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This is the third of a four-piece series breaking down Alibaba’s plan to shake up China’s logistics: Cainiao Network. Part 1, Part 2Part 4

Based on the information available on Cainiao Network, the business model can be divided into two levels:

1. In its strategic positioning, Cainiao Network is an important part of Alibaba’s business portfolio and ecosystem, complementing its weakness in logistics.

2. From a business operations point of view, Cainiao Network is an expansion of the Taobao model onto the field of logistics.

Strategic Positioning

Alibaba and Jingdong are the two giants in the field of ecommerce in China. Since the early days of its business, Jingdong has always emphasized logistics and built out its own warehouses and fulfillment centers as well as last-mile delivery fleet. This is exactly the opposite of what Jack Ma has done, with Alibaba’s focus on maintaining an asset-light business model. Alibaba’s intention for Cainiao Network is to enter the field of logistics and make up for its weaknesses in this area.

From the existing business segments of Alibaba, through Taobao/Tmall, Alipay/Yu’E Bao, and Ant Financial, the company has had full control of the business flow, information flow and capital flow in ecommerce, but it doesn’t have any control over the physical logistics part. The establishment of Cainiao Network allows Alibaba to fully control the entire ecommerce value chain, all the way from businesses to consumers. Because of Cainiao, Alibaba’s ecommerce ecosystem can now be considered complete. 

Below is an illustration of Alibaba’s ecommerce ecosystem.

cainiao southeast asia

Focusing on the logistics link in the chart, Alibaba has achieved control of courier companies through Cainiao Network and courier companies have been relegated to being just a “transportation tool” in Alibaba’s ecommerce system.

Through the construction of an ecommerce logistics platform ecosystem, Cainiao Network has become a rule-maker in the logistics industry to take the lead in the development of industry guidelines. This will undoubtedly contribute to the standardization of China’s courier industry.

However, for courier and logistics companies, they can’t help but feel uneasy that control will be by someone else rather than themselves. This sense of unhappiness is, to a large extent, reasonable, but they don’t really have the leverage to reject it.

A tremendous 70% of the business of the “Three TOs and One Da” and other courier giants comes from ecommerce. In April last year, Cainiao Network launched an e-shipping label system that now accounts for 40% of the entire volume of the courier delivery system and is expected to reach 100% by the end of 2016. As a result, Cainiao has an increasingly tighter grip on flow of goods and information resulting from ecommerce transactions in China.

At this point and in light of everything discussed, we need to think twice about Jack Ma’s commitment not to have Cainiao provide courier services, buy trucks or recruit any delivery staff. Jack Ma’s words are very tactful and subtle.

Although Cainiao Network isn’t going into the courier business, incumbent courier companies are increasingly dependent on Alibaba to receive courier business. Its impact on the existing courier industry is not a possibility but an inevitability.

Through the construction of Alibaba’s ecommerce ecosystem, Cainiao Network controls the vast majority of Alibaba’s logistics resources and will have the full right to speak. All the courier companies and line-haul logistics operations companies have to use Cainiao Network to access orders, uphold their ethical standards and follow the logistics hardware and software standards and the corresponding logistics rules developed by Cainiao Network.

Specific Business Model

Regarding its specific business model, Cainiao Network is an extension of Alibaba’s Taobao model, both commercially as well as conceptually. Taobao was developed as a third-party ecommerce platform between sellers and buyers, and gradually became a sound ecommerce ecosystem through the introduction of Alipay.

Cainiao Network applies this business model to the logistics field through the construction of a “China Smart Logistic Network (CSN)”.

It aims to create a virtual platform for an intelligent logistics ecosystem.

To build this “China Smart Logistic Network (CSN)”, Cainiao Network relies on five strategic pillars: express delivery, warehousing, cross-border logistics, rural area logistics and pickup stations. It strives to soon achieve the goal of 24-hour delivery within the country and 72-hour delivery across the world.

cainiao-southeast-asia

Strategy 1: The Express Delivery Strategy—bring an end to price wars among courier companies

With regards to express delivery, Cainiao Network’s next focus is to use the internet and big data to help courier companies become more data-driven to drive product and service expansion. This will enhance the overall speed and service level of the logistics industry and at the same time maintain order in the market and prevent courier companies from entering price wars.

