Opportunities and problems for eCommerce and omni-channel merchants
Anticipating demand: managing suppliers and inventory
Guaranteeing shipping space: managing your logistics partners
Gain more repeat purchases: managing customers expectations
When the holidays start rolling in, people get their wallets ready while eCommerce merchants get themselves ready for the busiest period of the year. From October to December, and even up to February of the following year, countries across Southeast Asia celebrate major holidays and enjoy huge online sales. And while these occasions can boost your online store’s profits, they can also spell major headaches and potential pitfalls for those who haven’t prepared well. You have the opportunity to multiply your sales, but you also run the risk of missing delivery time windows due to the sheer volume of orders that need to be processed. The holidays are a great period to capture new customers, but if you’re hoping to convert them into repeat purchasers, you need to ensure our deliveries and logistics are ready to deliver them the best experience possible.
These huge holidays spell sales. But for a region with a logistics infrastructure that still requires more development1, it can mean much stress and problems, too. For example, in Lazada’s 12.12 sale in 2017, the company had to charter flights2 to Indonesia and Thailand to keep up with goods delivery. A spike in demand becomes a problem when your supplier can’t produce enough goods, or when delivery demand far exceeds delivery capacity. This could mean that your cargo could end up waiting for a long period of time before a plane to transport the goods can be found. This leads to congestion in airports and distribution hubs and consequently, shipping delays. Congestion also results in another problem online sellers encounter during major sales and holidays—higher costs for warehouse rental or shipping. Warehouse owners and shipping partners may increase their prices when demand vastly exceeds supply (in this case, space). During the holidays, carriers like Fedex and UPS charge holiday season rates for deliveries3 and even increased surcharges for large and bulky deliveries
In turn, your packages may be deprioritised because someone else paid more to have their deliveries expedited. This is more likely to happen if you’ve only recently begun working with your shipping partner or have not established a good relationship with them.
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These problems need not dampen your holiday spirit and that of your customers. There’s a way to prepare yourself for shipping in Southeast Asia‘s shopping holidays and major eCommerce events, and to maximise the opportunities to sell to both new and repeat customers. More often than not, your ability to cope with online delivery problems and the strategies you develop to resolve them will depend on your fulfilment model. As an online merchant, it is likely you’d be using either a cross-border shipping model or local distribution model.
New to eCommerce and don’t know the difference? Check out this handy infographic:
As shown in the infographic, both involve the transportation of goods from one country to the next. The key difference is that cross-border shipping does away with the need to store inventory in the destination country. On the other hand, a local distribution model requires the merchant to have a warehouse—its own or that of a third party—in the destination country. Here are some ideas on how you can prepare for major holidays and sales, and how your shipping model can influence your response to eCommerce logistics problems.
If a major shipping event or holiday is coming up, try to predict the demand for the products you sell. If you’ve been selling items online for a few years now, you’ll have historical data to rely on. If not, conduct research on industry benchmarks or ask your supplier about their benchmarks. Examine this data and identify the items that tend to sell the most during top eCommerce events like Singles’ Day, 12.12, Christmas, and Chinese New Year. Then, share this information with your suppliers so they’ll be prepared, too. It’s also a good idea to have additional suppliers and shipping partners during this season if you anticipate a major spike in demand and online deliveries. This way, you will have fewer bottlenecks in your supply chain when demand peaks.
It also helps to have a calendar of the major shopping events that your target Southeast Asian country is going to be holding. Check out our list below to find out major eCommerce events to help plan your sales promotions better:
If you’re using a cross-border shipping model, consider working out an arrangement with your supplier that allows you to have these best-selling items at your warehouse before the holiday or sale begins.
It is vital to begin shipping your products as soon as orders come in. To speed up the delivery process, you can prepare your top-sellers for shipping in advance. This can be done by pre-packing your top-sellers into boxes before orders have come in and keeping them ready-to-ship in your warehouse. By doing this, you only need to slap on a label once orders come in. From there, your logistics partner can clear the item through customs, put it on a plane, clear it through the destination country’s customs, and send it to their partner’s distribution hub. The latter will take care of bringing the package to your customer’s door. On the other hand, if you’re using a local distribution model, you’ll need to make sure that you have sufficient stocks in your destination country. As you’ll be planning in pallets, make use of predictive data and historical data, if you have it, to plan your inventory. By having your inventory transported to your target country at least a few months in advance, this also saves on holiday freight charges.
