APP REPORT Q4/2015 Crowdsourced Delivery vs. Postal Service Reaching out to SMEs Maldives Post's embarkation on cross-border e-commerce ...
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APP REPORT Q4/2015
Crowdsourced Delivery vs. Postal Service
Reaching out to SMEs
Maldives Post's embarkation on cross-border e-commerce
APP Operations Audit
0
APP REPORT Q4/2015
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APP REPORT Q4/2015
01 Crowdsourced Delivery vs. Postal Service
Rivalise or Moneytise
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APP REPORT Q4/2015
CROWSOURCING CONCEPT
Crowdsourcing is a modern business term of which definitions and terms vary but
the basic idea is to tap into the collective intelligence of the public at large to
complete business-related tasks that a company would normally either perform
itself or outsource to a third-party provider.
An important element of crowdsourcing is that it builds on the sharing of excess and
underused assets.
Over the last decade crowdsourcing has revolutionized almost every field.
Wikipedia is the top source of information in the world, replacing expensive
encyclopedias written by experts with free online articles by the public. Netflix, the
online video rental service, uses crowdsourcing techniques to improve the software
algorithms used to offer customer video recommendations. The team or individual
that achieves key software goals will receive $1 million. In the US, there are several
apps such as Instacartor Postmates that will send someone to get some groceries or
some restaurant food for those are in need. And Uber, operating in 58 countries,
will do pick up from wherever. Uber network provides big cars, fancy cars, and even
normal cars for customer to get a ride to a place, or maybe do a thing! Airbnb, a
website for people to list, find, and rent lodging, has surpassed 2,000,000 listings
worldwide, which means they now offer more lodging than Hilton Worldwide or
InterContinental Hotels Group or any other hotel chain in the world. Just to name a
few.
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APP REPORT Q4/2015
CROWDSOURCED DELIVERY
Crowdsourcing also has its facet in the delivery and courier industry.
Crowdsourced delivery is an answer to the growing expectations of customers
for faster, more personalized and cost efficient delivery service. It exploits
technological potential (geolocalization, mobile apps) and the social trend of
sharing and collaboration.
For recent years, crowdsourced delivery has been bursting in the US. Several
start-ups have been launched and some have attracted millions in investment.
Development of e-commerce is a key reason for the situation. From a business
perspective, the shipping price is a frequent obstacle to online purchase; and
brick-and-mortar stores suffer from the competition of online stores. They
search for a way to equal the comfort of shopping from home. From a societal
perspective, the number of single parcel deliveries is growing. The required
logistics services have environmental impacts (pollution, noise, traffic jam, etc.),
which are gaining a growing attention in the public’s eye.
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APP REPORT Q4/2015
Major players are experimenting new delivery services. The same-day delivery
is tested by Amazon, Google and eBay. Walmart is running several projects. The
Walmart To Go same-day delivery program is a partnership with Fedex. It is
currently tested in 25 stores. Walmart is also exploring how in- store customers
could deliver packages on their way home to online buyers. Customers who
accept to deliver packages would receive a discount on their purchases.
In September 2013, DHL launched the MyWays Platform. It facilitates last-mile
deliveries in Stockholm through crowdsourcing. An app allows individuals
requiring flexible deliveries to connect with commuters who accept to transport
parcels along their daily routes for minimal fee (Post&Parcel, 2013).
For brick-and-mortar stores, crowdsourced delivery is a competitive advantage
against online retailers. With crowdsourced delivery, local shops can abolish the
e-commerce advantage of buying from home. They are best positioned to
marry the tangible experience and immediacy of physical retail with the
simplicity of online selling, by offering one-hour or same-day delivery.
In Asia, crowdsourced delivery has not yet spread widely. There are potential
problems such as safety issues, legal questions, liability concerns, and
reputational risks.
However, as crowdsourced delivery matures, it may have profound implications
for traditional delivery and courier services. On the other hand, with the rapid
growth of e-commerce and online-to-offline (O2O) development, crowdsourced
delivery may become the next big trend to watch as it helps pave the way for
O2O by providing convenience and speedy e-commerce fulfillment and last-
mile delivery.
HOW DOES CROWDSOURCED DELIVERY WORK?
Crowdsourced delivery is a web or mobile-based courier service which leverages large
groups of geographically dispersed individuals to match demand with supply digitally, i.e
“Crowdsourced delivery platforms”. These platforms connect people who need things
delivered with independent couriers, or delivery staff who can help. It makes use of idle
human resources to complete tasks that otherwise require massive amount of work and
long logistics lead time.
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APP REPORT Q4/2015
Physical Internet (http://www.physicalinternetinitiative.org) put up an exploratory paper
after exploring 26 businesses doing crowdsourced delivery. Four interdependent poles
were analysed:
Offer Pole
The B2C (Business to Customers) market is apparently the most promising segment today.
Two situations are possible:
- Customer places an order by phone or on the web site of a retailer, a pharmacy, a
restaurant, a dry-cleaner, etc. Crowdsourced delivery is an option in the online
checkout process. If chosen, a task is created and managed by the crowdsourced
delivery company. The strategic objective for the latter is to develop partnerships
with retailers in order to generate continuous flow of tasks. For example, Deliv (a
crowdsourced delivery start-up) has signed partnerships with Foot Locker,
L’Occitane, Sony, and others.