Skeptics, however, would say that Cainiao’s success will actually drive last-mile players into a commodity service as they compete for orders drip-fed to them through the Cainiao Network. Cainiao aggregates Alibaba’s massive ecommerce demand and leverages it to drive down prices among last-mile suppliers. As a result, logistics becomes cheaper and more people will use ecommerce, driving up GMV, with Alibaba being the ultimate winner.

It is reported that Cainiao has launched a number of big data products. For example, the level 4 address database generated by Cainiao along with AutoNavi Map and big data algorithms can match a consumer’s delivery address to a specific township.

And the popularization of Cainiao’s e-shipping label system is expected to become the basis of digitization of courier companies to further enhance the overall efficiency of the industry.

Strategy 2: The Warehousing and Distribution Strategy

Through a social collaborative approach, Cainiao has formed a nationwide network to help businesses improve warehouse operations efficiency and experience. Having distribution hubs in five locations will reduce logistics costs and achieve next-day delivery in 50 cities within this year – a smart network.

Strategy 3: The Cross-border Logistics Strategy

In order to align with Alibaba Group’s globalization and rural strategy, Cainiao aims to establish a global network to reduce cross-border ecommerce logistics thresholds.

At present, Cainiao Network already has overseas warehouses in seven countries and cities and achieved a direct connection with national postal information to better serve the global market.

In terms of imports, Cainiao Network will enable consolidated imports and direct mail routes to allow consumers to have the same logistics experience as they do with domestic online shopping.

It is reported that Cainiao has partnered with YTO, DHL and the Russian Post and opened a number of import channels between the United States and China, Australia and China, and South Korea and China.

The company is also piloting a bonded warehouse model with several cross-border ecommerce businesses in Hangzhou, Guangzhou and Ningbo and in addition, established data integrations and business partnerships with dozens of overseas logistics partners to achieve synchronization of logistics information.

Strategy 4: The Rural Areas Logistics Strategy

Regarding its rural strategy, Cainiao has rapidly built the capability to cover second-tier logistics in counties and villages country-wide by relying on Alibaba Group’s Rural Taobao initiative. This was done in collaboration with Shanghai Winshine Logistics and dozens of other cash-on-delivery logistics companies as well as China Post.

Since the launch of Alibaba’s “1,000 Counties and 100,000 Villages” program in the second half of last year, Cainiao has in a few months used existing social logistics systems and its technical advantages to achieve quick delivery of goods from county to village.

Currently, Cainiao Network has achieved delivery of goods from Rural Taobao to villages in Ningxia, Guizhou, Jilin, Jiangxi, Fujian, Jiangsu, Zhejiang and Guangdong.

Cainiao Network’s data from May show that about 20% of the orders in areas covered by Rural Taobao of Alibaba can be delivered with same-day or next day service.

Strategy 5: The Pickup Stations Strategy

Cainiao has jointly built Cainiao pickup stations across the country with its partners. Through student entrepreneurs at colleges and universities, residential property management companies Greentown and Vanke in neighborhoods, and convenience stores such as C-Store, it has formed a “crowd-sourced” last-mile delivery network covering major cities across China.

At present, Cainiao Network is operating more than 20,000 pickup stations that provide integrated logistics and lifestyle services. In the future, this will be a last-mile logistics and express delivery network across the country.

Cainiao has also launched an app called “Guoguo” that consolidates all functions of courier companies, allowing users to check shipping status and to drop off and pick up orders.

By analyzing the aforementioned five pillars of Cainiao Network, we find that the implementation of its strategies cannot be achieved without collaboration with other partners such as warehouse storage operations. This reveals Cainiao Network’s business model implementation approach: a data-driven “platform model” (i.e. decentralized, horizontally integrated, asset-light).

