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Global e commerce summit 2015-china e commerce delivery management-uco


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Global e commerce summit 2015-china e commerce delivery management-uco

  1. 1. Managing eCommerce Fulfillment in China Global E-commerce Summit 8-10 June 2015, Barcelona, Spain
  2. 2. About the Speaker Long Wong • COO of, the market leader for cosmetics eCommerce in China • 2004-05 HQ, responsible for World Wide Transportation system projects • 2006-07 Head of Supply Chain & Transportation at • 2009-10 Head of Supply Chain & Logistics at Metersbonwe • Various eCommerce start-up experience
  3. 3. • Which are the key dimensions to consider for offering eCommerce delivery service? • What are the different trade-offs and options for each of these dimensions? • How to execute (best practices) to achieve the desired result? If you have to set up your consumer delivery solution for your company’s eCommerce outlets in China today, what should you do?
  4. 4. Consideration Factors
  5. 5. Do You Need Payment Collection? • Cash-on-Delivery • Prepaid How to Define Tiers of Service? • Speed • Service How to Optimize Cost? • Partnership • Competitive Other Considerations • Peak management • Air restrictions • White glove / High value / Temperature control
  6. 6. COD Requirement Would Limit Supplier Options Non-COD: National common carriers (the 四通一达—YTO, STO, ZTO, HTKY, Yunda, TTK, GTO, ZJS, etc) are competing fiercely but customer brand loyalty starts to emerge – Wide coverage – Carrier coverage and performance (speed and service) could vary greatly by region – Relatively low price COD: Regional Carriers (落地配), ZJS (宅急送)/SF Express/EMS (Nationwide), Common Carriers such as YTO is getting into this space – Performance of different regional carriers can vary greatly and would require more management oversight (service level, cash remittance risk) – Regional carriers only make sense if COD volume is high, because of line-haul requirement – Regional carriers have lower COD rate (usually included in delivery rate); COD rate for national carriers vary from 1% to 5% – Regional carriers usually have better service than common carriers
  7. 7. Carrier Capability Overview STO/YTO/ ZTO HTKY/Yunda/ TTK/GTO ZJS Normal Day Volume ~2-5MM ~0.5-2MM ~500K Cost Low Very Low Low Coverage Very Good Good OK Peak Management OK ? OK EMS China Post (Small Package) SF Express / FedEx QF Express/ Regional Carriers Cost High Low High Low Coverage Nationwide Nationwide Good/Limited Limited Peak Management OK OK Good ?
  8. 8. Achieving Service Differentiation • Delivery Speed – Warehouse processing speed (ship time) is more important – Warehouse location may have bigger impact on Ship-to- Delivery time – Same Day delivery—is it necessary? – Managing customer perception and expectation • Last-Mile Service – Some carriers have the perception of better service to consumers – Actual service is greatly dependent on the courier – In absence of strong consumer preference, speed and meeting delivery time expectation matter more Key: Trade off between cost and speed/service, and executing on carrier selection strategy Need to understand factors that would affect speed and service
  9. 9. Collection Sorting Last MileDelivery Shipped Late Processing backlog at collection point Traffic control at sorting center Backlog at delivery station due to last mile capacity Adverse weather Rude/untidy delivery person Sorting backlog/Mis- sorting at sorting center Not enough line haul capacity / No direct route Line haul delay due to weather Line Haul Life of An “Unfortunate” Package
  10. 10. More to Think About • Peak Management • Will you carrier partners take care of you during peak (e.g. Double- 11)? • What’s your commitment for service (pick up and delivery) during Chinese New Year? • Air Restrictions • Different airports, different carriers at different times have different standards for air restrictions • Greatly affect delivery speed and thus expectation management to consumers • Special Service Requirements • White glove/Oversized—use LTL and specialized companies, will limit delivery areas • High value—special handling, shipping insurance • Temperature control—pack better, or be prepared to pay and only serving in selected metro areas
  11. 11. Strategy
  12. 12. Leave it to God vs. Control Freak • Outsource – Pick reputable carriers that can meet your obligation to consumers: • COD—SF Express, ZJS • Premium service—SF Express, FedEx • Standard service—STO or YTO, for air restricted products, use ZTO or Yunda which primarily uses ground line-haul – Promise all your volumes and negotiate for best price; re- bidding regularly • Pick Best of Breeds – Sign multiple carriers for each service obligation – Need to have system in place to select the most appropriate carrier for each package (Ranking Agent) – Ability to exclude smallest possible region for carrier assignment (as speed/service varies greatly by carrier by region/last-mile delivery person) – Low price will come to you due to competitive nature of the industry
  13. 13. System Requirements Jurisdiction Engine Delivery Data Tracking & Feedback Loop •Flexible & versatile rule setting (e.g. air restriction) •Filter out non-applicable ship method •Use tracking data to discover service problem and mitigate proactively •Solution for delivery area definition (zip code is not commonly used in China) •Solution for parsing Chinese address •Ability to exclude based on key words •Select carrier based on estimated cost & service performance considerations •Integrate with CRM & ranking rules Rule Engine Ranking Agent U-TMS Logic
  14. 14. WHO IS UCO?
  15. 15. 6,000+ Inquiries Daily 5,000+ Orders Daily (Peak Day 500K+) 200,000+ UV Daily 3,000,000+ Paid Customers 30+ International Brands 1.2B+ CNY Annual GMV (2015 estimate) Institutional shareholders include Alibaba and China King King (002094); latest round of fund raising: RMB150M Cosmetics is our ONLY Business 500+ staff ex-Alibaba ex-Amazon UCO by the Numbers…
  16. 16. 16 Target Consumer Analysis Go-to- Market Strategy Product/ Pricing Strategy Pre-Sales Service Traffic Drive/User Acquisition Store Positioning & Design Order Fulfillment & Delivery Post-Sales Service Loyalty Program/ CRM/Cust Sat Taobao Channel Management Overall Brand Mgmt & Ecosystem + • We cover the China eCommerce ecosystem, and our channel management includes Taobao/Tmall and major B2C platforms such as Jumei,, VIPShop/Lefeng, Hitao, etc One-Stop eCommerce Solution
  17. 17. Brands we Carry eSkin = Vichy, La Roche-Posay, SkinCeuticals—L’Oreal Derma-brands
  18. 18. Together We Build Long Term Partnership and Profit!! Contact:Long Wong