Good afternoon – a few words of thanks to Post Expo Asia Pacific for inviting me to address you on how we at bpost International are building market share in APAC. We have already heard from previous presenters a raft of numbers about how this dynamic region is growing in the eCommerce sector. In the next 15-20 minutes I aim to provide some key pointers as to the lessons we’ve learned so far and hopefully offer a brief insight into the type of solutions that are proving successful.
We all know that the eCommerce sector is a huge, vibrant and rapidly growing market. It is changing the landscape for postal operators beyond imagination a few years’ ago. Significant double-digit growth levels have changed the landscape for our sector – we are all moving towards becoming parcels-oriented companies, where we leverage our network strength and capabilities in B-2-C home delivery.
Looking at Cross-border eCommerce is it clear that this is our future and in particular our businesses in Asia Pacific. This region will become the largest online trading bloc in the world. Building sustainable market share connected to packet and parcels delivery internationally is our focus. PayPal’s recent study highlights the cross-border flows and the main online shopping destinations across six surveyed markets - despite the global marketplace, geographic proximity still plays a part in purchasing decisions. For example German online shoppers buy heavily from their neighbours in Austria and the Netherlands, while mainland China shoppers buy from Hong Kong and Japan. This is why targeted global scale is important in this new world.
eCommerce in many markets is a new way to shop – online and by smartphone and tablet. In China, (and other Asian markets) this is the new lifestyle choice. There are plenty of nuances to the ecommerce market in China. Westerners mostly shop online for convenience, but in China eCommerce is driven much more by availability and value. Shopping online means access to brands and goods otherwise not available beyond Tier 2 cities. Foreign internet brands face hurdles entering China. The country’s ecommerce market, like its search, social networking, instant messaging and gaming sectors, is dominated by a handful of local giants – Alibaba, DH Gate, 360buy and international platforms such as tMall, Taobao, ebay and to a lesser extent Amazon.
We have invested in China which is a huge and complex market – looking at the scale and scope it is daunting at first sight. The GDP of many of Europe’s largest developed economies would easily fit into some of China’s provinces! Indeed, Belgium (our home country) is around the landmass size of greater Beijing! It’s not just about demographics but to be successful you need a robust logistics management set-up to handle increasing volumes from ‘inner China’. This is why we at bpost operate from three main gateways - Beijing, Shanghai, Guangzhou and Hong Kong.
China’s numbers are impressive. Rapid industrialisation and development continues apace, despite slowing economic growth rates, which are still in the 7-8% per annum range.
Let’s have a quick look through some of the challenges we have encountered in starting our business in China and the APAC region.
Developing sustainable business in APAC cannot be approached in an opportunistic or ad hoc way. If you are serious about the region it must be part of a long-term plan. For us, market entry was carefully thought through and executed by our team of professionals managers with years of experience in international postal and parcels businesses. Our first entry vehicle was to acquire in Hong Kong and Singapore and build from there. Our business handles millions of direct mail and publications items, but is now moving rapidly into eCommerce from a strong base. Possible options for China were to acquire (difficult and expensive!), work through agents (loyalty is a key point here), partner with companies operating through other gateways (e.g. Hong Kong) or to establish ourselves on the ground in major gateways. We chose the latter option and commenced operations around 18 months ago.
Having a strong home core in Belgium and Europe enables us to develop scale and market share quickly and profitably. Today we operate in China, HK and Singapore, where we have gateway operations with direct access into Europe and the Americas. Plus, our group company Landmark Global has recently commenced operations in Australia to support cross border business needs for our US customers. We are looking to build on that fulfilment and eCommerce base. In North America we operate through 10 centers and have just opened our 11th facility in Las Vegas!
A key success factor for APAC is crafting solutions that are tailored to customer needs – one size does not fit all! Competition and price competitiveness are important considerations. We have first mile options (our own in HK and SG) and with established partners in China Our new e-fulfilment centre is now operational in Guangzhou with other centers coming on line soon. Connecting with our close linehaul relations with airlines is key to assuring uplift (peak and low seasons!) Then interconnectivity with last mile delivery networks (postal and alternatives) helps us control the end-to-end flows. eCommerce customers demand control and reporting to support the customer buying experience. Operational performance measurement must be effective, transparent, timely and accurate to enable buyers to have the best experience and minimise incidences such as non-delivered items. Understanding these drivers and metrics is central to offering the best-in-class distribution performance. The eCommerce customer / buyer has control in our new world!
