AST&L China eCommerce Fulfillment 2013

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AST&L China eCommerce Fulfillment 2013

  1. 1. Chung Tam Chief Representative Greater China American Society of Transportation and Logistics China E-Commerce Fulfillment
  2. 2. Logistics is a major bottleneck for development of e-commerce in China • Dissatisfied customers: – slow delivery; – damaged goods; – lost shipments; – unprofessional service; – misuse of personal information • Unable to cope with volume during peak season • Poor impression of e- commerce and express industry
  3. 3. China challenges •Consumer preference for COD •C2C dominates marketplace - 77% of transactions are C2C (micro business & SME) •Urban traffic congestion •Delivery to 3rd and 4th tier cities
  4. 4. China Fulfillment Models • In-house: has existing delivery infrastructure, warehouses, and customer service center • Outsource: uses express companies • Form partnerships – e-commerce companies forming strategic alliance with express companies
  5. 5. E-Fulfillment in China • Most leading B2C online retailers are pure web-based • Building own logistics infrastructure
  6. 6. E-retailers’ logistics offerings • Online retailers are setting up their own logistics network to fulfill customer orders due to inability of express companies to meet their needs. • They can expand their service offerings to compete with logistics companies using existing infrastructure
  7. 7. Un-Sustainable pricing & business models • Offering free shipping + low prices • Heavy spend on marketing • Favor gaining market share vs. profits • Easy access to capital for dotcoms • Management focused on public offering instead of operational excellence
  8. 8. China’s express delivery market has grown five folds in the past five years driven by the growth of e-commerce. The number of units delivered in April increased by 64.1%, with revenue hitting 10.9 billion RMB ($1.77 billion) up 41%, YOY. In 2012, 5.7 billion packages (up 55% over previous year) delivered. Industry earning 106 billion RMB ($17.02 billion), 40% increase YOY. China Express Delivery Industry Overview
  9. 9. China Express Delivery Industry Revenue Growth
  10. 10. Delivery Density
  11. 11. Special promotion and seasonal peaks stressing industry capacity Industry Dynamics
  12. 12. Industry Dynamics Top Fashion site Vancl.com E-commerce companies offering delivery services
  13. 13. Industry Dynamics Express companies getting into retail
  14. 14. Industry Dynamics Alibaba $16 Billion network

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