Last mile developments in Singapore

The urban environment is a specific challenge for logistics companies and particularly so in ASEAN. The last mile of the logistics chain, which accounts for a large proportion of shipment costs and complexity of operations, is often the most inefficient. This distribution inefficiency in urban areas comes from low load factors, long dwell times at loading and unloading points and a high number of delivery requirements to individual customers within a short time.

Two of the major challenges common to the last mile pertain to unconsolidated deliveries and high delivery failure rates. For the former, the lack of order and delivery coordination between retailers has resulted in customers receiving multiple deliveries and a substantial amount of time waiting for their parcels. At the rate that consumers are turning to e-commerce for their needs, this is an issue that needs to be addressed. For the latter, delivery failure rates have exceeded 15 per cent signalling a need for improvement in the current modus operandi.

Failed deliveries incur extra delivery costs for companies as they make repeated trips to the same doorstep. As the e-commerce market in ASEAN grows to a predicted US$88 billion (S$120 billion) in less than a decade, last mile delivery solutions must develop at the same pace to satisfy the expectations of millions of customers. Singapore is currently undergoing some last mile delivery developments and transformation:

TR46: Technical reference for last mile delivery

Jointly launched by the Singapore Manufacturing Federation-Standards Development Organisation (SMF-SDO), Infocomm Development Authority of Singapore and SPRING Singapore, the TR46:2016 aims to standardise dataset formats and streamline delivery processes between e-commerce retailers and logistics service providers.

A common format will vastly improve communication between the various players in the e-commerce supply chain; effectively reducing time, costs, and delivery errors, and enabling a seamless experience for customers.

Smart lockers

In Singapore, the Infocomm Media Development Authority (IMDA) has been tasked to deploy a nationwide federated locker network to transform the future of last mile deliveries in Singapore and reduce house-to- house delivery inefficiencies, especially given the increase in online shopping. Citing data from logistics providers, IMDA said that more than one in 10 deliveries could not be fulfilled due mostly to recipients not being at home. The locker system proposal will not be tied to any single operator, and can be used by all couriers, potentially benefiting more than 7,600 logistics service providers operating in the country.

Drone deliveries

The usage of drones is constantly evolving in ASEAN with many developments in various countries. Drone deliveries cost less to operate than traditional ground vehicles resulting in cost savings. Delivery time is also greatly shortened allowing for the fulfilment of same-day delivery for customers.

In September 2015, Singpost successfully conducted a recipient – authenticated delivery via an Unmanned Aerial Vehicle, its payload included a letter and T-shirt. Furthermore, Singpost signed a partnership agreement with Airbus Helicopters in April 2017, with aims to develop an aerial drone delivery system for the urban city.

E-commerce case studies in Singapore

Amazon Prime

In July 2017, Amazon Prime was officially launched in Singapore with a 9290 Sq. m facility located in the west part of the country. Prime Now in Singapore marks Amazon’s first foray in Southeast Asia and it runs on a new operating model which leverages data and technology such as artificial intelligence to achieve greater resource efficiency and near-real time delivery of goods. Amazon Prime’s two-hour delivery service is only made available through the Prime Now mobile app. It gives shoppers in Singapore access to tens of thousands of products ranging from groceries to electronics and sporting goods from its fulfilment centre.

Lazada (www.lazada.com)

Headquartered in Singapore, Lazada Group is a privately owned e-commerce company founded by Rocket Internet in 2011. As of 2014, Lazada Group operated sites in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam and had raised approximately US$647 million (S$883 million) over several investment rounds from its investors such as Tesco, Temasek Holdings, Summit Partners, JPMorgan Chase, Investment AB Kinnevik and Rocket Internet.

In April 2016, Alibaba Group announced that it intended to acquire a controlling interest in Lazada by paying US$500 million (S$681 million) for new shares and buying US$500 million worth of shares from existing investors. The British supermarket company Tesco confirmed the sale of 8.6 per cent of its holding in Lazada to Alibaba for US$129 million (S$175 million). In June 2017, Alibaba Group increased its investment in Lazada by an additional US$1 billion (S$1.3 billion), raising its stake from 51 per cent to 83 per cent. Alibaba invested another US$2 billion (S$2.7 billion) into Lazada in March 2018. In Philippines, Lazada was ranked the top e-commerce player by iPrice, garnering a staggering 67,679,800 monthly visits online in April 2018 compared to its nearest pursuer Shopee with 9,165,600 visits a month. In Singapore alone, Lazada has over 5,000 retailers listed on the site, including household names such as Watsons, Best Genki and Gain City.

Redmart (www.redmart.com)

RedMart Limited was incorporated in 2011 and is based in Singapore. RedMart Limited operates an online grocery portal in Singapore. The company allows customers to buy fresh produce, meat and seafood, dairy and chilled, bakery, frozen, beverages, food cupboard, alcohol, health and beauty, household and pet, baby and child, and home and outdoor products online. It also provides home delivery services. As per the transaction announced on November 2, 2016, RedMart Limited operates as a subsidiary of Lazada South East Asia Pte. Ltd.

Reebonz (www.reebonz.com)

Reebonz is an online platform for buying and selling luxury products. They offer premium brands at deep discounts in private sales and are modelled around the concept of ‘accessible luxury’, where members can shop on web or mobile for an exciting collection of new and preowned luxury merchandise. Reebonz is one of the most established online luxury sales companies in Southeast Asia, with business operations in eight countries, Singapore, Malaysia, Indonesia, Taiwan,Hong Kong, Thailand, Australia and South Korea. Reebonz was established in 2009 when e-commerce was just taking off in Asia and there was no clear market leader yet. It was also the year of the Global Financial Crisis and many brands and companies were dealing with overstock and Reebonz provided just the platform for them to liquidate their inventory.

In 2017, Reebonz opened its 23225 sq. m headquarters in Singapore, housing its regional distribution centre as well as its global procurement and marketing operations. The S$42 million (US$30 million) facility provides the company with a strategic platform to manage its regional cross border distribution from one single centre to serve the region.

This article was adapted from “Singapore: E-Commerce. Gateway to ASEAN and Southwest Pacific”, a supplement published by Supply Chain Asia.

To read more about the opportunities and challenges for ASEAN’s e-commerce industry, click here.

To read more about Singapore’s industry initiatives for e-commerce, click here.