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Here’s what you should know today.

1. WeChat now lets mainland Chinese users share content to Facebook

With parent company Tencent seeking to expand its presence outside of China, WeChat has just launched a significant new feature allowing domestic Chinese users to synchronize Moments posts to Facebook and Twitter.

China’s Great Firewall means that access to Facebook and Twitter is still blocked inside mainland China, but the new feature should be useful to Chinese users living, traveling, and studying overseas, as well as those using a VPN within the mainland.

To access Moments synchronization to overseas social media platforms while residing in China, users will need to enable a VPN, but it’s not uncommon for wealthy WeChat users to have access to VPNs, especially if they frequently travel or do business abroad.

So what does this mean for brands? Firstly, the feature may make life easier for social teams already working with WeChat alongside Facebook and Twitter, by allowing one post to be automatically shared rather than posted multiple times.More importantly, the move allows social content to flow between WeChat users and the wider Chinese diaspora, some of whom may be using Facebook and Twitter, but not WeChat.

Read the rest of the story here.

 

2. A $60 billion ecommerce loophole in China may be narrowing

Known as cross-border ecommerce, the booming backdoor avenue allows Chinese consumers to buy overseas-manufactured goods online and effectively circumvent the regulatory issues that have stymied access to consumer products from cosmetics to Cognac.

Faced with pressure from conventional retailers at home, and the loss of tax revenue, the government is now looking at overhauling the legal loophole.

Source: Bloomberg

“If you do not harmonize the rules for commercial imports and cross-border ecommerce, there is an advantage you give to companies overseas,” said Chan Wai-Chan, a retail partner at consultancy Oliver Wyman in Hong Kong.

Read the rest of the story here.

 

3. Siam Commercial Bank’s Digital Ventures reveal coin machine

According to data from the Treasury Department in 2017, there are about 29 billion coins worth a combined Bt50 billion in circulation. Approximately 10 per cent of these coins are not in the system due to several factors including people collecting coins at home and the tendency to not carry around change.

The product development team at Digital Ventures worked with our partners, namely Lightfog, RTech and Creatus, to create a coin machine capable of counting and checking coins, exchanging coins for notes, and linking with the bank’s system to allow users to carry out transactions with greater convenience and in ways that fit with their lifestyle.

“For example, consumers can choose to deposit the change directly into their bank account, transfer to their e-wallet by providers such as Line Pay and PayPal, top up their mobile phone, or donate the change to a foundation or charity of their choice.

Read the rest of the story here.

There’s increasing pressure for ecommerce companies to offer customers “value-added services” such as same-day delivery or offline pick-up points thanks to a growing generation expectant of instant gratification – waiting even 3 days for a package isn’t going to cut it.  

Online brands and retailers end up working with a variety logistics companies to deliver orders across urban and rural areas in a quick fashion to appease customers. This is a trend not only in developed economies, but demanded in developing countries such as Thailand and Indonesia as well.

Progression of logistics in Southeast Asia

Southeast Asia is poised to become one of the world’s fastest growing market for ecommerce, estimated to exceed $238 billion by 2020. Known to be ridden with infrastructure challenges such as fickle trade regulations and lack of roads, government initiatives across the region are being put in place to improve logistics.

An example is the Indonesian government’s push to increase accessibility of islands in the country by constructing a road alongside the Malaysian border and building seaports.

“If you look at the roads, airports and railways, things are improving and will continue to. Infrastructure spend in Indonesia is expected to reach $165 billion by 2025 and the spend in public investment expected to increase by 7% per year,” says Charles Brewer, CEO at DHL Ecommerce.

Thailand also has a $50 billion infrastructure budget as the country plans to improve roads, highways and railways in the upcoming years.

But long term changes will take both investment and time before the region’s infrastructure can catch up to “same-day appetite” in developing markets and at a relatively inexpensive cost.

The ‘Light’ Model

In the meantime, online players can rely on the rise of an on-demand, lighter logistics model that tackles issues of long delivery periods and limited distribution in rural locations.

According to real estate consulting firm CBRE, modern logistics services are shifting away from big box warehouses, bulky deliveries and in turn, expanding their networks with existing infrastructure or building small counters across the country to meet the demands of clients.

Examples of this in Bangkok include SKYBOX pickup and dropoff kiosks, located at the city’s public train stations and Zalora Thailand that uses 7-Eleven as return points.

Logistics providers are also introducing collection points at existing locations such as shopping centers or office buildings in second and third tier cities as seen by DHL Ecommerce’s recent nationwide expansion in Thailand. The company’s aim is to decrease the time SMEs take to ship parcels.

According to a DHL survey, 55% of SMEs cite logistics as a time killer.

It’s resource heavy to build new hubs and roads and companies can’t afford the time needed to see infrastructure improvements and capture market share. By turning to a light model, logistics services can provide efficient, speedy services without big investments.

