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Aug, 2020     

ASEAN eCommerce and Logistics: Rising to Deliver – Part 4

Consumers also expressed strong willingness to continue using online channels for purchases in future, in a post Pandemic era. This increased demand for e-commerce will continue driving up eLogistics parcel volumes rapidly over the next 2-3 years as well.


1. The rapid growth of eLogistics will continue, on the back of increased demand for online buying – by 2022, we estimate e-commerce shipments to account for ~50% of parcel volumes across ASEAN countries

Consumers in ASEAN countries have shown a strong adoption of online services in past few months. While COVID has affected operations for most sectors, e-commerce has emerged to be a clear winner. Both social and formal e-commerce have seen strong traction on the back of this.

Consumers also expressed strong willingness to continue using online channels for purchases in future, in a post Pandemic era. This increased demand for e-commerce will continue driving up eLogistics parcel volumes rapidly over the next 2-3 years as well.

Indonesia: Expected spend in future (post COVID) – for sectors with increased spend (during COVID)

 

Vietnam: Expected spend in future (post COVID) – for sectors with increased spend (during COVID)

 

ASEAN Consumer Goods logistics market

% Split of parcels

Note: 

  • Chart above is representative of Indonesia, Thailand, Philippines, Malaysia, Vietnam & Singapore

2. Despite the rising share of in-house logistics, 3PLs are expected to command over 2/3rds share in the overall eLogistics opportunity

Across major horizontals, we are seeing an increase in share of captive logistics due to benefits such as better service quality, lower cash handling charges, etc.

However 3PLs still continue to account for more than 2/3rd of the rapidly growing eLogistics market, making it quite a sizable opportunity.

 

Benefits of Captive Logistics (in addition to better operational efficiency, with scale)

Indonesian eLogistics Market- For Formal eCommerce

Mn Shipments, 3PL vs In-house

Vietnam eLogistics Market- For Formal eCommerce

Mn Shipments, 3PL vs In-house

3. On Demand delivery has also been picking up steadily in top demand centers for categories like FMCG

On-demand logistics is on the rise on the back of strong demand for FMCG deliveries and personal care products. There is also a strong willingness to pay for express delivery accompanying this trend.

This creates opportunities for 3PLs and in-house logistics arms to drive volumes by catering to this demand and also monetize effectively.

E-Tailing– Consumer decision criteria (post COVID)

Key Criteria while choosing platform , Average rating

Willingness to pay for express shipping

 

Indonesian eLogistics Market- For Formal eCommerce
Mn Shipments, % On-demand Deliveries

4. Diversification of services/sectors + strong tech enabled operations could prove game changers in the near future, that will eventually decide the leaders and laggards in the eLogistics space

The Logistics space is definitely one to watch out for with a lot of players trying to create winning business models, across the value chain.

Having strong tech enabled operations, diversification of sectors/service lines and including Value added services, are aspects that existing players are focussing on, to stay ahead in the game.

Initiatives arounds these areas could go a long way in creating long standing relationships with customers, thereby driving predictable volumes and healthy margins in the long run.

 

Initiatives to drive growth & monetization in eLogistics