- Customer places an order on the website or on the app of the crowdsourced
delivery company. He indicates the retailers on the website where the products
are available. A task is created. The courier visits the stores, finds the requested
items and delivers them. Instacart (a crowdsourced delivery start-up) is specialised
in this service to the point where couriers are named “personal shoppers”, “smart,
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APP REPORT Q4/2015
friendly people who enjoy shopping for groceries, meeting others, and exploring
their city”. Other companies are targeting the P2P (Peer to Peer) market. They
aim at matching people who want to send packages with people who accept to go
there (dedicated carriers) or are already going there (commuters or travelers). The
sender details the type of package, its dimensions, the address of pick-up and
delivery specifications (addresses, time schedule, etc.). A carrier executes the task.
Crowdsourced delivery can be used by businesses, when they have to send
something to a client, a partner, or else (B2B). Several companies are offering
escrow services in order to secure payments.
Crowdsourced delivery is offered at three geographical scales:
· Intra-urban services are the most frequent. Companies offer delivery services
inside big cities where the B2C demand is the highest.
· Interurban services rely on travelers from town to town.
· Global services rely on travelers in order to connect locals who want stuff with
travelers who can buy and deliver it.
Creation pole
The process is globally the same over the nascent industry. There are variations at every
stage of the process.
· One customer describes a delivery to be made.
· A task is created on the platform of the crowdsourced delivery company.
· Sender and courier are matched.
· A price is fixed.
· Task is managed by the courier.
· Courier, sender and recipient can contact each others if needed.
· Recipient and sender rate the courier.
Interfaces
Interfaces are different. Some companies are using only websites, others, younger and
more fortunate, have developed mobile applications. Some use both technologies.
Mobile apps permit to use geolocation. Matching of tasks and courier can be automated
(using an algorithm that optimizes the execution). Or, in a low-tech process, carriers and
senders can register on the website. The requester chooses within a list the carrier or the
task that better suit his needs. Some companies offer online tracking of parcels, others do
not.
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APP REPORT Q4/2015
Revenue models
Fixed price
In intra-urban B2C, P2P or B2B delivery requests can be standardized. A fixed
price is possible. In the US, base price vary depending on the companies from
US$3,99 to US$10. Additional charges also vary. Depending of companies,
incremental charges apply for rush service, for larger or heavier loads that
need larger vehicles, for longer distances or, according to the time of day or
day of week.
The company keeps a commission on every payment for a completed task.
Negociated prices
When requests are customized, in particular in interurban delivery, price is
not fixed, but results from a negotiation between senders and couriers. In
general, senders set a target price, couriers make bids on deliveries and the
final price is negotiated. The company keeps a commission on every payment
for a completed task. It could be 20%.
The revenue model of international crowdsourced delivery companies is very
fragile. Service is free. In this business model, social values are central.
Receiving fees from being an escrow is the only source of revenue for these
companies.
The escrow process is as follows: “Payments are made at the time of
reservation and held in escrow. The company will disburse payment to the
driver's account upon delivery confirmation” (gobarncacle.com). The courier
receives net payment, after processing fees and financial fees have been
deducted.
Resale margin
In the case of B2C delivery, some companies make money by marking up
negotiated retailer prices. Markups vary on a store-by-store basis. Every order
delivered earns the carrier a commission. The amount of the commission is
based on many factors, including the number of items ordered by the
customer. Some customers choose to tip too, and personal shoppers receive
100% of tips from customers on top of their commissions.
Membership
Crowdsourced company can also use membership as a revenue stream, e.g
Instacart.
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APP REPORT Q4/2015
Stakeholder pole: Couriers
Couriers are a key resource in the business model. There are three types of couriers.
§ Commuters or travelers are opportunist couriers, who decide to take care of a
delivery task in order to reduce their costs or make their journey profitable. Those are
mobilized in interurban or international delivery.
§ Non-professional dedicated couriers are individuals who decide to accept some tasks.
They can self-determine their schedule. For some of them, it is a part-time job in order
to complement their main activity. For others, delivery has become their main source of
revenues. Those are concerned by intra-urban delivery.
§ Professional couriers find complementary revenues in partnering with crowdsourced
delivery companies. The types of couriers that companies are working with vary.
Character pole
Business philosophies vary widely from company to company. Motivational and
economic factors can be traced on a continuum illustrating that organizations can offer
a more business orientation or a community orientation.
For delivery model which is business oriented, market share, profitability, Return on
Investment (ROI) and so forth are essential means of measurements.
For the community model, players aim at being useful for their community. Human
touch and trust are essential.
|9APP REPORT Q4/2015
CASES OF CROWDSOURCED DELIVERY
DHL, with an app called MyWays, has been experimenting with a crowdsourced
parcel delivery system in Stockholm, Sweden since 2013 to get people deliver
parcels to end consumers.
On the creation pole, when a consumer has bought something online, he can
specify the delivery options. Once DHL’s MyWays is registered, the service will let
consumer specify a time and place for delivery, as well as the fee offered for
delivery.
On the stakeholder pole, DHL’s MyWays target people who regularly drive past a
DHL service point and who don’t mind making a retour for some extra income.