Adapting to (on) demand

Southeast Asia’s increase in delivery expectancies could be attributed to the fact that mobile subscriptions are ahead of the global average with 854 million mobile connections. These mobile first users can easily request for on-demand groceries, t-shirts and hot meals on the go with their phones.

Next day delivery account for 95% of existing logistics services in Thailand, while the remaining 5% is filled by on-demand delivery services. There’s still a vast opportunity for logistics players to service ecommerce companies that require speed and efficiency.

In Indonesia, there are PopBox lockers designed to make last mile more convenient for shoppers and merchants. According to William Tanuwijaya, CEO of B2C marketplace Tokopedia, “courier businesses will grow as they are needed to deliver products sold on marketplaces. The promise of fast delivery is also appealing to locals.”

In order to fully serve Southeast Asia’s growing customer demand for faster deliveries, logistics companies need to offer localized, out of the box solutions such as pick-up points in parcel shops, partnerships with convenience stores, lockers or risk being left behind.

 

Here’s what you should know today.

1. DHL ecommerce helping Singaporean retailers reach the US market

Singaporean businesses ranging from pure online retailers, ‘brick and mortar’ retailers, manufacturers or ecommerce giants are set to benefit from new international shipping platform launched by DHL which sends parcels to the US within 4-6 days. The platform is called ‘Parcel International Direct US’.

Cross-border ecommerce is projected to grow at a rate of 25% annually between 2015 and 2020.

Read the rest of the story here.

 

2. Singapore fintech startup OOjiBO raises $3.6m

Singapore-based fintech startup OOjiBO has raised $3.6 million in a pre-series A round led by Centurion Private Equity.

The mobile payments platform plans to use its investment to launch into Indonesia and Thailand.

It will also begin cross-border remittance within countries where OOJiBO has a presence. Currently, OOjiBO is only available in Myanmar (but based in Singapore).

The app offers a full suite of services from p2p transfers, retail payments, interest bearing accounts to ecommerce payments and more.

Read the rest of the story here

 

3. Alibaba to generate 30% of jobs in China’s digital economy

By 2035, the “Alibaba economy” could generate about 30% of all the jobs available in China’s digital economy, according to a new report published by management advisory firm Boston Consulting Group.

If Alibaba-generated employment has the same share of China’s digital economy in 2035 as in 2015, the platform will create 112 million jobs.

If Alibaba’s emerging businesses, play a strong future role as well, we can expect another 10 million jobs by 2035

The report looked at the larger impact that technology would have on employment and talent over the coming two decades, estimating that China’s digital economy would make up 48% of the country’s total economy in 2035, accounting for $16 trillion in spending.

Read the rest of the story here.

As ecommerce is growing in Southeast Asia and the latest Digital in 2017 report shows more respondents in each country have made a product or service purchase online compared to a year ago, the window is opening also for cross-border online shopping.

According to the Consumer Barometer by Google, 19% of people on average in 2014/15 have made a purchase online in Southeast Asia. But how many of them have bought something online from a foreign country? Let’s find out.

Singaporeans are the most active users purchasing products online from overseas – two out of three people do it more than once a year. The absence of Goods and Services Tax on imported goods of S$400 or less is highly attractive to Singaporeans.

They are followed by Thais and Malaysians of which nearly every second person buys something online from foreign countries. It is not a coincidence as Singapore, Malaysia and Thailand are the richest of the six Southeast Asian nations.

Source: The Consumer Barometer Survey 2014/15. Base: internet users who have purchased online, n=14174.

In all countries, the product categories that reap the most cross-border orders are clothing & accessories or footwear. People are also buying cosmetics, beauty or health products and books, CDs, DVDs or Video games from other countries.

Source: The Consumer Barometer Survey 2014/15. Countries included: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

Better availability and quality of products are among the top reasons why people are looking to buy things online from abroad, followed by better conditions and broader range of products.

Source: The Consumer Barometer Survey 2014/15. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

Despite the perks of cross-border online shopping, there are also several hassles. Shoppers in Southeast Asia have experienced deliveries that take too long and lack of international shipping options. Their trust has also been diminished as they see online shopping websites as “insecure”.

Source: The Consumer Barometer Survey 2014/15. Countries included Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have ever purchased a product or service online from abroad, n=8750.

On the other hand, for those who have never bought products online from abroad, Indonesians (90%) and Vietnamese (51%) stand out. In comparison – only 13% of Singapore has not ever ordered online something across the border.

People do not order products online from abroad as they believe it is more expensive, delivery takes longer and returns will be difficult or costly.

Source: The Consumer Barometer Survey 2014/15. Countries included: Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Base: internet users who have never purchase a product from abroad, n=4827.