Innovation in service development in APAC is vital in building market share. Our focus is squarely on the parcels sector and offers a range of solutions that combine the best of postal delivery and clearance (for low value items) – to scan services for lighter weight shipments - right through to tracked options for items up to 30kgs. We also offer the tried and tested service - ‘Globify’ - that offers full landed cost for etailers and their customers.
Our new global packet and parcel service – TrakPak – is implemented and growing here in Hong Kong and China. Here are some of the key features. We are building scale along the lines of what’s being achieved by our European businesses where this service (combining our MaxiPak EMS service with B2C distribution solutions from private operators in certain key markets) is growing strongly. Customer needs for this service include a DDU tracked solution for parcels up to 30kg, daily working day delivery, delivery scan, inclusive insurance and PUDO options in certain countries.
Fulfilment for eCommerce companies is another solution demanded by eCommerce companies. We offer this in our Guangzhou facility where we have just doubled the footprint to accommodate growth. We are attracting European etailers that require local fulfilment in China (for both outbound and inbound options). Similarly, our fulfilment options in Europe (EU and non-EU – Macedonia) offer e-sellers the opportunity to use local managed warehouse facilities to be close to the main markets – this is essential for both fast-moving items where proximity and speed of delivery to major markets (UK/DE/FR etc) is important and low-value items (under Euro 22) where price is the driver.
A key challenge for us in managing growth in Asia (particularly into the European region) is to ensure that our major facilities (Brussels/London/US) have the capacity and automation to handle significant volumes. Our EMC in Brussels is a highly automated facility and enables bpost International to demonstrate operational performance levels that are consistently in the top 3 of the external quality of service reporting system managed by the International Post Corporation. Indeed, in 2013 we were the top ranking postal operator for outbound mail. Our London operations now move significant volumes into China (where we believe we are now the 3rd largest volume sender after Japan and South Korea).
In conclusion, a key success factor is not just about having the right vision, services and solutions in place to drive growth, it’s about thinking global (strategy) and having the commitment to enact those plans locally and regionally. We are in APAC for the long run and aim to grow our business further whilst adapting to local needs and tastes.
BUT, the most critical success factor is the People you employ – we have a fantastic mix of local professionals (from a variety of business backgrounds and experiences) and western management that has built sustainable, profitable operations in Europe and North America. This is key – as without that learning exchange, support and knowledge transfer, mutual trust – and team spirit - achieving success in building lasting market share in this dynamic region will be difficult for any postal operator.
Thank you for your attention and time. I would be pleased to take your questions.
How to build a sustainable
market share in Asia-Pacific
Managing Director APAC
Post-Expo Asia Pacific 2014
yy/mm/dd - title presentation - author - qualifier 2
B2C eCommerce sales is expected to
increase by 20.1% in 2014
Source: eMarketer 2014
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”In other countries, eCommerce is a
way to shop. In China it is a
lifestyle” Jack Ma, founder of Alibaba
Source: EIU, Access China 2014
China is world in itself
Of these buildings could be
skyscrapers - equal to 10
cities the size of New York
The number by which GDP will
have multiplied by 2025
square metres of floor space
will be built – in five million
Mass transit systems will be
Netizens, the largest Internet
population in the world
Square metres of road will be
The numbers do the talking
We faced several challenges when
starting our business in China & the
Our strategic gameplan for the APAC
market was well thought over
We are a global company with
strong local presence
We offer a wide variety of
(T&T /T&T item)
Packets & Parcels
MiniPak No tracking
Tracking on bag level
/item to bag level
Tracking item to country of destination
EU28 customs clearance
Tracking an item to
scan at door & signature
Int’l customs clearance
(E format, max 2 kg)
Parcel (max 30 kg)
TrakPakParcel (target ≤5 kg)
Tracking an item to
scan at door & signature
Tracking on item &
Scan at door
Scan at delivery – no
Maximum 50€ per parcel
DDU fully tracked parcel
Combination of the best
postal and non-postal
More than 200 destinations
Delivery at least 5 days per
Our e-fulfilment solutions
enable e-sellers to focus on
their core business
As a result, our APAC volumes doubled
in the last 12 months