Growth of Ecommerce deliveries in Singapore

As more and more E-commerce businesses set up their online presence to serve customers in Singapore, and as more and more customers become Internet savvy, there is a huge trend moving away from retail stores to online shopping. This is the case for both retail goods as well as fast moving consumer goods such as groceries and household items. Retail companies like Zalora and FMCG companies like Redmart are snatching away market share (or rather, creating a new market). They are targeting people who do not like the hassle and wasting time and effort shopping offline in shopping centers. Why go out to a shopping centre, queue and squeeze with other people when you can shop online? You can literally be sitting on the toilet bowl and buying things! That’s how amazing E-commerce is these days.

With the rise in E-commerce purchases, comes an equivalent rise in deliveries for these companies as well! Most companies which require deliveries require a one time pick up and mass distribution. The greater the volume of deliveries, the more frequent the number of pick ups per week so as not to create too much backlog. For instance, a new E-commerce company may only have pick ups once a week or 2 weeks. However, a growing E-commerce company may have pick ups several times a week, e.g. twice. A large E-commerce company would definitely require very frequent pick ups and deliveries, as frequent as once or twice a day! There is definitely a large possible range of frequency for pick ups.

In my opinion, Ecommerce deliveries is something that’s going to see lots of development in many countries around the world. This is especially the case in Singapore. Despite the Internet proliferating in Singapore many years ago, Ecommerce companies have only begun springing up in Singapore in the last 5 years. Before that, people could only buy products online from website based in other countries. Due to this large increase in Ecommerce product deliveries required in Singapore, there would need to be many more logistics companies, or at least, a few large ones to emerge to handle these increased volume at reasonable rates so that consumers can still benefit from relatively low prices and even more convenience versus traveling to shopping centers and supermarkets and waste time, money and effort themselves.

I suggest you pay close attention to this industry in Singapore, because it is going to be very exciting if you love supply chain management and logistics.

E-commerce delivery operation chain in Singapore

Have you ever wondered how the operations of the E commerce delivery services in SG looks like? Singaporeans enjoy the luxury of online shopping which comes with product delivery to their doorstep. However, many people take this whole service network for granted and does not stop to think how all these are made possible. Multiple businesses put in a lot of hard work and dedication to make this ecosystem work out. This includes the delivery service providers.

Regardless of whether you buy products from overseas or local shopping website, your products can be delivered fast and safely to your doorstep. This is how the whole delivery operation chain works out:

1. After you submit your order, the shopping website will submit details of your order to the main E-Commerce logistics company they are liaising with. If warehousing solutions are purchased, the E-Commerce logistics company will also help in the packing of the items, preparing them for distribution.

2. In the event the items need to be delivered to an overseas location, the logistics company will consolidate all the items for international shipping to the same countries. Then, the items will be sent to the overseas locations on a batch processing basis.

3. Once the items reach the destination country, the items will be moved to a local warehouse. If the main E-Commerce logistics company is big enough (for example, FedEx and DHL), they may have their own local warehouse in the country. If not, a local logistics company will take over. In essence, they are a subcontractor to the main E-Commerce logistics company. These local logistics companies are also called last mile delivery service providers.

4. The items will then be sorted out into different regions in the countries for efficient delivery. After which, they will be passed on to the teams of drivers and couriers for distribution.

The entire process stated above may take between 3 days to a month, depending if there are any traffic delays or unforeseen circumstances.

In order for this whole system to work, huge Information Technology have to be invested in it. The individual items need to be tracked. Moreover, software are needed to sort the parcels, to plan the delivery routes, and to plan the needed manpower. As more people shops online, the growth of E-Commerce businesses is certain. In turn, this will aid the E-Commerce logistics industry as well.

Next time you receive your items from your online shopping, you will be aware and more appreciative of its delivery operations.

Stark differences between managing E-commerce deliveries in-house and outsource

In my previous post, I highly recommended to engage courier services for E-Commerce Deliveries in Singapore. There are huge benefits associated to it – zero fixed costs, zero human resource planning, zero vehicle management issues, and more time to concentrate on improving your competitive advantage.