There are several takeaways for ecommerce businesses, both targeting consumers locally and also those willing to sell their produce outside their country’s borders.

Local online stores and marketplaces would benefit from studying the motivation of those who dabble in cross-border ecommerce to offer what consumers are lacking. For example, consumers in Indonesia and Vietnam are stocking up on quality clothing, accessories and footwear. In Singapore, consumers are ordering from abroad because of appealing offers so providing attractive deals on the website might be a good way to catch their attention.

For those looking to expand their customer reach and tap into the Southeast Asia’s population, offering more attractive delivery options might be key. While the level of infrastructure development (or lack of it) varies across Southeast Asian countries, there are number of established players such as DHL Ecommerce and Lazada Express as well as startups like LalaMove and NinjaVan that are looking to address the logistics challenges. Improving the security of the website and offering convenient payment methods would also help transition more people to try ecommerce.

By enhancing the shopping experience and tackling the above mentioned issues, hopefully the myths that surround the online shopping in the region will be dissolved but there is still much to do.

By: Aija Krutaine

Mitch Bittermann, Regional Chief Logistics Officer at aCommerce recently sat down with The Postal Hub podcast to discuss a successful B2C ecommerce strategy, logistics in Southeast Asia, and what he thinks brands should prioritize when attempting cross-border. 

The Postal Hub: From a retailer perspective, what are the challenges to get into ecommerce

Mitch: I would look into tech, customer service, warehousing and transportation. Retailers today are mainly working from a B2B perspective. This means bulky shipping and heavy-duty racking in the warehouses, which is only suitable when operating B2B. To do B2C, the requirements are completely different, because the consignments are smaller. From a transaction perspective, businesses would also need to think differently.

With transportation, it would either be light or FTL (full truck load), the size of packages are smaller with B2C, which means you have to work with parcel couriers to get the items shipped to your end customer. The biggest difference is also with customer service. If a company is running their own customer service, it usually requires them to talk to businesses, but with B2C, customer service means the end customer is contacting you through various channels, from calling to live chat, things that B2B businesses may not have.

The Postal Hub: If you are a retailer entering ecommerce, what are the key delivery considerations?

Mitch: I would go one step before that. I would think about what the location strategy is. Where is your supplier, brand, manufacturer and customer sitting? If it comes from a transportation perspective, today, you’re shipping a lot on freight. You’re shipping pallets, costs is definitely a consideration but from a cost perspective it is a lot smaller than if you have to send everything in small consignments. Someone has to pick up the bill.

Customers in Southeast Asia are more cost sensitive about shipping price so retailers will eventually need to consider setting up a hub somewhere to cut costs on shipping.

Postal Hub: Cash on delivery is popular in Southeast Asia. What are the other ways people are paying?

Mitch: Cash-on-delivery (COD) is the biggest enabler in ASEAN. This is the choice for most people, especially in tier 2-3 cities that are unbanked. If you look at Indonesia, in a place like Papua New Guinea, 90% is COD. Do we have another method? Yes, but one of the challenges is that we do not have Alipay. Banks offer platform but they are not default.

In Indonesia, a lot of banks are talking about an e-platform but nothing concrete is happening just yet. 

For now, we cannot live without COD in Southeast Asia. Potentially, a retailer could lose out 60-70% of revenue if they don’t offer COD as a payment method.

Postal Hub: What about buy vs. build? What should be outsourced?

Mitch: It really depends on retailer maturity. If a retailer is just starting, I would say do as much as possible by yourself. Pack and send off shipment by yourself, if your business scales, then look to outsource. When it reaches the stage of 100,000 orders a month, do you want to run it by yourself or outsource to a third party service provider?

With transportation, it is best to outsource. This is because Southeast Asia still has fairly weak infrastructure. There are a lot of options to choose from; DHL and Kerry are the big ones. Then we have smaller disruptors such as Ninja Van and Sendit. All the movements in the transportation industry also mean prices will be soon drop and the industry will become more commoditized.

Some of my clients run their own warehouses and some outsource. When I was working in B2B, companies were running their own warehouses and then the outsourcing trend happened. The trend is coming for B2C, but I don’t think it will take 5-10 years to take off, it will go faster.

Soon, the trend will go towards out-sourcing supply chain so that businesses can focus on growing and selling their products. 

Postal Hub: What about cross-border delivery?

Mitch: With delivery, some people request next day or same day. It’s more difficult to ship cross-border with these requirements. Companies need to consider regulations that are related to ecommerce shipment and study revenue transfer, especially if you don’t have your own entity in that country. Figure out how to get money back from country A to country B while also thinking about tax implications.

Businesses will also need to think about FDA licenses and certain regulations. For certain products, you would need a license to legally bring it into a country, including distribution and logistics licenses.

