Witnessing the boom in the eCommerce industry is no surprise. In fact, with internet tightening its grip over the market, this acceleration in the market is evident.
Logistics in eCommerce too has been evolving significantly across the globe over the last couple of years. Fashion, electronics, online marketplace et al, are some of the key areas driving eCommerce which is broadening the horizons by exploring the possibilities in the untraded fields.
With materialisation of these possibilities, the global eCommerce logistics market is expected to grow at a CAGR of 9.69 per cent by 2020.
DHL has made a place for itself in the logistics and facilitation service arena. Offering myriad hues of standard domestic and international parcel pick-up, delivery and return solutions for business customers as well as eCommerce logistics and facilitation services, today DHL eCommerce is a name to reckon with in industry.
In conversation with Retail360Aisa, Malcolm Monteiro, CEO, DHL eCommerce Asia Pacific talks at large about the brand and its future plans to enhance the growth and visibility of the brand.
Below are the excerpts of the interview…
Q: What new technologies, you feel, are needed to be competitive in the eCommerce sector?
A: To be competitive in eCommerce, businesses must provide fast, reliable, cost-efficient and convenient solutions to their end consumers whose expectations are constantly evolving. Not only do consumers want more delivery options, they also want to know where and when to expect their shipments. At DHL eCommerce, we are continually innovating to provide solutions that meet the needs of our customers.
For example, DHL provides a range of unattended delivery options, such as Parcel Lockers in Europe and India and Parcel Shops in Europe. Most recently, DHL Parcel and Smart announced a joint pilot in Germany to allow car-trunk deliveries in their vehicles by allowing customers to use their cars as mobile delivery addresses.
This is indeed a dynamic space and with technology, the possibilities are endless – and DHL will continue to innovate and develop solutions to meet the needs of its customers and the industry.
Q: How are you planning to expand your reach in the South East Asian market? Which are the new Distribution centers being added, and their capacity?
A: Asia Pacific and as part of that region, South East Asia, is really an important market for DHL and as such we will continue to invest to maintain our leadership position and to meet the demands of our customers. Across Asia Pacific, we currently have nine distribution centers – Singapore, Bangkok, Hong Kong, Shenzhen, Shanghai, Sydney, Delhi and Japan and over 10,000 eCommerce ‘experts’.
Earlier this year we inaugurated a 3,000sqm distribution center in Bangkok as part of our ‘Last Mile’ B2C delivery business in Thailand and lately in June, a new distribution center was launched in Shenzhen, which can handle a capacity of up to 18 million shipments annually. Additionally, we will expand our distribution centers in Hong Kong and Shanghai, to handle a combined capacity of 119 million pieces per annum.
Q: Which markets in Asia Pacific have the highest potential in terms of eCommerce?
A: Emerging manufacturing hubs, increasing domestic consumption and the rapidly growing eCommerce sector are key drivers of the region’s strong growth. The six markets across Asia Pacific we see as having the highest potential – China, India, Thailand, Vietnam, Malaysia and Indonesia.
Additionally, trade initiatives such as the Trans-Pacific Partnership (TPP) and the ‘Belt and Road’ initiative will make Asia Pacific countries even more attractive as manufacturing bases.
Q: What are the top 3 challenges that eCommerce industry is facing in the logistics sector? How do you intend to address it?
A: Rather unsurprisingly the issues are very generic, both in Asia Pacific and Globally. The key ones are:
- How and where should a small and medium size eCommerce business expand globally.
- How to develop landed cost solutions, so that the shipper and receiver know the likely duty and taxes applicable for every item ordered.
- How to reduce the cost of logistics whilst providing a great customer experience.
- How to place products as near to the customer as possible, specifically, how to deliver a great consumer experience through the last mile of delivery.
- How to meet the ever-changing demands of the consumer – speed, choice, quality and visibility.
Addressing these challenges faced by merchants, DPDHL Group harnesses our strength across our divisions, to provide a wide range of quality solutions.
Q: Which is big for you – Domestic, or International parcelling in South East Asia, and why?
A: Both domestic and international B2C are equally important, and both are growing at double digit levels. Our goal is to be the provider of choice for the eCommerce sector and as such we will continue to invest and innovate to deliver solutions that fulfill it.
Q: How do you deal with delivery problems in the areas with poor connectivity?
A: In the eCommerce sector, there isn’t a ‘vanilla’ — one size fits all answer! In fact, every market and its challenges are different. That means DHL needs to remain nimble, very close to the business and our customer, and constantly modify our approach to overcome any challenges that may pop up – and they do!
As an example, in India, the largest postal network in the world, we deliver to more than 39,000 Pin Codes and some of those are very remote; we found that bicycles are the most effective delivery method for the last-mile. Elsewhere, unattended options provide greater connectivity, e.g. Parcel Lockers and in Thailand DHL Parcel Shops create improved accessibility and choice.
So it really is about listening to our customers, engaging our great teams to help solve the delivery issues and high degree of trial..
Q: Are you using any technology to track shipments, right from a buyer clicking to pay, till its delivery?
A: Visibility is a key requirement for both the e-tailer (the shipper) and the consumer (the receiver) – both want to know where their order is and the expected delivery date and time.
We continually invest in technology and this allows us to create proprietary solutions that provide that visibility and predictability. As an example, our Customer Web Portal allows tracking of shipments from the time of processing the order right to delivery.
Q: Visibility is the biggest issue seen in logistics and supply chain across the world. How do you help your customers in that?
A: As noted above, depending on whether your order is cross border or domestic, we provide a range of solutions to deliver great visibility and predictability.
Q: How does DHL prepare itself to meet the sudden spurt in orders?
A: It is tough! We approach this unique eCommerce challenge through four areas:
- Regular dialogue with our customers and detailed peak season planning and forecasting.
- Recruiting additional resources to match the demand.
- Using alternate delivery options to provide incremental capacity, whilst maintaining service, but not pushing costs through the roof, eg: crowd sourcing delivery routes, parcel lockers, parcel shops.
- We have a great global team and we rely on our leaders to be great at execution.
Q: Do you want to expand capacity for that one day of big sales? How do you manage additional resources post the holiday seasons?
A: Majorly, big day sales are alike sudden spurt in orders. We follow the above mentioned steps for coping up with the one day big sales as well.
Q: Do you find Cash on Delivery (COD) rampant in South East Asian markets? How do you address its challenges?
A: COD and CCOD is ‘rampant’ in almost all global markets. Our couriers, and more specifically their delivery applications, are built to accommodate the high percentage of COD/ CCOD transactions. This really isn’t a huge issue and I am sure over time, and with the increase in m-wallet we will see more and more digital transactions as opposed to physical cash.