These people can pick up the package from a DHL service point and deliver the
goods at the specified time and place. In return, they get the fee the original
consumer negotiated with DHL.
| 10APP REPORT Q4/2015
Amazon is working on a new initiative
called “On My Way'. The program would
hire retailers in urban areas to store
packages and pay regular people a small
fee to make deliveries. Presumably,
customers could pick up their own package
and then grab other parcels to deliver to
others at their convenience. The initiative
could be one way to contain its rising labor
costs as it could be a cheaper alternative to
paying bike messengers, drone pilots or the
postal service, or international couriers like
FedEx and UPS.
| 11APP REPORT Q4/2015
Wal-Mart also tried a crowdsourcing program in 2013. Wal-Mart has millions
of customers visiting its stores each week. Some of these shoppers could tell
the retailer where they live and sign up to drop off packages for online
customers who live on their route back home. Wal-Mart would offer a
discount on the customers' shopping bill, effectively covering the cost of
their gas in return for the delivery of packages.
| 12APP REPORT Q4/2015
Australia-based MeeMeep is self-funded startup since November 2012 that is
growing rapidly with over 4000 members, 2500 completed delivery jobs and
an army of hundreds of movers ready to deliver “anything anywhere in
Australia”. Before one can become a MeeMeep mover, he/she must provide
proof of identity including bank account, drivers licence, mobile number
verification and ABN (in case of a business). A quick phone interview will take
place with 5-6 questions about the applicant. MeeMeep formed partnerships
with GraysOnline and eBay in 2012 and 2013 respectively.
In China, crowdsourced delivery is getting popular as it helps solve part of the
last-mile delivery problems especially during the annual online shopping
festivals such as the Singles’ Day and annual promotional campaign on June
18 (“618 festival”). Crowdsourced delivery is also valuable for certain product
categories such as daily necessities and fresh products, where consumers
demand same-day delivery service.
Recently, several companies have started experimenting crowdsourced
delivery service.
Renren Kuaidi has operations in 16 cities. An important aspect of the
company’s value proposition is to provide fast delivery; it promises to
complete the delivery process in 30 minutes within 3 km for delivery orders in
the same city. In November 2014, Renren Kuaidi obtained US$15 million
funding from investors including Tencent Holdings and Banyan Capital11,
indicating that investors feel confident about the development prospects of
crowdsourced delivery in China.
JD Daojia (literally JD to your home) is the crowdsourced delivery service
offered by JD.com. This online-to-offline (O2O) service platform is the first
service which leverages the JD crowdsourced service. The service first started
in Shenzhen in May 2015. JD Daojia users can buy products from local
supermarkets or takeout meals online, and experience fast delivery services
provided by JD.com’s part-time couriers.
| 13APP REPORT Q4/2015
PROS AND CONS
Advantages of crowdsourced delivery
Crowdsourced delivery attempts to achieve a win-win situation by connecting enterprises
with part-time individuals who have spare capacity. For these enterprises, crowdsourced
delivery can help them:
- Reduce logistics costs, especially for last-mile delivery.
- Satisfy the growing demand for e-commerce logistics, especially during certain e-
commerce promotional periods.
- Save on vehicles maintenance costs, warehousing costs as the enterprises would
not own so many vehicles and warehouses to stock the products.
- Save on regular salary and benefits that they would have to pay for permanent or
contracted staff.
| 14APP REPORT Q4/2015
- Besides, these part-time couriers can work anytime and anywhere, adding flexibility
to the delivery process.
From an environmental perspective, crowdsourced delivery may help alleviate the traffic
congestion problem and reduce car emissions.
From a social perspective, it provides employment opportunities for people who want
have trouble getting a full-time job, or want to earn extra money.
Risks and challenges of crowdsourced delivery
In reality, crowdsourced delivery has some risks and uncertainties:
- Trust building is a key success factor in every crowdsourced process. In the
crowdsourced develivery process, the question is bidirectional:
o How to create trust in the sender mind? Crowdsourced delivery service may
not be as reliable as those provided by traditional delivery companies.
o How to protect couriers from hazardous or illegal substances, products?
- A number of safety issues need to be addressed: Theft, fraud, damage of parcels or
late delivery may occur, and it is not clear that who should be responsible for such
problems.
- There are also privacy concerns. For instance, retailers sharing home addresses and
shopping habits of customers with strangers may be dangerous. For the case of
Wal-Mart, users got angry when they learn that Wal-Mart wanted to share their
home address with a bunch of strangers. Most online retailers insist that customer
data is kept in a safe place. Crowdsourced delivery would make that impossible:
first, the retailer would have to share the information with a store employee, who
would then have to share it with a customer as he or she exits. Upon ordering
another item, the customer's info would be shared with another customer, and
possibly other employees who are helping to fulfill the order. This cycle would
continue with every item ordered.
- There are additional costs such as insurance, lawsuits and training of part-time
staff. Training is needed to ensure the consistency of service quality. Training costs
of couriers are high as their turnover rate is very high.
Companies have to consider the uncertainty as well as
sustainability of the large pool of part-time labour
force.
- Last but not least, managing the geographically-
dispersed labor force may also be a challenge.
| 15APP REPORT Q4/2015
IMPLICATIONS TO POSTAL SERVICE
A potential rivalry
If crowdshippers can do the job for less than the traditional postal service, obviously
crowdsourced delivery will potentially take away a significant delivery volume of postal
operators in following segments:
- same-day delivery;
- intra-urban, especially metropolitan areas; and
- package business, which is one of the biggest areas of growth for the Posts in recent
years.
We should note that, while online shopping is an attribute to package business growth for
the Posts, crowdsourced delivery can serve both online and offline commerce. And if we
look at the downsides of crowdsourced delivery as mentioned above (Risk and Challenges
of Crowdsourced delivery) to feel at ease, then we may want to take a look on other
crowdsourcing variations below.