A client came to me, they wanted to ship stuff from Singapore to Indonesia, but it was taking 7-9 days and costing customers $7 per shipping order. Depending on the product, that is quite a high price point. Customers are also not happy to wait that long for a delivery.

The client wanted a local set-up and do COD shipment because they want to build up scale. The company never shipped more than 100 orders a month. When they signed on with aCommerce, we closed 1400 orders after 3 months. The only thing that changed is the country we did the shipping from.  

For businesses that are starting out in Asia, I would say for them to start their operations from either Hong Kong or Singapore. If it scales, then is the time to go local i.e. Jakarta, or hyper-local, such as tier 2 and tier 3 cities like Bandung or Surabaya for better reach. 

Postal Hub: What about parcel lockers? What are end consumers in Southeast Asia interested in?

Mitch: The interest is there, but it’s all about reach and coverage. In Singapore, the country is not that big and essentially a metropolitan location, which makes it easier to offer things like same day delivery. In Bangkok, we power SKYBOX, a pick-up station on sky-train stations that allows consumers to pick-up their parcels on the way to and from work.

In Jakarta, MatahariMall offers lockers but it is limited in terms of coverage. I would recommend looking at pick-up and return from convenient stores such as 7-Eleven, Family Mart and Alpha Mart. There is already a lot of offline coverage in Southeast Asian cities and retailers can collaborate with these stores to begin a wider distribution network. 

Listen to the full interview on eIQ’s podcast channel here.

The growth potential of cross-border ecommerce has not gone unnoticed for those in the ecommerce industry. According to reports, cross-border is speculated to reach $1 trillion by 2020. According to research by Accenture, more than 900 million people will be international shoppers by 2020.

Cross-border is an opportunity not to be wasted. DHL has definitely taken notice. The logistics giant has published a report, The 21st Century Spice Trade: A Guide to The Cross Border Opportunity, assessing the vast potential of cross-border logistics and last mile opportunities across the world.

Source: DHL

Why are people willing to shop internationally?

Although cross-border ecommerce may seem like an expensive hassle, respondents from DHL’s survey indicate that cross-border is appealing due to product availability and attractive offering, i.e. price. The top selling items for cross-border are fashion and electronics. However, consumers are beginning to search for cosmetics, pet care and sporting goods, which means all product categories now have cross-border growth potential.

Source: DHL

Here are the key takeaways from the report

  • Cross border ecommerce is expected to grow at 25% between 2015-2020, which is twice the pace of domestic ecommerce retailers and manufacturers.
  • Online retailers are boosting sales by 10-15% on average simply by extending their offering to international customers.
  • An additional boost for retailers comes from a premium service offering: retailers and manufacturers that incorporated a faster shipping option into their online stores grew 1.6 times faster on average than other players. This is also applicable to SMEs, not just global brands.
  • On a country level, demand is more fragmented than supply, with the US, the UK, and China accounting for closer to 30% of all global high-value demand (versus 60% of supply)

What are the challenges with cross-border ecommerce?

Having an attractive offering (including price) stands out as key to convincing international consumers to act. However, maintaining a long-term competitive advantage in terms of website appeal, broad range of payment options, and convenient customer service will be challenging for many e-tailers. The speed of delivery is also another key roadblock that often hinders the growth of cross-border  ecommerce, which means that for brands, picking a delivery partner is a key step to driving conversion.

Who can benefit from cross-border ecommerce?

Ecommerce giants

The most obvious contenders for cross-border selling. Multi-billion businesses have the budget to move abroad.  Amazon, for instance, has carefully gone market by market since the late 1990s and now generates 40% of sales outside the US. For Alibaba, on the other hand, sales outside China still represent less than 10% of its revenue.

Overall, survey respondents associated with ecommerce giants confirm their role as early movers: they report the largest average share of cross-border sales (15%) among e-tailers.

Pure online retailers

As ‘purely online players’, they can influence online shopping behavior easily. Cross-border selling can give them access to less penetrated market opportunities abroad, where further sales growth may be cheaper to generate even than in their respective domestic market.

Brick-and-mortar retailers

They report the lowest cross-border sales share (on average 11% of total sales) today, although by a small margin. They need to build out the digital capabilities that allow them to go head to head with online-first competitors. If they do manage to carve out their own multi-channel niche however, brick and mortar retailers may offer a unique cross-border experience for international shoppers.

What to think about before going cross-border?

  • The right product assortment
  • The global local website: localization is key
  • Warehousing and fulfillment
  • Delivery choices: speed is the decision factor and can be an effective conversion tool for brands and retailers

For brands that have the scalability and budget to test out international reception through cross-border ecommerce, they would be joining a growing market with a trillion dollar potential. The DHL report represents only a fraction of the surging industry, but has shed light on the various pros and cons that brands and retailers should keep in mind before expanding beyond their domestic market.

Download the DHL report here.