Also, consider your warehouse space needs. Using your predictive data, anticipate how much warehouse space you’ll need for the goods arriving in your target country. Demand for warehousing increases closer to festive seasons so it’s good to secure this additional space at least a few months beforehand. Preparing your inventory and warehouses in advance helps to secure capacity and could potentially save you on shipping costs. Having your stocks in the country early helps avoid delays due to congestion at ports and other potential delays in shipping, particularly if you are using ocean freight.
Warehouses and shipping partners may increase their fees during extremely busy periods, as more merchants compete for limited space. They may also prioritise customers with larger contracts or with whom they have long-standing relationships.
But if you’re a relative newbie in eCommerce, don’t fret. You can prepare months ahead and establish clear expectations with your shipping partner. Forge a good relationship with your account manager through clear, constant, and respectful communication. That way, when the holiday season comes around, you’ll know whom to call to address your concerns or negotiate with to get more space. When choosing your logistics service provider, look out for one that has solid partnerships with warehouses and carriers. For merchants using the cross-border shipping model, you’ll need a logistics partner with solid air freight carrier networks so they can guarantee space for your goods on their planes.
The shipping partner will also have a distribution hub in the destination country, so you won’t have to look for a warehouse provider there. On the other hand, check with your logistics service provider how much capacity they have in your target country. If you anticipate that your original partner may not have sufficient capacity, consider on-boarding more logistics partners.
If you’re using a local distribution model, the process is similar but you’ll need to consider your logistics partners at all your delivery stages. For delivery to the target country, work with a logistics partner with strong shipping ties, as this puts them in a better position to negotiate for space and priority if necessary.
As for the last mile fulfilment, check if you or your last mile fulfilment partner have enough manpower to deliver all the products to your consumers’ doorsteps. Also, consider having some additional last mile service providers as a contingency plan. You can similarly prepare your top-sellers for shipping in advance, which will further speed up deliveries. This way, you just need to slap a label on when orders come in and send the orders straight for shipment.
If you need additional warehousing, consider the location and service quality of the warehouse that you are considering to rent. The warehouse’s location will affect how long it would take for deliveries from the new warehouse to reach your consumers.
Service quality would affect the speed of processes such as picking and packing. The more efficient the warehouse service is, the faster deliveries can be made.
To find out a warehouse’s service quality, consider reaching out to your considered warehouse provider’s clients and finding out whether or not they’re satisfied with the services. It’s a good idea to visit the warehouse in your target country so you can vet the warehouse providers in person.
Especially when selling overseas, it’s important to only promise what can be achieved. While it is still important to deliver our goods to our customers as quickly as possible, you will need to set realistic timelines. When planning the timeline and cut-off dates, consider all the steps required to deliver an item as well as how long each step takes.
For those using the cross-border shipping model, bear in mind the goods need to be transported from one country to another before it arrives at your customer’s doorstep. This means you need to factor in air freight timing, customs and delivery in the target country when creating the delivery time frame.
As for the local distribution model, this process will be a lot shorter. Since most of your inventory is already in the country, you only need to factor in the timing of preparing the goods for shipment from your warehouse and transporting it to the customer’s doorstep.
Be sure to add in a reasonable allowance for potential delays. These delays could be caused by congestion at airports or ports, or bad weather. To find out more, consider checking out our guide on how you can deal with and minimise delays.
To reduce the likelihood of consumers getting anxious about the status of their deliveries, you can offer real-time tracking of their delivery to them. This added layer of transparency saves you the hassle of having to deal with emails from consumers requesting the status of their shipments.
A large proportion of goods are returned on arrival as they were damaged during shipment, while some may change their minds shortly after receiving the delivery. Apart from the damaged goods, the undamaged goods that need to be returned can be used as inventory for future sales.
To ease any potential frustration and negative reviews that your customers may have, it helps to have a clear returns policy. A good returns policy which is clear and can tackle returns swiftly can give consumers the confidence to buy from you, while efficiently returning undamaged goods back into your inventory system.
Keep in mind that with eCommerce, even if you’re simply running a modest online store or selling goods on a popular platform, you’re part of a larger, complex picture. This picture includes your network of trusted suppliers, shipping partners, and warehouse owners. When you build a strong network and at the same time, improve your own efficiency, you serve your customers better as a result.
‘Tis the season to be jolly—but for eCommerce and omni-channel retail businesses, it’s also a season for stress. On the flip side, it’s a season for boosting sales. If you aren’t sure how to make the most of the upcoming holidays, use the tips above as a shipping guide that will help you survive the festive season.
If you’d like to find out more about how we can solve your SEA eCommerce cross-border delivery needs, come and have a conversation with us.
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