July 8, 2013
In my post last month about global themes from recent events, I cited logistics as the scariest part of international expansion for eCommerce organizations. Nowhere is this more true than in emerging markets. Only a small percentage of warehousing facilities tend to be modern enough for eCommerce operations and identifying reliable fulfillment providers is a particularly thorny challenge. Horror stories abound:
For North American and European brands, one of the issues is that many of their existing logistics partners are not present in emerging markets – or do not provide the same depth of offerings in these markets – requiring brands to forge new relationships. There are, however, some less traditional types of players that brands are turning to as potential partners in the logistics space. Below are three models that have emerged beyond the typical suite of solution providers and examples of each:
The large online retailer with its own logistics network. It’s become quite common to see leading online retailers in emerging markets building their own logistics networks. From Flipkart and Jabong in India to Jingdong and the recently announced Alibaba initiative in China, many online retailers are investing heavily in logistics and fulfillment. Some have taken these offerings a step further and started offering other online retailers in the country the opportunity to use these networks. In Russia, for example, one of the largest online retailers in the country, Ozon.ru, offers a service called O-courier. O-courier provides services to online retailers in the country, including shipping and returns across Russia – the company also collects cash payment on behalf of its clients (a key component in markets such as Russia where COD remains an incredibly popular payment type). Others such as Jabong in India have pursued this model with their JaVAS offering.
The enhanced local parcel carrier. In some countries, postal services are innovative and efficient – in others, just the opposite. Indeed, while most postal organizations around the globe have played some role in driving eCommerce, only a handful have expanded operations well beyond traditional deliveries. In Asia, for example, Singapore Post launched a division focused on enabling eCommerce across the region: Through a series of partnerships, the company provides services including eCommerce website operations, warehousing and fulfillment, customer care and marketing. The goal is to facilitate brands’ entry into the eCommerce markets of the region, especially in areas such as Southeast Asia where such partnerships can be challenging to identify and navigate. Other types of parcel carriers, too, have expanded their offerings to include an eCommerce supply chain component such as express operator Aramex in the Gulf.
The startup aiming to streamline market entry in complex regions. In addition to well-established institutions spinning out innovative divisions focused on eCommerce, new entrants are also emerging to help drive eCommerce in parts of the world that continue to vex global brands. One example is the Middle East: Not only are logistics a particular challenge in the region, but the addition of a right-to-left language like Arabic can require brands to shift entire site navigation. Last week I spoke with a recently launched company called MENA360 which is helping brands with website development and operations in the Middle East, as well as handling marketing, customer care and deliveries (the company partners with a freight forwarder and offers its own last-mile delivery service through a subsidiary). In regions where the big US and European full-service solution providers are unlikely to launch operations in the short term, newer players are set to help fill the void.
This is not an exhaustive list (see this article for the slew of new initiatives in India alone), but rather some key new options that are emerging for brands. If you are a company helping to facilitate entry into emerging markets, we’d love to hear from you!