The personal transportation industry has undergone drastic changes in recent years when
new entrants, like Uber and GrabTaxi come in. Uber and the likes are crowdsourced and
application-based alternatives to traditional taxi. Though there are pros and cons, even
this crowdsourced car-hailing model are banned or facing with regulatory difficulties in
many countries, it is undeniable that Uber bookings have increased, comes with huge
revenue growth (as illustrated chart below).
| 16APP REPORT Q4/2015
Another example of crowdsourced model is Airbnb, which is a big disruption to hotel
industry. Airbnb is a platform for people to list, discover, and book accommodation
around the world. As a crowdsourced model, travellers can book accommodation easily
and mostly at lower cost compared that of hotel offerings, making “staying in hotel” an
old fashion practice. The “crowd” (i.e accommodation owners) obviously much
appreciates this platform as they can make money with their extra space. Despite the
ongoing battle with regulators and lawmakers in many countries over who can list
properties and how they should be zoned and taxed, the website is expected to have
about 80 million nights booked this year, up from about 40 million in 2014.
Yet pre-mature in most of Asia Pacific markets
Fact and Figures
Australia-based MeeMeep started in 2012, its business is growing with over 4000
members, and an army of hundreds of movers ready to deliver “anything anywhere in
Australia”, however, 2500 completed delivery jobs1 is not a very inspiring number.
In China, crowdsourced delivery is in its infant stage of development2. Apart from the
risks and concerns mentioned above, there are also some regulatory issues that may
hinder the development of crowdsourced delivery. It was reported that the operations of
Renren Kuaidi were suspended in some provinces such as Shanghai, Tianjin, Henan and
Hubei in 2014 because their operations were initiated prior to the official approval of the
provincial governments. Moreover, it is a requirement that at least 30% of the employees
of a courier company should have a delivery service license; most crowdsourced delivery
companies fail to meet this requirement. It still remains uncertain whether Chinese
regulator will further regularise the crowdsourced delivery market to prevent the
potential risks of crowdsourceddelivery, and set clearer standards to support its
development.
Low cashless payment penetration
Crowdsourced delivery is application-based and remuneration of delivery jobs is cashless
payment. In case of DHL’s MyWays, the shippers will be remunerated in credits which can
be exchanged into cash anytime. And in order to have enough “credits” into MyWays
account (to pay for the shippers), service users you need always deposit “credits” from
their bank account. And in order to become a MeeMeep mover, it is important to provide
1
https://www.meemeep.com/public/home/about
2
Crowdsourced Delivery by Fung Business Intelligence Center
| 17APP REPORT Q4/2015
his/her bank account details so that MeeMeep can verify his/her identity and to get paid.
In Asia Pacific, the cashless payment is still at low penetration. As MasterCard unveiled in
its global report “The Cashless Journey”, Australia (86%) and Singapore (69%) were
approaching the “tipping point” to becoming nearly cashless where emerging economies
such as Indonesia (31%) was just embarking on their cashless journey. In another report
of McKinsey, Japan was more cash-based than many other developed economies, just
over three-quarters of transactions are cash. Other countries such as India, Vietnam, the
use of non-cash payments still very low.
Again, crowdsourced delivery is application-based and cashless payment.
Could the Postal Service take advantage of the crowdsourced delivery?
There are a lot of potential issues, including legal questions, trust and liability concerns,
and reputational risks. But if postal operators, which are trusted, and most of postal
operators in Asia Pacific are governmental businesses, do crowdshipping, they can take it
off in a big way.
Same-day delivery
While crowdsourced delivery startups can potentially grab the share of the Posts in the
big cities for same-day delivery of parcels and small packages, the Posts should do the
same.
Crowdshipping for peak season
Using crowd to deliver packet and parcel during peak season is worth considering. Postal
operator may concern about security issue (lost, thief of items), then we can always
screen crowdshippers beforehand. A practice ofMeemeep - a crowdshipping startup in
Australia can serve as a reference - to become a Meemeep crowdshipper, the person has
to provide his/her banking details into profile. Once they submit this information so they
can get paid and Meemeep can verify their identity by making a small deposit into the
provided bank account. MeeMeep will also verify their mobile numbers and ABNs if they
are professional shippers.
Crowdshipping for the 2nd attempt delivery
For premium services such as EMS, Speedpost, the 2ndattempt delivery could cost
significantly. The Posts may consider to use crowdsourced shippers to take over this job
for cost-effective purpose.
| 18APP REPORT Q4/2015
Don’t forget 020 (online to offline or vice versa)
O2O is a buzzword within the e-commerce community for “online-to-offline”, but nothing
can stop us to interpret it reversely, i.e. “offline-to-online”. The idea of O2O is that, while
a large part of traditional brick-and-mortar retail sales can be replaced by e-commerce,
there are elements to physical shopping that cannot (or should not) be replicated
digitally. And the potential for integration between e-commerce and physical retail
shopping is the core of the O2O movement.
For example, a local gym will not come and set up a bench press and treadmill in your
living room. However, by using O2O services provided by a company such as Groupon, the
local gym can funnel online business into its local “offline” locations.
While the integration of online retail and “brick-and-mortar” retail in the United States
typically means adding online options to a retailer’s long-established physical store
infrastructure, it often means quite the opposite in China.
In China, the adoption of the Internet has occurred faster than the creation of brick-and-
mortar retail infrastructure in many rural locations. This development means that O2O
expansion consists of complementing established e-commerce infrastructure by adding
additional physical retail locations.
In either way, online-to-offline or offline-to-online, delivery service would be generated.
There is a trend that people go to a shopping center to shop, and then assign concierge
service to have the purchased stuff delivered to a physical address (while he or she can
continue going for a movie or a gathering). In this case, postal operators who might have
contract with the shopping centers can use crowdshipping, so that the demand will be
processed with immediacy and cost efficiency.
In every case, using crowdshipping, postal operators should make sure that registered
crowdshippers should be screened. That is to protect our brandnames.
