Asia Supply Chain Insights e-Commerce frenzy the biggest challenge for Asia Logistics in 2015

For 2015, we can expect continuing exciting omni-channel developments in Asia, embracing plentiful challenges and opportunities.

With the Asia Pacific region now representing over 35% of the global B2C e-commerce market - valued at over USD 1.5 trillion - 2015 will present some significant challenges for logistics in Asia.

The fastest growth in e-commerce is occurring in emerging markets, where transportation infrastructure and logistics capabilities are much less well developed than in the west.

In Asia, by far the biggest supply chain challenge arising from the digital revolution is e-commerce logistics - in contrast to the developed markets where omni-channel retail is stress-testing even the most sophisticated supply chain ecosystems.

Driven by an upwardly mobile middle class with a taste for Western brands, coupled with massively expanding rates of internet access and digital empowerment through ubiquitous mobile phones, the e-commerce markets in Asia are experiencing exponential growth that McKinsey forecast could generate online sales of USD 650 billion in China alone by 2020.

The massive increase in online sales is driving exponential expansion in the need for comprehensive B2C logistics networks, stretching Asia’s express logistics capabilities like never before.

Furthermore, Alibaba research reports that consumers in small cities and remote areas - with no large shopping malls and not much modern retail - actually spend a larger proportion of their disposable income via e-commerce, than those in the large cities where brand-name stores and high street retail are plentiful.

Across Asia, there are millions and millions of digital-native consumers that have never been to a supermarket or a department store, but are now equipped with smart phones and empowered by always-on and all-pervasive internet access, and can thus shop online as if they were in Macy’s in New York or Harrods in London!

But in an environment of predominantly old-stock warehouses and relatively under-developed logistics systems, the challenges of single-unit fulfilment and last-mile home delivery to consumers in the far-flung hinterland regions becomes operationally challenging and often prohibitively expensive, not to mention the cost and complexity of delivering on the promise (insanity?) of free-returns policies.

For 2015, we can expect continuing exciting omni-channel developments in Asia, embracing plentiful challenges and opportunities in this rapidly growing sector of e-commerce and the logistics networks that empower online supply chain ecosystems.

 

 

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