The Three Biggest Challenges Presented at LMFAsia 2015
Last week aCommerce traveled to Singapore for the Last Mile Fulfilment Asia 2015 conference as both an exhibitor and presenter. Retailers, transport providers, and logistics operators all merged to check out and discuss the latest in the region’s growing logistical infrastructure.
aCommerce was well represented at the conference with Thailand CEO Tom Srivorakul speaking about the competitive fulfilment landscape in Thailand, Group CEO Paul Srivorakul discussing strategic investment & financing opportunities in the fulfilment industry, and Indonesia CEO Hadi Wenas explaining Indonesia’s immense e-commerce potential.
After two days of action packed panels and exhibition, the following three logistical e-commerce challenges were noted as being especially important across Asia:
1) Alternative Payment Methods
“Cash on delivery is paramount for the India market! Only 2% of the population owns credit cards.” – LMFAsia
No surprise, alternative payment methods, especially COD, proved to be an important talking point and a key issue across Asia. While many panelists discussed their company’s involvement in COD, panelists argued that few do it right.
Ardent Capital CEO Adrian Vanzyl explained how over 70% of orders in Thailand are from upcountry, markets with lower credit card penetration rates and a need for alternative payment methods. The importance of COD was not limited to Southeast Asia, with India and China also being areas of focus where the need of varying payment methods is crucial for companies looking to penetrate different markets and customers in the region.
2) Cross-Border ecommerce
“Customs inconsistency in SEA is a major roadblock to cross-border commerce. It’s hard not having one answer for global clients.” – Paul Srivorakul
E-commerce is evolving in Southeast Asia and one of the big challenges is how to shift towards a cross-border strategy. Cross-border includes the ability to source unique products, have the resources to import and export these products, and the on the ground operations to fulfill e-commerce orders in various regions.
In Southeast Asia, costs and delays become critical factors in determining the success of an e-commerce business. Heavy documentation, high import taxes, and delays create an environment that is difficult to navigate.
Developing the international e-commerce infrastructure in SEA has become a major focus for aCommerce with the upcoming ASEAN Economic Community in 2015, which aims to open regional free trade as more global brands leapfrog brick-n-mortar shops in Southeast Asia and go straight to e-commerce.
3) Reverse Logistics
“Chinese consumers are spoiled: they want fast, good and cheap service and don’t want to pay.” – LMFAsia
Reverse logistics includes repairs, return processing, restocking, recalls, and all of the customer service involved at each step of a transaction.
In China, importing products can take up to twenty days, creating a severe bottleneck in effectively doing e-commerce across Chinese borders. Chinese consumers were described at LMFAsia as knowing only one service – bad service. Meaning, customer expectations remain high and products are expected to be delivered safely, quickly, and at a fair cost. If not, customer service is expected to be flawless to ensure all problems are quickly fixed.
Given costs, the localized support needed, and documentation, many e-commerce players find reverse logistics extremely difficult to manage, especially when customer expectations remain very high.