Is Singapore really ready for e-commerce?May 27, 2016 / By
I have to admit, online shopping is quite addictive. Having the global marketplace at your fingertips is tempting, and all the better when it is sent to your doorstep.
Based on a 2015 survey by eMarketer, global e-commerce sales are expected to grow an estimated 21% per year from 2016 to 2019, with Asia Pacific leading the pack. This staggering growth of e-commerce will unquestionably change the dynamics of the retail scene. Brands embracing on and offline stores are jumping on to the bandwagon of omnichannel marketing and distribution in response to changing consumer preferences. This is driving an evolution in logistics solutions as the requirements for business-to-customer operation is fundamentally different from traditional business-to-business (B2B) trade.
For example, while the traditional B2B trade usually involves pallet storage and large truckload delivery to a single or a few destinations, e.g. a retailer’s store, logistics solutions for e-commerce entails itemised storage, picking, sorting, packing and delivery to varied destinations such as stores, individual consumers or click-and-collect points. There is also a need to provide ample parking facilities given the large fleet of smaller-capacity vehicles needed to deliver the many orders speedily to multipoint destinations. Consequently, warehouses have evolved into mega distribution hubs housing the e-commerce processes of picking, sorting, packing and, increasingly, returns. In e-commerce strongholds such as the US and the UK, big is the way to go, with logistics facilities typically measuring in excess of a million sq ft.
In this regard, logistics players in land-scarce Singapore are tapping into technology to stay ahead. LF Logistics recently opened its largest distribution centre in South East Asia. The million sq ft nine-storey facility is equipped with advanced technologies in product handling and hosts Nike’s global e-commerce distribution centre for Asia. DHL’s newly completed 0.97-million-sq-ft Advanced Regional Centre includes a specialised automation system with robotic shuttles to pick and store products from 72,000 locations spread over 26 levels. Separately, SingPost’s three-storey 0.55-million-sq-ft regional e-commerce hub scheduled to be operational in 2H2016 will be fitted with sorting automation and warehousing equipment.
The shift in consumers’ expectation from reliable to speedy next-day delivery has also led to the emergence of small logistics start-ups such as Ninja Van, which taps into technology to improve last-mile deliveries. In addition, parcel lockers have been rolled out under SingPost and Ta-Q-Bin (in collaboration with 7-Eleven) at various residential estates and convenience stores to allow the pickup and drop-off of parcels. In fact, a federated locker system serving residential areas was announced by the government last month.
While Singapore has made progress in catering to the logistical needs of e-commerce, more still can be done and at a more rapid pace too if it is to tap into the burgeoning e-commerce in the region. Moreover, as first and last-mile deliveries are often the culprits in causing high costs for retailers, a well-developed e-commerce logistics ecosystem is essential to empower retailers in Singapore to embrace omni-channel retailing without facing logistical constraints.
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