For the final part of this series, we compare the “platform model” against the more common “direct model” and what this all means ultimately for China’s future and its influence on Southeast Asia.

The original first appeared in Chinese on Yunbao88. Editing by ecommerceIQ team.

This is the second of a four-piece series breaking down Alibaba’s plan to shake up China’s logistics: Cainiao Network. Part I, Part 3, Part 4

Stage 1: The Birth of Cainiao to Serve The Motherland

When Cainiao Network was established, it positioned itself as an internet company with an asset-light business model, insisting it would not provide courier services, buy trucks or recruit any delivery staff.

At that time, Cainiao was given an exceptionally ambitious strategic vision: to build a “China Smart Logistics Network (CSN)”, develop an open and shared logistics platform, and to achieve 24-hour delivery of goods to any location in China through the Cainiao network.

This is the strategic mission that Jack Ma bestowed upon Cainiao, both out of commercial and national interests. We need to realize that this is an unprecedented challenge; there’s no precedent for reference; even in the United States, Japan and other countries where logistics is much more developed, there’s no such single logistics company performing a similar nerve center role.

If Jack Ma manages to pull off Cainiao, he will be lifting China from the logistics dark ages towards one with modern infrastructure, essentially accelerating the growth of China’s entire economy and well-being as well as cementing China’s position as the world’s largest and most advanced ecommerce market.

Stage 2: Cainiao’s Nest Building: Acquiring Land and Building Warehouses

After having established a lofty strategic vision, Cainiao Network seemed to deviate from its course in its next development phase. It set out acquiring land across the country at low prices and building warehouses and fulfillment centers, triggering a gold rush among related companies including ecommerce, logistics and large state-owned enterprises.

At the same time, voices of doubt were saying that Alibaba was taking this opportunity to engage in land enclosure (i.e. the fencing or hedging off areas of land for private use that had once been available for common use) and to develop logistics real estate. Jack Ma and Alibaba have never directly responded to these claims.

Cainiao Network’s capacity and speed in hoarding land has been nothing but amazing. In June 2013, the media reported that Cainiao Network acquired nearly 20,000 mu (about 13.3 million square meters) of land across the country. Alibaba has not confirmed this.

According to public information, Cainiao Network bought 1,000 mu of land in Shuangliu, Chengdu province; 1,500 mu of land in Jinhua, Zhejiang province; and 1,500 mu of land in Tianjin. And a conservative estimate, calculated based on a minimum purchase of 1,000 mu per city in an estimated 30 cities, amounts to 30,000 mu of land.

With such a large amount of land acquired in such a short period of time, it inevitably raised alarms and suspicions. People started thinking of this as land enclosure under the disguise of developing ecommerce logistics. Regardless of the source of funding used for this acquisition of land and construction, whether the acquired land will be really used in the construction of a smart logistics network, and whether the goal of “24-hour delivery throughout the entire country” really requires so much land remains an open question.

To illustrate this point, Global Logistics Properties, a modern logistics provider that built and managed 125 logistics parks in 33 major cities in China, has provided data. One of its presentations shows that the internal rate of return on a 10-year investment in the development of logistics real estate projects in China is about 15% to 20%. Among these returns, in addition to rental income brought in by warehouse storage rental, land value appreciation also provides attractive profits.

No wonder then that Cainiao Network’s actions came as an unpleasant surprise to several industries.

Real estate developers typically buy land and hold off on development, waiting for the land to appreciate in value and then selling it to never lose money. But now Cainiao Network has acquired land at a low cost and has suddenly broken into the territory of the real estate business.

The Chairman of Vantone Holdings Co. Ltd, Feng Lun once jealously said,

“The future of China’s real estate does not really depend on what the government will do, but on what Jack Ma will do.”

By acquiring land at a low cost and building warehouses, Cainiao Network has also created a strong conflict with other related logistics companies by not partnering with them. Warehousing is one of the central links in logistics and logistics companies don’t want this link belonging to someone else.

Jingdong is buying land, Suning is buying land, Shunfeng Express and DEPPON are buying land, and COSCO International is also buying land. Compared with the total amount of land these businesses have acquired, the 30,000 mu of land that Cainiao Network has bought is nothing and forming a competitive relationship could be a mistake.