Reference:
· http://www.benzinga.com/news/13/03/3456360/five-nightmares-of-crowdsourced-package-delivery
· https://www.meemeep.com
· http://www.investopedia.com/articles/investing/110614/taxi-industry-pros-cons-uber-and-other-ehail-
apps.asp
· http://www.latimes.com/business/la-fi-0822-uber-revenue-20150822-story.html
· http://www.reuters.com/article/2015/09/28/us-airbnb-growth-
idUSKCN0RS2QK20150928#Cqi6uy1Kra1GTMkZ.97
· Insights from McKinsey’s Asia-Pacific Payments Map
· http://newsroom.mastercard.com/press-releases/mastercard-study-reveals-the-rapidly-growing-cashless-
economies
| 19APP REPORT Q4/2015
| 20APP REPORT Q4/2015
02 Reaching out to
SMEs
| 21APP REPORT Q4/2015
SMEs as drivers of inclusive growth
Over the last four decades, Asia Pacific has experienced SMEs share of
unprecedented economic growth that has shifted the total employment
global economic center of gravity to the region. Asia alone (%)
entered 2015 as the world’s fastest-growing region, with Pakistan 70
the International Monetary Fund predicting that GDP Sri Lanka
40
35
would increase by 5.5 percent. Vietnam
40
77
97.2
Philippines 61
And SMEs play a fundamentally important role in Asia Malaysia
77.9
58.9
Pacific economy. Indeed, SMEs and entrepreneurship are Japan
87.5
70.2
considered as “key to ensuring economic growth, Germany
49.4
79
innovation, job creation, and social integration in the Asia 0 50 100 150
Pacific”. According to the ADB, SMEs comprised 98 percent
of all enterprises in the Asia-Pacific, employed 66 percent of
the national labor force, contributed 38 percent of GDP,
accounted for 30 percent of total export value from 2007 SMEs
Contribution to
to 2012.
GDP (%)
However, SMEs face a host of challenges. Studies show Pakistan 30
22.5
they are more vulnerable than large businesses to unfair Sri Lanka
17
52
trade practices and nontransparent domestic regulations. Vietnam 40
57.8
Limited access to markets and technologies, non-tariff Philippines 35.7
38.7
Malaysia 31.9
barriers to trade, poor access to finance, lack of access to Japan
49.4
50
business information, and difficulty in hiring and training Germany
46
53.8
skilled employees also diminish their potential to 0 20 40 60 80
contribute to the economy.
Building the capacity of SMEs across Asia Pacific to access
SMEs share of
information, network, join forces, enter into partnerships,
total export (%)
improve their compliance with international standards in
all areas, integrate into global and regional value chains, Pakistan
Bangladesh 11.3
25
and build their voice to interact more effectively with Sri Lanka**
India
20
40
public authorities would be an effective way to create Vietnam
Indonesia
20
15.8
more decent work opportunities that would boost Philippines
Thailand
20
29.5
economic mobility and inclusive growth. Creating open and Malaysia
Korea
19
30.9
transparent business environments that support Japan
US*
53.8
33.7
entrepreneurship and SMEs, so they can grow and create Germany 55.9
jobs and wealth, is equally important for more inclusive 0 20 40 60
growth.
| 22APP REPORT Q4/2015
E-commerce can open the door to new markets and business
opportunities for SMEs
Exports are driving revenue for Asia Pacific SMEs, which generated an average of almost US$1.8
million per year in revenue from overseas markets. Opportunities to sell goods overseas are
increasing all the time, as even the smallest business increasingly trade online, meaning that
physical size or location is no longer a barrier to doing business internationally.
The establishment of the ASEAN Economic Community
(AEC) at the end of 2015, which is intended to make it
cheaper and easier to do business in the region, is likely to
accelerate the trend as it makes regional expansion easier.
Business operations can, for example, be structured to use
the region as an integrated production base. ASEAN with its
various “ASEAN+1” free trade agreements with China,
Japan, the Republic of Korea, Australia, New Zealand and
India, has made Asia Pacific positioned in the middle of
global supply chain, developing strong trade connections
and generating new business opportunities.
E-commerce is growing faster in Asia Pacific than any other region – in fact, Asia Pacific is already
the world’s largest regional e-commerce market, which creates amazing opportunities for so
many SMEs.
China has witnessed an unprecedented growth in its e-commerce market and currently stands as
the largest e-commerce market in the world. eCommerce has offered significant opportunities to
SMEs, specifically for exporters, to enter distant markets and to communicate globally with
consumers, distributors and suppliers. SMEs engaging in e-commerce have witnessed increased
income, with their business income growing 1.35 times than that of enterprises not engaging in
e-commerce. The largest marketplace in China has a seller base of approximately seven million,
and has assisted aspiring entrepreneurs with little seed capital to tap into the national as well as
global market.
In India, the surge of e-commerce is driving the growth of SMEs, which in turn is contributing to
new job opportunities and GDP contribution. A study jointly conducted by domestic e-commerce
player Snapdeal and market research firm KPMG claimed that e-commerce sector in India is
projected to cross $80 billion by 2020. As per the report, 85% of SMEs who adopted e-commerce
believe that it is a cost effective medium for sales growth. The study also claimed that SMEs who
actively adopt the internet for business activities boast 51% higher revenues, which results in
49% more profit and a 7% broader consumer base than their offline counterparts.
| 23APP REPORT Q4/2015
Similarly, adoption of e-commerce has positively impact on export intensity of SMEs in Thailand.
