations.

New startups such as Park N Parcel are also leveraging existing infrastructure such as mom and pop shops and convenience stores to offer another last mile solution.

With packages expected to increase in the region thanks to the rise of ecommerce percent of total retail sales, there is plenty to go around for logistics players, given they can handle today’s customer expectations.

“If you do last mile only, there’s zero loyalty. You don’t remember who delivered your order, but you remember who screwed it up,” – Vaibhav Dabhade, CEO and founder of Anchanto.

Blibli.com is best known for being Indonesia’s first established online retailer where shoppers can find quality vacuums and handphones to local Indonesian fashion labels.

The ecommerce veteran has been around since 2009, raised over $13 million in funding and runs in-house operation of over 1,000 employees to ensure that its 5 million monthly customers receive their packages within two-days. How do they manage it?

eIQ caught up with Lisa Widodo, Blibli’s Head of Operations and Product Management, at Last Mile Fulfillment Asia to discuss one of the most common questions asked in logistics, buy or build?  

To answer this question, there are many factors to consider and understanding where the company stands is a good place to start.

Growing in a crowded B2B2C space

A quick glance at the e-marketplaces available in Indonesia show that there is already a number of strong horizontal ecommerce players.

To succeed in a saturated market like Indonesia, companies either need to differentiate or allocate a large budget to marketing to get their site in front of the eyes of consumers.

Blibli focuses on product differentiation and based on the latest data in 2016, has over 12,000,000 sellers, 12,000 brands and more than one million products on its platform to attract a growing population of wealthier young Indonesians.

By 2030, the highest concentration of top income earners will be 30-34 year olds (Euromonitor: Income and Expenditure Indonesia 2016) and Southeast Asians in general are willing to pay more for better everyday products especially in personal care and food (see chart below).

This is good news for Blibli.com as the company’s shoppers are comprised of equally male and female (55% and 45%, respectively), between the ages of 25 – 35, and digitally savvy.

Galeri Indonesia is the newest vertical by Blibli.com that puts local Indonesian entrepreneurs in the spotlight. These small shops sell items like handmade wooden watches, speakers that run without electricity, grow-at-home mushrooms and jewelry made out of rice.

Blibli internal data shows sales from this category has been growing 1197% MoM since its launch last year.

“Locals like to shop locally,” says Lisa.

The company also recently began offering hotel bookings and soon train tickets under Blibli Travel and electronic tokens for Indonesians to pay their utility bills with under Blibli Digital Product.

The company, Lisa assures, is in it for the long run.

So buy or build?

Blibli currently has five warehouses strategically placed near Jakarta’s airport, near Jakarta’s port, in the middle of the city and in Medan. The company’s facilities, which also includes a fleet operating out of five hubs in the Greater Jakarta Area, and two hubs outside Jakarta, serving all orders coming from Java – 70% of Blibli’s total volume.

Out of the five warehouses, only one was outsourced to a local provider because the company knew it would be set up faster and that the packing process was standard meaning irregular shaped items like guitars or products that needed special handling weren’t going to be stored there.

But even so, the warehouse management system used at the outsourced warehouse belongs to Blibli for complete product transparency tracked by four statuses:

  1. Order comes through and payment has been received → package will be delivered within two days, otherwise the merchant will incur a penalty
  2. Ready for shipment
  3. In shipment
  4. Delivered

Only 10% of Blibli’s orders are paid for with cash-on-delivery, which is quite low for Indonesia.

“What sets Blibli apart is our dedication and empathy towards our customers,” says Lisa. “This means we must have complete control over their happiness, their complaints and the ability to track the problem back to the source.”

Because Blibli holds its customers in such high esteem, it needs to ensure the last mile experience is of quality.

 

“Even down to smallest dent in a box, it all matters,” comments Lisa. “The only touch-point we have with the customer is the package at their door so it needs to be perfect.”

The company sends all new merchants a care package that includes free Blibli branded boxes in various sizes and tips on how to pack a product properly.

“Currently we work with 12 different last mile service providers to serve customers outside of Java and we’re always open to working with others as long as they have a solid business plan.

Buy or build? In short, if the company is a class brand that sells at a higher price point thus needs to prioritize a quality customer experience to keep retention healthy, they should spend the resources to build its own operations.

Other factors to take into account would be local knowledge, the urgency for expansion and financial allowance.

“Blibli.com had over 7.5 million transactions last month, it makes sense for us to do as much as we can in-house to give our customers their money’s worth,” comments Lisa.

If the company’s selling point is low priced goods, it should focus on scaling before investing in its own operations. Other factors to take into account are cash reconciliation, difficult delivery routes outside of the metropolises and capabilities of its tech solutions.

And of course, a hurdle to overcome is the key resource needed to make ecommerce operations a success – talent.

Changing the mindset of the people

As Lalamove International Managing Director Blake Larson commented at LMFAsia 2017,

“Technology isn’t magic dust you can simply sprinkle on logistics, it still requires a human element to work.”

Lisa believes the company’s strongest asset is its people and as with most digital companies in Southeast Asia, finding the right employees can be a challenge.

“It’s really about changing the way the general population thinks and getting them to take more ownership,” says Lisa.

She personally vets each employee during the onboarding process to ensure that there is a culture fit. Coming from a mechanical engineering background, Lisa identifies strongly with logical thinking as a necessity for anyone joining her operations “super team” of 400.

The Blibli mission

There are two main objectives for the future of this online company:

  1. Expansion in Indonesia
  2. Putting local talent on a global stage

“We plan to keep monitoring the data to determine how quickly we need to expand our reach outside of Java,” comments Lisa. “SLA and cost also need to match up.”

“We hope to make these small businesses internationally known through mentorship programs like The Big Start Indonesia. The strength of Indonesia is its local talent but it needs to be nurtured,” says Lisa.

By: Cynthia Luo