Cainiao Network’s actions have also annoyed the Chinese government. When Cainiao Network was founded in 2013, the Ministry of Commerce praised Cainiao Network for using an internet platform to actively provide an integrated and one-stop service for small and medium-sized enterprises.

But relevant government officials are now convinced that the land enclosure movements of Cainiao Network is the wrong approach. Nie Linhai, Deputy Inspector at the Department of Electronic Commerce in the Ministry of Commerce, has bluntly pointed out that “Jack Ma set out to create Cainiao as a fourth-party smart logistics platform which I think would make a significant contribution to our country, but I find that he is walking in the wrong direction and building logistics bases and warehouses everywhere. That is because he can’t resist the temptation.”

Stage 3: Cainiao Grows Up and Takes Flight

In the two years since its establishment, Cainiao Network seems to have entered into a tangled state but under a low profile. Cainiao Network’s new president Tong Wenhong has said frankly that Cainiao has experienced a lot of hesitation and been constantly in a period of trial and error.

She told a China Economic Weekly reporter: “We have spent two years and are finally thinking clearly about what Cainiao is and what Cainiao will do.”

Tong Wenhong’s above statement was made at the “Cainiao Jianghu Assembly” held in Hangzhou on May 28, 2015. Based on Cainiao Network-related information revealed at this event, the company has finally returned from ideals to reality and is ready to take off.

In the next part of this series we will look at Cainiao Network’s business model in more detail to understand how it plans to build the China Smart Logistics Network (CSN).

 

The original first appeared in Chinese on Yunbao88. Editing by ecommerceIQ team.

Malaysia Ecommerce Landscape

Malaysia may be the second smallest Southeast Asian nation but it doesn’t lack ambition to develop itself into a powerhouse. Prime Minister Najib Razak recently out-hustled neighbour Indonesia to appoint China’s ecommerce tycoon Jack Ma to advise the country’s government on its route to develop a strong digital economy.

These ambitions don’t come out of thin air. In 2015, Malaysia’s ecommerce market was estimated at $1 billion, which constitutes 1.1% of country’s total retail sales (though these numbers may be skewed). Malaysia’s ecommerce market is on a par with Singapore not only in market size, but also in terms of the well-developed infrastructure within the country compared to the rest of Southeast Asia. This might explain why Malaysia is the origin for some of the biggest tech companies in the region such as the taxi hailing app Grab and Catcha’s iProperty Group.

In the next ten years, Malaysia is predicted to increase the online shopping market size eight-fold to $8 billion, but where does the country’s ecommerce stand now? ecommerceIQ shares ECOMScape: Malaysia to provide a quick overview.

1. Surprise, surprise, Lazada emerges as the leading mainstream platform

Lazada, Southeast Asia’s clone of Amazon, has emerged as the leading business-to-consumer (B2C) marketplace in Malaysia with around 20 million visitors per month while closest rival 11street.my, a South Korean marketplace, grew to become the second biggest online marketplace with more than 7 million visitors per month only a year and a half after launching.

Malaysia Ecommerce Landscape

Locally-run Lelong.my, which started as an electronics auction site but now turning itself into a B2C marketplace, gets around 6 million visitors per month.
While these companies are still competitors to Lazada, none of them pose a real threat to Lazada’s leading position, especially after its acquisition by Alibaba earlier this year (deep pockets)

2. Service providers are early online adopters

Malaysia’s online space is filled with service providers who choose to sell services through ecommerce to happy users. A smart move considering 50% of Malaysians in a recent PwC Survey said they shopped online because of convenience.

These early adopters include:

  • KFIT: started its fitness business in Malaysia offering a subscription model for unlimited access to various gyms, and has now expanded to other categories such as selling online spa and beauty procedures.
  • GoCar: car rental by the hour or day through mobile app that offers an alternative to car rental and car ownership in Malaysia’s capital Kuala Lumpur.
  • ServisHero: a mobile marketplace that allows search and booking of home service providers such as a plumber or repairman.

