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E-commerce boom reshaping delivery sector in Singapore

The Straits Times by TIFFANY FUMIKO TAY

Missed deliveries, lost packages and delayed shipments are the bane of every online shopper.

And these problems - which had surfaced during the just-concluded seasonal peak - could well increase if steps are not quickly taken, warn logistics players.

One measure already in the pipeline is a partnership between SingPost and some of its competitors to offer customers the option of receiving purchases through any delivery node in the network. Called The Last Mile Platform, it will be rolled out next month.

Such alliances may be unusual. But it cannot be business as usual.

SingPost saw its postal system strain under the pressure of the recent peak season. It saw volumes surge by 30 per cent, double what it expected. On average, it already delivers about three million items a day.

And this volume of deliveries, predicts SingPost group chief executive Paul Coutts, will become the new normal in six months.

Until very recently, e-commerce penetration in Singapore had "actually been quite low", Mr Coutts told The Straits Times in a recent interview.

"But I really believe that it's now accelerating and taking off."

According to a 2018 study by Google and Temasek, Singapore's e-commerce market, which stood at US$1.8 billion (S$2.43 billion) last year, is predicted to grow to US$5 billion by 2025.

Nanyang Business School adjunct associate professor Zafar Momin said that with just 5 to 6 per cent of shopping transacted online in Singapore, e-commerce penetration here may appear relatively low compared with countries like China (20 per cent) and Britain (16 per cent). Singapore's e-commerce sector is, however, expected to show double-digit growth over the coming years, he said.

Lazada, one of the region's biggest e-commerce players, said that sales for the Singles' Day event last year were three times that of the year before. Its chief executive in Singapore James Chang said it had seen a 60 per cent increase in smaller local businesses joining as sellers in recent months, helping to drive the industry's "tremendous growth".

Mr Prashant Dadlani, chief executive of retail logistics start-up blu, noted that rapid growth is not necessarily sustainable, adding that e-commerce now "is fuelled heavily by promotions, price discounting and cross-subsidising".

Mr Erik Cheong, co-founder of Park N Parcel, which has 1,600 collection points, is even more blunt.

In the overcrowded market, he said, "many third-party logistics providers are offering services at a low rate with thin margins or even making a loss per delivery".

There are now dozens of operators offering thousands of collection points across the island. But the market is fragmented and messy, while intense competition for resources calls for more industry collaboration, players said.

Parcel Santa, which provides parcel locker services to 300 condominiums in Singapore, started in 2017. Co-founder Jim Huang said that while traditional retail relies on malls and shops as consolidation points for goods, online shopping sees the delivery of goods to individual doorsteps, which is unsustainable.

The only way for logistics to keep pace with e-commerce growth is to re-establish "consolidation points" such as parcel lockers, he said.

While there will always be demand for doorstep deliveries as a premium service, he said the future blueprint for last-mile delivery in Singapore will likely be a hybrid model that includes lockers and community-based deliveries.

While there will always be demand for doorstep deliveries as a premium service, he said the future blueprint for last-mile delivery in Singapore will likely be a hybrid model that includes lockers and community-based deliveries.

Courier services are also finding ways to beat the manpower crunch and reduce missed deliveries.

Ninja Van, for example, has a network of about 1,000 pick-up and drop-off points, including neighbourhood shops, in addition to offering doorstep deliveries.

On-demand delivery platforms like GoGoVan, which has a registered fleet of 20,000 in Singapore, and GrabExpress, which rolled out its beta trial here last year, rely on shared resources.

GrabExpress uses GrabFood's motorcycle fleet, allowing the riders to "reduce idle time and earn more income", a spokesman said.

Some operators feel there should be greater collaboration in the industry, especially during peak seasons.

The Last Mile Platform, as well as the Locker Alliance, are leading the charge to create a more cohesive delivery network for consumers in a highly competitive space, where some players are at risk of suffering losses.

SingPost's Last Mile Platform will integrate partner courier services, parcel lockers and collection points in all South-east Asian countries, and allow retailers to offer customers the option of receiving purchases through any delivery node in the network.

The Locker Alliance is a government initiative to break down the barrier of locker operators having separate computer systems and tie-ups.

A year-long pilot was rolled out in December which lets customers of online retailers such as Lazada and Qoo10 have their items delivered to any of the 62 locker sites at Housing Board blocks in Punggol and Bukit Panjang, as well as at eight MRT stations.

Mr Christopher Ong, managing director of DHL Express Singapore, which is part of the pilot, said that rolling it out across the island will "give customers more options as well as a more consistent user experience".