In 2013, the export by SMEs accounted for only 26% of total export value or 1,716.8 billion baht. In
2014, there was an increase of approximately 12%. Export market of SMEs in Thailand in 2014 is
shown in the below table which is expressed that nearly 50% of export market by SME is located in
ASEAN+3 region including ASEAN, China and Japan.
Export Market Share of Thai SMEs in 2014
Export Market Value (Billion Baht) Market Share
Asean 509.4 27%
China 233.9 12%
EU 198.4 10%
Japan 185.2 10%
USA 149.6 8%
Others 640.6 33%
Total 1,917.1 100%
About 96% of Australia’s businesses are considered SME, employing 4.5 million people and
producing more than $330 billion of economic output. Australia's 2015 federal added budget to
boosts e-commerce and SMEs that would hopefully translate to accelerated growth, and new
businesses selling physical products (especially companies rooted online) will require a reliable
order fulfillment solution to move inventory to clients domestically and internationally. The
upward trend of Australia’s e-commerce spending economy points to Australia’s position as a
strong market for both outgoing and incoming product. For Australian SMEs, online sales as a
share of total sales activities continues to increase, from 32% to 41% over the last three studies of
the Sensis e-Business Report. Almost one in three (31%) of SMEs who use e-commerce made the
majority of their sales online, which was up two percentage points in the past year.
In Singapore, trade agency IE Singapore has been partnering with e-marketplaces to help SMEs
expand their global reach. The e-marketplaces include US-based Amazon, China's T-Mall and
Malaysia's Lelong, which together have an online customer base of almost 700 million. IE is
engaging these platforms so that Singapore firms can list their products on these websites more
easily. Under the collaboration, Singapore retailers can benefit from a waiver of set-up fees with
Lelong and cluster with other Singapore brands to attract more shoppers on T-Mall. IE also said
more than 30 Singapore companies from F&B, retail and consumer electronics are now in talks
with Amazon for product listing. Meanwhile, 13 food companies are on-board with T-Mall with
over 150 product listings. Six Singapore SMEs are the first to list on Lelong, with 15 more in the
pipeline.
| 24APP REPORT Q4/2015
Barriers and Challenges
Yet success is never that simple – not every SME has the confidence or the know-how to make the
leap onto the world stage. While Asia Pacific SMEs recognize the benefits of going global and are
increasingly looking to overseas markets to drive business growth, there are certain barriers and
challenges which hold them back.
Those figures are more conservative:
· In key Asia Pacific markets, only 36% of SMEs currently export goods beyond their own
borders – lower even than the global average (38%).
· In ASEAN markets, SMEs account for just 21% of direct exports.
· The share of SME contributions to exports varies widely among economies in Asia – for
instance, it lies between 14% for Malaysia and 69% for China, according to some reports.
A recent FedEx research, entitled Global opportunities: Examining import and export trends
among small businesses, revealed the concerns of SMEs in exporting. Their worries are quite
widespread, ranging from their website not being up to the job to concerns about the language
barrier.
Barriers cited most often are:
· Fears of not getting paid
· Not having a presence on the ground,
· Lack of technical know-how (tax issues etc.)
· Worries about potential costs arising
Besides, lengthy customs procedures for exporting goods can also be daunting for SMEs, which
cannot afford to pay a customs broker.
At the same time, opportunities for SMEs aren’t possible without strong digital connections, and
connectivity isn’t spread evenly across the region. For example, New Zealand and South Korea
have 94 and 92 % Internet penetration respectively, but Thailand is not yet at 30%.
Access to advice and support is vital. 64% of SMEs who do export indicate they would like more
advice, and half of SMEs who do not currently export have never received any export advice. This
suggests that SMEs receiving sound advice on exporting will take the next step, but that many are
not yet getting the support that they need to do so with any confidence.
And it’s clear that SMEs rely on multiple sources to get the information they need, illustrating the
range of organisations that have a part to play in ensuring SMEs continue to live up to their growth
potential.
| 25APP REPORT Q4/2015
Posts can help bridge e-commerce divide for SMEs
With the vast network of outlets – some 640,000 worldwide – and wide range of services,
including digital, financial and logistics services, postal operators can help SMEs become
participants in the global e-commerce market.
Arancha Gonzalez, the International Trade Centre’s executive director, speaking at the UPU World
Strategy Conference Geneva 2015, believed lower trading costs are “essential” for SMEs, and are a
deciding factor in whether a small business stays in its domestic market or expands abroad.
“Logistical efficiency and improvements in the facilitation of trade are essential ingredients for the
competitiveness of SMEs, Gonzalez explained. “It’s very important that organizations like UPU take
this and put this at the heart of the agenda.”
Posts as international logistics providers’ experience in shipping goods across borders represents a
valuable resource to support SMEs at each step of the shipping process. Posts can help with rapid
and reliable delivery services, and also through deep experience in trade regulations, supply chain
management and logistics that can cope with challenging transportation requirements and
challenges in regulatory, customs or business requirements.
Peru’s SERPOST revealed its efforts in this area. In 2007, Peru launched its participation in the
programme designed specifically for SMEs called Exporta Facil.
Originally a Brazilian concept, Exporta Facil enables SMEs to use online tools to cut red tape, such
as electronic customs forms, through the Post. The postal operator automatically receives the
information and can immediately process and dispatch the item abroad.
