In August – two months before SEKO Logistics would sign onto Alibaba.com’s “OnePartner” program – the U.S.-based forwarder opened a 50,000-square-foot warehouse in Hong Kong, following the establishment of another 50,000-square-foot facility in the territory last November. Both of these facilities are aimed straight at e-commerce. The first one targets the Hong Kong market, chiefly for same-day deliveries. The new building is for e-commerce fulfillment across the Asia-Pacific region.
“It made sense for us to open our own facility and take our destiny in our own hands,” commented Brian Bourke, SEKO’s vice-president of marketing.
E-commerce business in the region has been soaring, from Indonesia to the Philippines and Japan. Still, the biggest prize that SEKO – and many other logistics firms – has in its sights is Chinese consumers. “It’s all about access to the China market – not only to facilitate shipments around the region. It’s retailers looking to access the China market,” Bourke said.
Online shopping in China has gone through the roof. Bourke points to projections that 52 percent of China’s retail market will be online in 2017 and that the country’s e-commerce market will swell to US$650 billion by 2020. November 11, celebrated in China as “Singles Day,” is an online shopping frenzy, with discounts of up to 70 percent. Sales on online cross-border shopping sites Tmall and Taobao climbed from $5.8 billion in 2013 to $9.3 billion the following year and to more than $14.3 billion in 2015. Last year, logistics firm DB Schenker was bracing itself for an estimated volume of 1.5 million Singles Day orders to be processed in the space of seven days.
As a result, other logistics firms have also moved to bespoke solutions for international e-commerce flows. Last November, Damco, one of the companies in the Maersk Group, launched an e-commerce service for international shipments to China, which covers the process from inbound goods management and consumer order receipt to final delivery.
The services that international merchants looking to sell in China want from their logistics providers typically go beyond feeding distribution centers and organizing delivery. They want end-to-end solutions as well as a mechanism to handle returns, Bourke remarked.
Delivery pricing has to be integrated into the shopping site. Many merchants are happy to latch on to Chinese online channels, like Tmall, established by Chinese internet giant Alibaba. Others seek to control their brand identity better and look for bespoke solutions. Tigers, Inc., a Hong Kong-based logistics firm, has morphed from a traditional forwarder into an end-to-end provider, with a strong focus on international e-commerce logistics. Tigers launched “eShop” this spring, a cross-border e-commerce platform and distribution channel that gives small- and midsized international brands direct access to consumers in China. In addition to the logistics element, the platform is designed to provide foreign merchants with a marketing channel into China as an alternative to established platforms.
“Marketing via Tmall is expensive, and a lot of our small- to medium-size customers prefer Tigers to connect their community via mobile e-commerce,” said Tigers CEO Andrew Jillings.
Tigers’ eShop platform collects consumers’ personal data that are required for processing customs clearance and duty payments, handles payment collection, and oversees delivery of products via Tiger’s distribution facility in Hong Kong. To manage payments, the logistics firm adopted a mobile payment solution to collect money from the buyers and remits the funds on a monthly basis to the seller, minus the logistics and marketing cost. The company’s offering is built on a cloud-based system and a strong logistics footprint that includes 17 offices across China.
Jillings stressed the importance of a flexible setup that allows Tigers to tailor solutions to the requirements of individual clients rather than a one-size-fits-all approach.
For airlines, the e-commerce bonanza has played out in the form of mail or consolidations from forwarders or integrators. Controlling just the airport-to-airport part makes it difficult for them to assume a more active role, but some are trying. China Southern Airlines, for example, launched a cross-border e-commerce platform targeting goods ordered from overseas by Chinese consumers last year. In Europe, Air France-KLM Cargo is currently examining the viability of taking a stab at door-to-door e-commerce in partnership with express subsidiary Sodexi, said Rahul Pathak, the carrier’s head of cargo for China. Given Chinese consumers’ penchant for international brands, French couture could take the carrier’s e-commerce flows to new heights.
E-commerce lets consumers buy anything from anywhere, but location still matters. SEKO’s latest facility, for instance, is located right on the Hong Kong-China border, within easy reach from Hong Kong’s port and airport. Hong Kong’s free port status and its connectivity are crucial, said Bourke, pointing to Chinese consumers’ expectation of rapid deliveries.
“The key is to get inventory in the region in time and make sure you can fulfill these orders quickly,” he noted. “You have to position your inventory close to market. If you deliver in China in two days they’ll never buy from you again.”Like This Post