I will be supplementing that post with more facts on the differences between managing E-commerce deliveries in-house and outsource in this post. After going through my list of facts, you will definitely be more convinced of the benefits as derived in my previous post. I know some of you likes to analyze things from the bottom-up – making your own analysis and judgements after getting all the facts.

E-Commerce delivery boxes

Firstly, if you manage your E-Commerce deliveries in-house, you will need to hire a fixed salaried staff and rent a van. There is no question about it. If you would like to argue that you can offer fully commissioned salary scheme to drivers where they are paid per trip, then it will be futile – there will not exist any takers for it. Drivers know that low volume of deliveries will not give them much salary if they opt for the fully commissioned salary scheme. Hence, there will be a fixed cost from the start if you want to manage your E-Commerce deliveries in-house. It will definitely be more costly as compared to outsourcing the E-Commerce deliveries to an external E-Commerce logistics company where they charge you per delivery.

Secondly, you have to manage your drivers and vehicles continuously to ensure that both are performing at optimal standards. If the drivers are slacking or the vans are having some issues, you will need to motivate the drivers and send the van for servicing respectively. You will definitely be using up more time if you are managing the E-Commerce deliveries in-house as compared to outsourcing them.

Thirdly, you will need to plan for contingency events for deliveries if you want to manage the deliveries in-house. Contingency events such as workers taking leaves or delaying their deliveries may happen. Hence, there may be a need to hire part-timers or additional staffs to provide buffer to the operations. If you outsource the deliveries, the logistics company will take care of these issues for you.

An important concept to aid in your decision-making on whether to manage your E-Commerce deliveries in-house or to outsource them is to weigh the potential cost savings you can get via in-house deliveries management versus the cost of delay in competitive advantage improvements. You will essentially be saving more time and effort if you outsource the deliveries at some expenses, and vice versa. In the scenario where you think that you will not be able to produce cost saving if you manage the deliveries in-house, then it will be an outright wise choice to outsource your deliveries to a logistics company in Singapore.

Why Engage Courier Services in SG For Ecommerce Deliveries?

There are lots of benefits that can come from engaging courier services for your E-commerce deliveries instead of hiring a person in house.

  1. You do not have any fixed costs in the form of employee’s salary. Regardless of the amount of deliveries that you require for a particular month, especially if you just started, a deliveryman can be a big portion of your costs and can potentially disrupt your company’s growth and positive cash flow as a result of that. The most important things to an E-commerce business success is cash flow in the beginning. Hiring a deliveryman and incurring fixed costs will potentially break your business. However, with a courier company as your partner in SG, you will only have low variable costs instead of having high fixed costs!
  2. You do not have to plan your employee(s)’ leave schedule and for any unexpected medical leaves by them. These are all human resource problems that you would face if you were to hire your own deliveryman instead of engaging courier services in Singapore. You would need to handle their salary and CPF payments as well. As an E-commerce business owner in Singapore, you should focus your efforts on growing your business and making it a sustainable, long-term business instead of things such as delivering your items one by one to your end customers.
  3. Leasing or renting a vehicle, e.g. a van, in Singapore can be really expensive. This is especially the case if you were to factor in the petrol expenses as well. This is why it is highly not recommended for most E-commerce businesses to lease their own vehicles and perform their own deliveries. You would have to make at least well over 100 deliveries a month to simply break even. It is highly recommended that you outsource your product distribution to a reliable company like www.PCAMasters.com instead.
  4. Some business owners in Singapore may argue, and say that they have less control over the distribution and customer service experience because they outsourced their deliveries. However, before you argue that as well, one important question you must ask yourself is: Do you want growth and big success or do you want to be a control freak and stay small? If your goal is to get a big company, then there will definitely things which you will need to outsource or you would not be able scale quickly and in a sustainable way. To best grow a business in 2016 and beyond, it is ideal for you to focus heavily on your competitive advantage and outsource everything else. You would definitely not have as much time nor ability to drive your costs down and/or your efficiency up in terms of deliveries compared to courier companies in SG, so you might as well let them do the hard lifting work for you while you look after your customers and products instead.

In conclusion, it is highly recommended from a financial point of view for you to outsource your E-commerce deliveries to a courier services company.