The service is also accessible: SMEs can send items 365 days a year at outlets throughout the
country. They also benefit from lower costs, according to Friberg Quispe Grajeda, director general
of SERPOST. The postal operator is also reaping benefits, with more than 18 billion USD in exports
sent via Exporta Facil to date.
| 26APP REPORT Q4/2015
Australia Post is helping SMEs access new Asian markets by providing e-commerce listing services
and logistics. Through an agreement with Alibaba, operator of online marketplace Tmall.com,
Australia Post launched its flagship store auspost.tmall.hk to market Australia's niche products to
Chinese consumers. The goal is to empower Australian businesses and enable them to deliver their
premium products - including organic local produce and other high-quality goods - to more of Asia.
Not only bridging SMEs access overseas markets, Australia Post also provides special services
that facilitate SMEs in local niche markets.
Farmhouse Direct (http://www.farmhousedirect.com.au), an initiative developed and run by
Australia Post, is an online farmers’ market that facilitates Australian farmers who have locally
produced food and regional delicacies reaching out to customers.
Another specialised initiative is Wine Delivery Service. High reputational Australian wine will be
delivered across Australia and internationally. Australia Post works with Margaret River
winemakers to place wine on a popular Chinese-owned website, www.1688.com, the largest
wholesale website in China specialising in sending goods business to business. In this
collaboration, it's targeted at smaller wineries that don't have the scale and the bulk to be able to
do direct into China themselves. Australia Post looks after everything from getting the language
conversion, getting the pricing right, all the way to the final last mile delivery. Helping SMEs
exporting wine overseas is critical for Australia Post as it also wants to take it to the remaining
wine regions across Australia, and then look at other products, such as at milk powders, cosmetics,
beauty, health — all those key Australian products loved and demanded by global wide
consumers.
| 27APP REPORT Q4/2015
To make ecommerce easy for SMEs, SingPost rolls out an fully
integrated ecommerce fulfilment solution, named
ezyCommerce. This is a cloud-based platform that automates
order-to-fulfilment cycle, enabling SMEs to outsource their
inventory management and order fulfilment. By outsourcing
fulfilment and delivery to SingPost, SMEs can focus on
business growth strategy and scale up their business across
multiple marketplaces and countries without contending with
fixed fulfilment costs. ezyCommerce comes also with a
business intelligence dashboard for SMEs to monitor all key
metrics such as inventory levels and the bestsellers, allowing
them to make better decisions on growing their business.
| 28APP REPORT Q4/2015
Looking forward – Posts to proactively reach out to SMEs
Unleashing potential of SMEs is key to postal operators. APP member posts should focus on the
importance of SMEs in driving revenue (for Posts) and how SMEs are playing a significant part in
the growth of small packets, parcels and other services such as logistics fulfillment, tailored
services for niche markets, and financial services.
It is very essential that APP member posts should reach out to SMEs, telling them that we can help
them enhance their competitiveness, especially we can support them in growing their online
business.
So how we should reach out to SMEs. Here are some good practices.
Create communication platform between Post and SMEs
PostalPlus for SME aims to serve as a communication platform between Hongkong Post and SMEs
in Hong Kong. Nowadays, PostalPlus for SME has tens of thousands of corporate members. Apart
from various member privileges and welcome offers, Hongkong Post also sends eNews with the
latest postal service updates covering a wide range of solutions and practical tips to members.
Besides, member activities such as seminars and expos are organized from time to time. Industry
professionals are invited to share with members their success stories and relevant market
intelligence.
Tie-up with governmental bodies, trade and media corporations:
In Singapore, trade associations, chambers (TACs) and industry partners have been tasked with
supporting SMEs to thrive. There are also schemes aimed at helping SMEs compete and to
encourage new start-ups. For instance, there is a recently launched scheme to help SMEs Go
Global online, backed by heavyweights such as Google and key government agencies, or SPRING
Singapore's Collaborative Industry Project initiative to provide eligible SMEs 70% subsidy. SingPost
has been involving in and play an proactive role on those programs and schemes to engage SMEs.
SingPost also ties up with Strait Times, a media giant in Singapore that often organises
communication forums for SMEs where SingPost can come to share about initiatives that could be
helful and benefit SMEs.
Organise e-commerce seminars
The most effective way to support the growth of ecommerce is to bring SMEs who want to tap in
online business into one place and updating or highlighting the positive features and potential
benefit for them, i.e. to organise e-commerce seminars.
| 29APP REPORT Q4/2015
Such e-commerce seminars should compose of big e-commerce companies and e-commerce
fulfillment companies like postal operator, payment service provider. This is very efficient for
SMEs as well as for each co-organiser. Japan Post have co-hosted over 50 seminars with Rakuten,
eBay, PayPal, etc over the last 5 years and attracted over 1,500 customers. Such seminars can pull
in more audiences while the audiences can acquire better knowledge and information, not only on
shipping matters but also on other areas’ challenges such as payment, inventory, etc.