Malaysia Ecommerce Landscape

3. Mobile shopping platforms on the rise

66% of consumers surveyed in the PwC report have used their phones to make purchases. It implies that the majority of 50% of respondents who have started shopping online in Malaysia within the last three years are heading straight to mobile marketplaces.

Among Malaysia’s most popular shopping apps are companies such as local imSOLD, Singapore-based Shopee and Carousell, Japan’s Qoo10 and global players like Taobao and eBay.

Malaysia Ecommerce Landscape

As Malaysians on average spend 3 hours per day on social media, social commerce becomes quite popular – 31% of online shoppers in Malaysia have purchased directly via a social media channel. The most common being Facebook and Instagram, which is preferred by 41% and 22% of Malaysians, respectively.

4. Good banking system means one less problem for ecommerce

Malaysia has well-developed banking infrastructure and as a result, its residents are more accustomed to digital payments than most Southeast Asian nations. 37% of Malaysia’s population uses mobile banking, while nearly 20% made digital payments and used banking cards in 2014.

According to the global payments solution provider Adyen, the preferred payment method of 42% online shoppers is online banking where shoppers are redirected to their online banking environment to complete purchases.

Malaysia Ecommerce Landscape

Source: The Global Ecommerce Payments Guide by Adyen

As a result, there are plenty of payment gateway solution providers in Malaysia, yet few companies offer mobile wallet solutions as they would struggle to change Malaysian habits regarding using online banking.

Malaysia Ecommerce Landscape

5. Newcomers fight to grab a share of logistics

Successful ecommerce in Malaysia has contributed to increased competition among logistics service providers. The country does not have major infrastructure issues such as islands or bad roads like in the Philippines and Indonesia, posing less obstacles for startups to offer straightforward parcel delivery.

Malaysia Ecommerce Landscape

Traditional last mile delivery companies such as POSMalaysia, Nationwide Express and SkyNet have been somewhat lagging behind adopting new technology and are now being challenged by newcomers like Ninja Van, who proudly states it’s “powered by proprietary cloud-based technology”.

And it’s not only rookies in logistics fighting for their share. In Malaysia, the competition is quite tough among fulfillment service providers who focus on serving the needs of online merchants.

Companies such as DHL, SP Ecommerce, aCommerce, theLorry.com and others are battling for clients not only among themselves, but also with the biggest client – Lazada.

Malaysia Ecommerce Landscape

Lazada already pushed its own logistics service, Fulfillment by Lazada (FBL) in Malaysia, Singapore and the Philippines. The online marketplace offers end-to-end fulfillment solution at a fixed cost per item delivered. As the biggest player in the market and scaled operations, Lazada’s price may be hard to beat.

“Increasingly, having an online shopping functionality is becoming the norm, rather than the exception and it is only going to be more widespread,” said Jon-Paul Best, Head of Financial Services for Nielsen Malaysia.

Click here to download the full, high resolution version of ECOMScape: Malaysia and join the ecommerceIQ network to not miss out on ecommerce market trends and insights.

For more information on other ecommerce landscapes, take a look at:

ECOMScape: Indonesia

ECOMScape: Thailand

ECOMScape: Singapore

ECOMScape: Philippines

Philippines ecommerce landscape

The Philippines, although part of Southeast Asia’s growing ecommerce family, is quite the odd cousin. It’s the only market in the region where Lazada totally dominates the competition, getting around 35 million visits per month with no second player in sight. In addition, with over 10 million overseas Filipino workers and 3 million of them in the United States, Philippines’ online shopping behavior has been heavily influenced by the US, paving the way for innovative cross-border logistics businesses.

As the second most populated country in Southeast Asia with around 100 million residents, the Philippines currently has the second smallest ecommerce market. But that’s not surprising when 46% of the population are connected to and browsing the second slowest internet connection in Asia Pacific region. On top of that, the country ranks lowest among its Southeast Asian neighbors in terms of ease of doing business, which doesn’t help to boost its online trade either.

