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Moving e-commerce fulfilment closer to the customer

Blog

Moving e-commerce fulfilment closer to the customer

Ian Kerr

Customers' desire for speed is bringing fulfilment centres closer to where customers are.

Lazada Singapore recently moved its warehouse operations to SingPost Regional eCommerce Logistics Hub in an effort to provide faster fulfilment of orders.

“[It's] the next natural step as we seek closer integration with our partners to better serve the needs of Singapore customers,” said Alexis Lanternier, CEO of Lazada Singapore.

With this new warehouse, Singapore shoppers will have same-day delivery for a wider range of Lazada products.

The new warehouse boosts Lazada's capabilities to handle cross-border orders, that is, items that ship from overseas.

Product returns will also be processed via the SingPost Hub. Customers can drop off returns at one of over 200 SingPost POPStations in Singapore. Alternatively, Lazada will collect returns from the customer’s doorstep.

Some of Lazada's "local sellers" will be fulfilled out of the SingPost hub. A selection of items, especially those “Fulfilled by Lazada”, can be delivered within the same day if the order is placed before 12pm (fast delivery).

E-commerce delivery in the USA

In the US, e-commerce retailers are rushing to establish forward stocking 3PL relationships that can support next-day and two-day ground service capabilities across all regions of the 48 contiguous states, according to industry expert Dean Maciuba.

FedEx_Express_truck_in_the_snow.jpg

"In most cases, it's just not cost-effective to support customers more than 1000 miles away from a single FC platform via express/air service."

FedEx will continue to expand the footprint of their new FedEx Fulfillment Service. (Dean Maciuba analysed FedEx Fulfillment in Episode 54.)

"FedEx will build out more FC locations that will cater to small and medium sized customers that tend to yield higher revenue per package."

Once UPS takes delivery of the 14, 747-8 freighters it has purchased from Boeing, it will begin to offer lower cost, two-day express delivery services targeting e-commerce shippers.

Dean Maciuba

Dean Maciuba

"UPS isn't spending billions of dollars on the largest cargo aircraft available not to fill them up with e-commerce shipments!" says Maciuba.

Dean Maciuba says the “wild card” in this segment is DHL. "Look for them to continue to open more fulfilment centres in major US markets that will support all carriers."

But DHL might be going beyond simply having its own network of fulfilment centres.

"The question is, is there some type of DHL/Amazon partnership lurking in the background that will allow DHL to take advantage of the those 100+ Amazon DC’s and get very close to the US consumer?"

There could be global ramifications for a DHL/Amazon deal: "Such an alliance could also give Amazon incredible reach across the globe via DHL’s expansive network of postal authority relationships."

Express is the new normal

Research from IMRG shows more online shoppers are choosing express delivery compared to economy shipping. Customers' desire for fast delivery is pulling fulfilment centres closer to the consumer.

(Listen to Episode 35 for analysis of these delivery trends with Andrew Starkey from IMRG/Spiral 4.)

What's next?

Amazon is already offering same-day delivery in some markets via Amazon Prime Now, but the minimum spend recently increased by about 30%.

Amazon's super-fast delivery attracts a fee on top of the customer's Amazon Prime membership.

The success of super-fast same-day delivery will ultimately be determined by customers' willingness to pay.