Reference:
· National Bureau of Statistics of China; ‘Trade and Employment – China’s Development Process’ presentation at WTO Public
Forum, October 2014; Forbes; International Journal of Economics and Finance, 2014
· http://asiafoundation.org/in-asia/2015/08/12/boosting-economic-mobility-in-asia-smes-as-drivers-of-inclusive-growth/
· Fedex’s APAC SME Export ebook
· Impact of e-commerce on SMEs in India
· Procedia – Social and Behavioral Sciences 207 (2015) 111 – 120
· Sensis e-Business Report 2015
· https://www.shipwire.com/w/blog/australias-2015-federal-budget-ecommerce/
· http://news.upu.int/no_cache/nd/posts-can-help-bridge-e-commerce-divide-for-smes/
· http://www.scmp.com/presented/business/topics/australia-country-report/article/1846763/australia-post-digitises-service
· http://www.abc.net.au/news/2015-12-07/australia-post-wine-to-china-program/7008150
· https://www.singpost.com/media-centre/news-releases/565-singpost-to-launch-ezycommerce-to-help-smes-sell-online-
scale-and-enhance-productivity.html
· http://www.straitstimes.com/business/new-scheme-to-help-smes-go-global-online
| 30APP REPORT Q4/2015
03 MALDIVES POST - Embarkation on
cross-border e-commerce
| 31APP REPORT Q4/2015
Maldives Facts: A new ecommerce platform of Maldives Post have been
launched under the brand name “eTukuri” on 26th
· Population: 393,253 (2015)
November 2015. The Service was launched officially by
Honourable Minister of economic development of
· Internet users: 230,000 as of 15 Maldives, Mr Mohamed Saeed. The launch of etukuri
November 2015 platform has paved the way to achieve one of the major
strategic goals of developing and diversifying the services
· Internet penetration: 58.5% provided by Maldives Post.
· Top exports: Non-fillet Frozen Fish With the launch of eTukuri service Maldives Post has
($79.1M), Fish Fillets ($46.4M), Non- gained an extra edge in giving out a solution to online
fillet Fresh Fish ($43.6M), Processed shoppers in the Maldivian Market. In order to develop the
Fish ($16.9M) and Processed Fish service Maldives Post limited collaborated with Singapore
($9M) Post limited to work together in sharing the needed
knowledge and experience.
· Top imports: Refined Petroleum
($419M), Planes, Helicopters, and/or As the global postal network has been the major network
Spacecraft ($75.1M), Petroleum Gas where the online purchased items are delivered across the
($54M), Concentrated Milk ($34.4M) globally. Therefore, Maldives Post intends to work on to
and Computers ($26.6M). bring out the best beneficial’s that can be delivered to
customers through the postal networks which will have
· Top export destinations of Maldives impact economically and socially to the customers. The
are Thailand ($67.6M), France intended benefits can only be forwarded through
($35.3M), Germany ($13.7M), Sri innovation, developing services to customer needs and
Lanka ($13M) and UK($11.5M). collaboratively working together between postal
operators. Therefore, the launched etukuri services of
· Top import origins: UAE ($465M), Maldives Post gives the Maldives post customers the
Singapore ($278M), India ($163M), opportunity to ship their online purchases from the two
China ($109M) and Sri Lanka largest online markets of the world China and USA to
($97.4M). Maldives. Through the eTukuri Service customers will have
a secure, reliable and quick shipping solution that will
guarantees the delivery from the online merchant to
customers’ doorstep. Furthermore, the easiness of this
service will enable small, medium & micro enterprises to
ship their shipments.
| 32APP REPORT Q4/2015
The launch of eTukuri service have also paved a gateway for Maldives Post Limited to enter into
various ecommerce and logistics solution. Therefore, in order to expand this solution Maldives Post
plans to introduce an export component, by implementing the easy export programme of Universal
Postal Union, which will enable small, medium and micro enterprises to get global reach to their
products and will enable to market their products globally.
Sources:
· http://atlas.media.mit.edu/en/profile/country/mdv/
· Maldives Post Press Release
· http://www.etukuri.mv
| 33APP REPORT Q4/2015
04 Operations Audit
| 34APP REPORT Q4/2015
Lao Post
The APP Office conducted a mission from 26 – 29 October 2015 to visit Lao Post to assist in
the following areas:
1) Conduct Operations Audit at Wattay International Airport, Vientiane Exchange Office,
General Post Office and remote post office to perform checks on current EMS and Parcel
processes.
2) Assist in strengthening EMS and Parcel operations in the following areas:
a) Establish roles and responsibilities for possible consolidated EMS and Parcel call
centre (for enquiry team)
b) Complete re-validation of EMS Delivery Standard and recommendations for re-
organisation of postcodes and zones to cover other possible delivery areas including
remote post offices
| 35APP REPORT Q4/2015
c) Recommendations for operational
improvements to meet EMS 2016
Operating Standard and Pay for
performance
d) Recommendations for operational and
technical improvements to meet 2016
Parcel ILR bonus requirements for 2016
revenue
e) Improving the success rate for capturing
of delivery information (H or I events) for
EMS and Parcel items through future
counter automation system
During the operations inspection at the
Office of Exchange, it is observed that
there are efforts made by operational
team to enhance the inbound EMS and
Parcel operations. There is also good
cooperation with customs authority in
performing customs screening and
taxation.
Lao Post is planning to improve and
introduce new businesses with the
introduction of new Counter Automation
System from 2016. The new system will incorporate some functionality to allow the
integration of Counter Automation System with IPS.Post after Lao Post completes migration in
2016.
The APP Office would like to congratulate Lao Post for their effort and investment to improve
the domestic and international mail services for customers and looks forward to the
operational improvements from Lao Post to secure better revenue for international mail
services.
| 36Asia Pacific Post
Postal address
Geylang Post Office PO Box 78
SINGAPORE 913803
Street address
447 Geylang Road #02-00
Geylang Post Office Building
SINGAPORE 389406
Website
www.app.coop
For general & membership enquiries
Send email to info@app.coop
For new postal business opportunities enquiries
Ms. Bui Bang Tam
Head of Office and Business Development
Phone +65 6841 3461
Mobile +65 9018 9193
bangtam.bui@app.coop
For postal operations consultancy
& technology related enquiries
Mr. Li Chung Huang
Senior Operations - Technology Manager
Phone +65 6841 6234
Mobile +65 9018 9192
lichung.huang@app.coopYou can also read