However, there’s a bright side. Ecommerce in the Philippines is on a runway and expected to lift off to reach nearly $10 billion by 2025 outsizing Singapore and Malaysia. How developed is the market now? ecommerceIQ shares ECOMScape: Philippines to provide a quick snapshot.

1. Lazada dominates over local and regional B2C marketplaces

Lazada, Southeast Asia’s heavyweight of marketplaces controlled by the Chinese ecommerce giant Alibaba, is leading online shopping in the Philippines. It currently ranks as the 7th most popular website in the Philippines. More than 60% of Lazada’s sales in the country come from mobile devices. The marketplace has also doubled the number of merchants selling goods on its platform to 4,000 compared to a year ago.

Philippines ecommerce landscape

Other local marketplaces in the Philippines don’t come close to Lazada in terms of visitors so have found other revenue streams offering affiliate marketing or cashback through their platforms. Takatack, calling itself one the biggest discovery platforms in the Philippines, is one such example. It is both an online marketplace offering products and services from local ecommerce shops and at the same time features products from different ecommerce sites such as Zalora and Galleon.

Marketplace verticals also show potential for growth. The usually competitive Fashion & Apparel category is rather thin in the Philippines. Zalora, online fashion shopping destination focused on Southeast Asia, operates in the country. A small number of global brands have local online stores and only a handful of local merchants sell online meaning the space is wide open for new players.

Philippines ecommerce landscape

Other verticals, such as Electronics & Gadgets, Home & Living, Others, also aren’t too crowded indicating there is room for more sellers.

Yet, Phillipines’ online scene might not be too easy for foreigners to conquer as learned by Thailand’s online retailer iTrueMart. At the end of 2015 it opened online store in Philippines as their first point of expansion out of Thailand but eventually closed the shop in September 2016 after less than a year in the country.

2. Retailers test ecommerce waters through Lazada

The Philippines’ ecommerce market in 2015 was estimated at $0.5 billion or 0.5% of retail in the country as many brands and merchants were not yet committed to making the big investment of opening a full-fledged online store.

However, to test market potential, some traditional brick-and-mortar retailers are opening their shop-in-shops on Lazada. For example, popular local department store chain SM Store initially went online through a shop-in-shop on Lazada where it offers more than 4,000 items. It now has also its brand.com store, powered by Lazada.

Consumer electronics retailer Robinsons Appliances also partnered with Lazada in mid-2015 by opening an official shop on the popular marketplace. Even global brands like Samsung are adopting this strategy.

More brands and sellers will likely follow in these steps to tap online shopping opportunity and add to Lazada’s popularity.

3. C2C ecommerce thrives

Similar to other Southeast Asian countries, a consumer-to-consumer (C2C) market makes up a significant part of online shopping in the Philippines, likely at around one third of the ecommerce market as it is Indonesia.  

OLX is the largest platform for classifieds and peer-to-peer sales. Ranking as 17th most popular website in the country it started as Sulit.ph 10 years ago. Currently, it claims to attract 100,000 to 200,000 new sellers every month.

Philippines ecommerce landscape

In 2016, two other well known C2C marketplaces in the region – Shopee, supported by Southeast Asia’s largest gaming company Garena, and Singapore-based Carousell – entered the Philippines to fight for Filipinos’ hearts and wallets. Shopee’s strategy to lure sellers from Instagram and other marketplaces to its platform by offering merchants free shipping and cash on delivery in the Philippines increased the number of sellers by 40% and the number of listings sold on the app – by 60% within three months.

Philippines ecommerce landscape

As 55% Filipinos own a smartphone and 18% have made a purchase online via mobile, it comes as no surprise that Shopee and Carousell are betting on the Philippines as their next stop for growth.

Another driver of the C2C market is the Filipino preference of Western brands combined with limited options to buy them as international brands have started entering the country just recently and there still remains a significant number of underserved market segments. This fuels selling of popular brands on C2C marketplaces, where products usually don’t come directly from manufacturers but are obtained elsewhere.

