Southeast Asia is an exciting region for ecommerce.
Home to over 650 million people and a relatively young and digitally-savvy demographic, the region is expected to see online shopping hit US$172 billion by 2025, compared to a previous US$153 billion estimate by Google, Temasek Holdings and Bain & Co.
This is not surprising. The large, young population creates a significant volume opportunity for ecommerce players to tap on. In addition, consumers are turning to three channels for online purchases– brand.com, online marketplaces such as Shopee, Lazada and Tokopedia, and social media platforms – enabling them to shop anywhere, at any time.
Online marketplaces in particular have revolutionised online shopping in Southeast Asia, introducing consumers to a new way of transacting and getting the goods they need. Through robust marketing efforts, an endless slew of sales events and customer loyalty programmes, marketplaces now contribute to a large portion of Southeast Asia’s online retail sales and have shown they can retain customers for the long term and get them spending even more.
With online shopping accelerating through COVID-19, spending through online marketplaces is expected to growth further.
3PLs vs ecommerce enablers for online marketplace offerings
To fulfil customer orders, whether they come through retail stores or brand.com, third party logistics (3PL) providers are traditionally used by brands to deliver goods.
In fact, since the inception of ecommerce, 3PLs have been a key component in the supply chain of many brands. While brands manage the front-end side of things, i.e. market the product and take the orders, their 3PL provider fulfils the orders and handles returns – a very seamless process.
However, the rapid evolution of online marketplaces today has led to brands now finding themselves wanting a provider that can offer a one-stop solution for their omnichannel approach. Not only do brands want partners that can fulfil and deliver orders made on the likes of Shopee and Lazada, but also do the selling of products.
Brands are looking for a one-stop solution that covers everything from product marketing to platform optimisation, all the way to delivering an order right to a customer’s doorstep. So far, start-ups and ecommerce enablers have been the first port of call for brands as they do provide such expertise, however to date, there is not one enabler that provides an end-to-end solution for the entire Southeast Asia region.
This presents a significant opportunity for 3PLs to seize. In order to get into this space, 3PLs need to also offer services including onsite marketing, social media management and campaigns and promotions management.
How to get there
Three options for 3PLs to consider when moving to become a full end-to-end omnichannel service provider include:
1. Build up capabilities
This is, however, a time-intensive option and a 3PL will need to have the proper talent and expertise on hand to ensure that this is done well.
2. Acquire a company with the relevant capabilities
Companies that currently have the capabilities to help brands market and sell products on marketplaces and eventually fulfil the orders are mostly start-ups with high valuations and expectations of a potential buyer. This means that this could be a costly option.
3. Build a meaningful partnership with an ecommerce enabler
Identifying the right partner that is able to provide the relevant capabilities and agree to the rules of engagement in the partnership is key. Terms of partnerships, particularly in areas such as ownership of clients, need to be clearly defined.
Indeed, these all need to be heavily weighed.
With our experience providing high-quality, end-to-end solutions, TMX can help 3PLs assess their current in-house capabilities and identify the gaps and opportunities. This includes looking at the Southeast Asian countries where a 3PL is seeking a presence and the types of services it is confident in providing.
We believe the time is now for 3PLs to capture the opportunity to become a one-stop ecommerce solution provider for brands in this region, and we at TMX can help enable that opportunity.