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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.

1. Walmart’s Jet.com to buy fashion retailer ModCloth for less than $75m

The deal, which had already been rumored, is almost finalized and will fetch a price tag between $50 million and $75 million.

Walmart has been snapping up smaller online retailers in recent months

The acquisition comes after a series of struggles for ModCloth, including several rounds of layoffs. The company saw little growth in 2014, and reduced its engineering team to just over half a dozen.

Walmart explained that it’s increasingly interested in the apparel category, given it’s now one of the largest for online retail.

Read the rest of the story here.

 

2. fast fashion brand Zara to launch ecommerce in Thailand

It seems that Zara is doubling down on ecommerce in Asia, having launched its online website in Singapore and Malaysia earlier this month. Thailand and Vietnam’s stores will launch within the next few weeks, with India following later this year.

Zara’s  business model allows it to get clothes to stores much faster than its rivals, who prioritize low-production costs and outsource manufacturing to China, and can react more quickly to shifting consumer tastes without holding excess inventory.

Read the rest of the story here.

 

3. Recommended Reading: The 2017 Indonesian startup popular sector forecast

DailySocial conducted a survey with a number of investors about which sectors are going to be hot, and what their focus in 2017 will be. Along with predictions, ecommerce influencers also share their two cents:

“From year to year, ecommerce services and online transactions will become part of Indonesians’ day-to-day activities,” says William Tanuwijaya, CEO of Tokopedia.

Read the rest of the story here.

 

Seven years after its launch, Tokopedia now has one million registered sellers on its platform, reports Tech in Asia.

The total number of products sold on the platform rose to 16.5 million a month this year.

tokopedia merchants

Source: Tech in Asia

Co-Founder and CEO, William Tanuwijaya said in a statement that the total value of items purchased on the platform is now ‘on the trillions of rupiah’ per month. Five trillion Indonesian rupiah would roughly equal $380 million.

These somewhat casual numbers are not to be taken for fact, but for the sake of comparison. Lazada’s GMV was just above $1 million in 2015, and that is the total number for all of Southeast Asia.

With the GMV hitting the hundreds of millions in USD monthly, it puts Tokopedia in the same league as Lazada.

Shift in shopping behavior

Tanuwijaya also pointed out that Tokopedia is the most popular home-grown site in Indonesia, with a total of 1.3 billion page views per month.

This reflects a big shift in shopping behavior among Indonesians. Two years ago, 56% of shoppers accessed Tokopedia from mobile devices and mobile transactions was only at 29%. Now, 80% of visits are from mobile, and mobile transactions rose to 74%.

Tokopedia’s rival, Bukalapak, also reportedly hit the 1 million merchants mark, but did not reveal any numbers. The ecommerce company revealed its figures to Tech in Asia, but because it is not a public company, there is no way of fact-checking the numbers.

A version of this appeared in Tech in Asia on August 18. Read the full version here