4. Digital payments pick up

Around 70% of the Philippines’ population are unbanked and less than 3% of Filipinos use a credit card to make payments. Thus, opening an online store without a cash-on-delivery payment is not really an option in Philippines.

In the recent years, several new mobile wallet apps have been introduced first by local telecommunication companies. For example, PayMaya mobile wallet app and GCash app offer a virtual card for shopping online that can be topped up at various offline points throughout the country. Local banks are also launching mobile banking apps.

Philippines ecommerce landscape

Many of country’s fintech startups are attaining to the needs of the unbanked while also serving overseas Filipino workers who send remittances to their relatives. In 2014, two Silicon Valley entrepreneurs Ron Hose and Runar Petursson founded Coins.ph – a mobile blockchain-enabled platform aimed at the unbanked for easy access to financial services. This start-up raised $5 million series A funding just at the end of October, 2016.

Philippines ecomscape landscape

ePeso app allows to create a digital account with an email address, top it up through scratch cards, over the counter facilities and merchants to send and request funds, pay bills. Paylance allows users to pay and transfer money to Philippines through Bitcoin for free. While Payswitch through its web platform allows small enterprises to offer services such as electronic loading, remittances and bill payments.

5. Innovative cross-border solutions and competition among logistics service providers

While ecommerce is not yet in full swing in the Philippines the logistics landscape is dominated by local players like 2GO and LBC while in other Asian countries international players like Kerry Logistics and DHL lead. Several regional players like Thailand-based aCommerce, Singapore-based SP ecommerce and Quantium solutions provide fulfillment services to online sellers.

Philippines ecommerce landscape

Poor infrastructure, difficult geography and high rates of cash-on-delivery make the shipping of online purchased goods complex. While there seem to be plenty of third-party delivery providers, only two companies – 2GO and LBC – offer countrywide shipping. The rest ensure delivery within metro area of Manila. This limits ecommerce growth and leaves many of country’s potential shoppers underserved.

At the same time, overseas Filipino workers have facilitated the development of innovative cross-border shipping solutions for goods purchased overseas. Beyond family members carrying their Amazon orders back in one big “balikbayan” box, several unique cross-border package forwarding services like LBC’s ShippingCart, Johnny Air Plus and POBox.ph have sprung up to take advantage of this phenomenon.

Philippines ecommerce landscape

Click here to download the full, high resolution version of ECOMScape: Philippines and join the ecommerceIQ network for the first look at the next ECOMScape in our series.

For more insights on the region’s ecommerce landscape take a look at:

ECOMScape: Indonesia

ECOMScape: Thailand

ECOMScape: Singapore

Are we missing any key players? Let us know on FacebookTwitterLinkedIn

Had a good weekend? Dive into today’s ecommerce headlines.

 

1. Singapore’s sovereign wealth fund GIC buys warehouse group P3 to tap into ecommerce boom

For GIC, the acquisition bolsters its ownership in the segment globally. The sale of P3 is one of the largest European property deals this year.

Read the rest of the story here.

 

2. Retail ecommerce small but growing in Vietnam

Deputy Minister Ho Thi Kim Thoa of the Ministry of Industry and Trade (MOIT) told the conference participants he has set a target to grow e-commerce to reach 5% of the nation’s total retail sales by 2020. The implementation of robust 4G networks by mobile carriers (which is already underway) would also help drive increasing digital purchases made via smartphone, particularly from the rural areas.

Read the rest of the story here

 

3. The NFL’s game plan for 11.11

The NFL is making strides in building a fan base in China, says Richard Young, managing director of NFL China, and the 11.11 sale is a chance to connect with more fans and sell more official league merchandise.

Read the rest of the story here

 

singapore ecommerce landscape

With 83% of its population connected to the internet, Singapore holds the title as the most mature ecommerce market in Southeast Asia. Despite its small population, Singapore accounted for 25% of Southeast Asia’s 2013 online retail value, larger than the region’s largest market, Indonesia that contributed 20%.

