With the Asia-Pacific region now representing 35 percent of the $1.5 trillion global B2C e-commerce market, 2015 will present some significant challenges for logistics in Asia.
In Asia, by far the biggest supply chain impact from the digital revolution is e-commerce logistics — in contrast to the developed markets where omni-channel retail is stress-testing even the most sophisticated supply chain ecosystems.
Driven by an upwardly-mobile, Internet-enabled, middle class with an insatiable appetite for Western brands, e-commerce in Asia is experiencing exponential growth that McKinsey forecast could generate 2020 online sales of US$650 billion in China alone.
The massive increase in online sales is driving exponential expansion in the need for comprehensive B2C logistics networks, stretching Asia’s express logistics capabilities like never before.
Furthermore, Alibaba research reports that consumers in small cities and remote areas — with not much modern retail and no large shopping malls — actually spend a larger proportion of their disposable income via e-commerce, than those in the large cities where brand-name stores and high street retail are plentiful.
Across Asia, we have millions and millions of digital-native consumers that have never been to a supermarket or a department store, who — now equipped with smart phones and empowered by always-on and all-pervasive Internet access — can shop online as if they were in Macy’s in New York or Harrods in London.
But in an environment of predominantly old-stock warehouses and relatively under-developed logistics systems, the challenges of single-unit fulfillment and home delivery to the far-flung hinterland regions becomes operationally challenging and often prohibitively expensive, not to mention the cost and complexity of delivering on the promise (insanity?) of free-returns policies.
For 2015 in Asia, we expect plentiful challenges and opportunities in this rapidly growing sector of e-commerce and the logistics networks that empower online supply chain ecosystems.
Mark Millar, Managing Partner, M Power Associates