E-retailers continue to struggle with cross-border demand

E-commerce has been the dominant force for change in the air cargo logistics business for the last several years, but online retailers, forwarders, carriers and integrators are still struggling with ways to keep up with the intense demand from international customers to deliver them the world instantly. This was the main theme of the plenary session, “Cross-border E-Commerce: Who Will Rule the Game?”, at last week’s Asian Logistics and Maritime Conference (ALMC) in Hong Kong.

“The real change is consumer behavior,” said session moderator Mark Kemper, a partner with KPMG. “Everyone is for change, but not everyone wants to be change.”

Panelist Zheng Changqing, senior director of eBay’s greater China region, said the future of cross-border e-commerce will be something he calls “Commerce 3.0,” which will create “seamless and truly global commerce” to anyone in the world, merging both the offline and online experience.

Dr. Guo Dongbai, chief technology officer for AliExpress, the export arm of Chinese e-retail giant Alibaba, said that the future will be centered around the “electronic world trade platform” that will “accelerate globalization, so that goods can flow freely among countries,” which will also help small businesses survive.

“We’re not trying to be Amazon,” Guo explained to the ALMC crowd. “We want every small business to be Amazon. And AliExpress is the center of that effort.” As the division of Alibaba that handles cross-border exports, AliExpress handles about US$10 billion in shipments annually to 18 million customers.

However, Guo admitted that the task was not easy. “We are actually troubled by logistics,” he said. “For almost all the countries we serve, the delivery date is more than 20 days for guaranteed delivery. For cross-border, it is almost 20 to 30 days.” Hassles involving customs, he said, “take the majority of the time.” To speed up this process, he added, the opportunities can be found in all aspects of the supply chain, including shipping, packaging and delivery.

While the online aspect of these operations is paramount, the panelists also stressed the need for an integration with offline retail business to help facilitate product returns. Since launching in 1995 as “the world’s first e-commerce platform,” eBay has evolved to reach more than 200 countries and is now experimenting with “click and collect” delivery methods outside the customer’s home, Zheng said. “You can make a purchase online and them be able to collect the purchase in another location,” he said. “This lets the consumer make the choice of delivery.”

Another eBay option being introduced in 20 countries, Zheng said, is a virtual reality interface to enhance the offline shopping experience. While in a physical retail store, customers can view a product and have “multiple selections” from eBay displayed in front of them to comparison shop – items that can be “seamlessly be placed into your eBay shopping cart,” he added.

Panelist Andrey Zatsepin, head of international logistics for Russian online retail portal Ozon.ru, described his company as both an online and offline business. “We are a selling platform, we are data company and we are logistics company,” he said. “People place orders on our website and communicate with our call center, and our couriers make the delivery.”

Ozon.ru has its own couriers, along with “crowdsourced couriers” that customers can choose. By the end of this year, Zatsepin said, Ozon.ru expects to deliver 7 million parcels to more than 6,500 cities across the vast, 10-time-zone-spanning expanse of Russia. The site does this by using more than 2,460 self-pickup points (SPPs) that customers can access near their homes.

Via the SPPs and three fulfillment centers, Zatsepin said, Ozon.ru can currently provide same-day service to cover 10 percent of the Russian population of 150 million people. He can also provide next-day service to 30 percent. To do this, his company must overcome daunting challenges in Russia, including a general lack of warehouses, spotty internet service, poorly maintained roads and a scattered banking infrastructure, all of which make delivery costs about 10 percent of Ozon.ru’s total expenses, versus an average of about 4 to 5 percent for other European competitors.

“We like to see these challenges as opportunities,” Zatsepin added. He said he hopes to expand Ozon.ru’s network with “five to six new centers” to cover 60 percent of Russia’s population with next-day delivery, and to increase the SPPs to 10,000 in the next three years.

As the youngest company on the panel, Japan Post International Logistics Co. has provided B2C e-commerce service between Japan and China since 2013 worth roughly $14 billion per year. Haruko Takachi, CEO of Japan Post’s Shanghai-based logistics subsidiary, said that total is growing rapidly and is expected to reach $26 billion by 2018.

Using Japan Post’s Express Mail Service (EMS), the company has partnered with China Post and other Chinese couriers to provides cross-border service at 10 to 30 percent discounted rates, Takachi said. Japan Post also works with the couriers to provide fulfillment services from outbound Japan.

While the service with China is growing, Takachi said cross-border e-commerce is still difficult, as conflicting regulations can create longer lead times. “We cannot really do it ourselves to improve the service level,” she said. “In Japan, the service levels are some of highest in the world, but our weakness is that we cannot create this whole service by ourselves in China.”

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