Singapore’s ecommerce market is valued to reach $5 billion in 2025, making up 6.7% of retail sales in the country. What else can we see from the Lion City’s ecommerce scene? ECOMScape: Singapore will provide a quick overview.

1. Cross-border ecommerce is (still) preferred by the population

Around 55% of ecommerce in Singapore consists of cross-border transactions. Their developed infrastructure, liberal regulations on customs and tax, and large population of expats in the country opens the gate for foreign companies to flourish without having to establish local ecommerce operations in the country.

Singapore ecommerce landscape

The US and China are the top two destinations for shoppers from Singapore, putting Amazon and Alibaba’s Taobao on the top five most visited ecommerce websites in the country.singapore ecommerce landscape
As a result, there aren’t many home-grown players opting for a marketplace business model. Lazada and Qoo10 are the only mainstream B2C marketplaces in Singapore, unlike in Indonesia and Thailand where the space is a battlefield for deep-pocketed companies.

Its strategic location also attracts global companies to use Singapore as an ecommerce hub for their Brand.com presence to serve online customers in nearby markets such as Indonesia and Malaysia. Adidas used to fulfill regional orders from Singapore before opening an online store in Indonesia this October while Charles & Keith, a brand native to Singapore, offers free shipping to most countries with minimum purchase conditions.

2. Grocery shopping becomes more convenient

As the popularity of online shopping in Singapore increases, more Singaporean are turning online to fulfill their basic needs, including groceries. According to Ipsos and Paypal, online grocery shopping in Singapore is predicted to increase 21% in 2016.

This space seems to be very attractive for investors as seen by funding news of pure-play online grocers like Redmart and honestbee and transition of Singapore’s traditional grocers like Giants and Fairprice jumping on the online bandwagon. In fact, the majority of the etailer in Singapore are traditional grocers.

singapore ecommerce landscape

Food delivery services like Foodpanda and Deliveroo are also thriving in Singapore, the latter boasting 25% week on week growth, while Foodpanda claims Singapore to be one of its key markets in Southeast Asia after closing down operations in Indonesia and Vietnam.

singapore ecommerce landscape

3. Daily deals sites are still popular among Singaporeans

As news of daily deals companies shutting down across Southeast Asia grows, the business model may have overstayed its visit in the region but seems to be stable in Singapore. Groupon, which closed operations in Philippines and Thailand last year and sold its Indonesia operations, remains in Singapore’s top 5 most downloaded shopping apps and top 15 most visited website in Similar Web’s ‘shopping category’. Although Ensogo shut down earlier this year, many more deals sites still continue to operate.

singapore ecommerce landscape

4. Payments opportunity in Singapore attracting global players

Singapore’s established infrastructure and internet maturity makes an appealing testing ground for global players wanting to expand their reach in Asia, especially online payments players. The country’s credit card penetration is 38%, while most of the Southeast Asian countries are still below 5%, and the amount of cards circulating in the country averages 3.9 cards per person.

As a result, the Cards and Payments market in Singapore has become one of the most attractive and competitive markets in Asia Pacific. Adyen, a payment platform unicorn from Europe, recently opened its office in Singapore following the company’s plan to focus in Asia Pacific.

singapore-ecommerce-landscape-mobile-wallet

Singapore’s cashless habit has also made Singapore the perfect place for NFC payments solutions like Apple Pay, Android Pay and Samsung Pay to launch in Asia and the heavy traffic to Alibaba’s ecommerce platforms ensure the adoption of Alipay is well on its way.

5. C2C is driven through mobile apps

singapore ecommerce landscape

According to PwC, 38% of online shoppers in Singapore are making purchases on their smartphone, this number is higher than the global average of 28%. 57% of the shoppers in the republic also turn to social media to read product reviews. As an early adopter of internet culture in the region, Singaporeans are apt at using their mobile to access the internet.

Home-grown C2C platforms like ImSold, Shopee and Duriana have focused on their mobile platforms in order to appeal to customers who want the convenience of buying and selling their things on the go. More mobile-only players are expected to emerge.

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You can also find ECOMScape: Indonesia and ECOMScape: Thailand.