Opening the next frontier for ecommerce logistics

Over the last few years, ecommerce supply chains have witnessed an era of unprecedented growth, as digitalisation takes hold and customer expectations evolve. 

With at least 102 key logistics providers – both existing and emerging players – operating in Southeast Asia today, we are clearly witnessing the development of a robust ecommerce logistics ecosystem, where the introduction of innovative technologies, such as artificial intelligence and big data, promises to offer greater cost and operational efficiencies. Based on the trends outlined above, all signs seem to indicate that the addition of new logistics players and technologies will play a key role in alleviating the accelerated demand for ecommerce. 

On the other hand, this has also generated questions over the sustainability of the ecommerce logistics ecosystem. While the presence of more logistics players can help meet the demand for ecommerce, we are currently facing a situation where some players exist to fulfil a single role in a highly interdependent supply network, while others are edging towards a full-service model that remains dedicated to specific sales channels. A key question arises from this situation: are we scaling the right way to meet the demands of small businesses and evolving consumer needs? 

Making the case for an integrated platform with ecommerce logistics 

If we are to overcome these constraints and create a sustainable path for growth, we need to consider a new growth paradigm for ecommerce logistics, and here, we need to adopt an integrated platform approach to enhance the sustainability of the industry. 

Think of your parcels as passengers travelling on bus routes owned by different bus companies. Currently, the fulfilment of an order in the logistics industry is analogous to having a passenger getting from point A to point B via one bus operator operating their own bus route. In some instances, this can result in longer commute times and perhaps longer walking distances just to use that bus service. However, with the introduction of a bus interchange, passengers can hop on any bus service that is at their doorstep and switch to another route that can get them to their location in a shorter period of time. 

The analogy of a bus interchange in this context lays the foundation for an intelligent, integrated logistics and supply-chain network that allows a more efficient and customer-focused ecommerce experience. Most importantly, the application of such a concept to ecommerce logistics carries the potential of breaking through the challenges associated with a highly fragmented market – where despite the currently collaborative nature of ecommerce partnerships, the ecosystem is unable to achieve cost and operational efficiencies in the truest sense – just like how different bus operators continue to operate bus routes which may not be the most efficient for getting their passengers to their destinations. 

Opportunities to make a real difference 

The current challenges associated with ecommerce logistics underline the importance for ecosystem players to reinvent themselves not just from a technological perspective, but also to re-calibrate their business and operating models for sustainable long-term growth. 

As the logistics of ecommerce remain highly segregated, establishing one’s own end-to-end logistics network and facilities involves dedicating substantial capital expenditure to maintain and operate. These are costs that a small business can often ill afford. Working with a player that provides multi-channel logistics services can be the solution to this problem. This is where a single stock fulfilment solution can help ecommerce enablers and brands to fulfil across all ecommerce channels seamlessly. It can be highly beneficial for smaller ecommerce players and sellers, who might experience high barriers to entry when it comes to building their own logistics capabilities. 

In addition, with scale and end-to-end capabilities, ecommerce platforms can incentivise their sellers and partners to provide expedited services, such as rewarding sellers who fulfil their orders faster with increased store visibility and higher traffic. This will, in return, result in shorter delivery lead times and an overall better customer experience when buyers are able to get their orders faster. 

The best time to act is now 

The ecommerce logistics industry has come a long way since Lazada’s inception nine years ago. From managing orders with excel sheets to having a centralised data management platform, the industry has evolved tremendously to meet the needs of sellers and customers alike. While it is clear that Southeast Asia has a unique opportunity for economic development through the growth of the ecommerce and logistics industries, we must do more to set in place the foundations that will help us offer diversified services and better cater to evolving, varied customer demands. For example, some people are price sensitive and some are willing to pay more for expedited services. 

If we are to create a sustainable and inclusive ecommerce logistics ecosystem, integrating logistics activities both within and beyond a business will be key – it is about planning resources and manpower as one single entity. Being able to achieve that will help reduce the cost of doing business and empower brands, sellers, and small businesses to better compete on a global stage. 

This editorial was first published in our Cross-Border Payments and Ecommerce Report 2021–2022, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About Andy Huang 

Andy comes from Alibaba Cainiao Network where he served as VP of Logistics and Supply Chain, growing the business into one of the top ecommerce logistics service providers in China, including the expansion into its own fulfilment network. Before that, Andy spent more than a decade in Amazon North America and China, serving several critical roles across strategy, operations, and tech program management. Andy holds a Master of Science in Logistics from the University of Wollongong in Australia. 

About Lazada Group 

Founded in 2012, Lazada Group is the leading ecommerce platform in Southeast Asia. We are accelerating progress in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam through commerce and technology. With the largest logistics and payments networks in the region, Lazada is part of our consumers’ daily lives in the region, and we aim to serve 300 million shoppers by 2030. Since 2016, Lazada has been the Southeast Asia flagship platform of Alibaba Group powered by its world-class technology infrastructure.