Singapore - the Lion City (derived name) has acquired a lion’s share in the e-commerce market of the South East Asian islands. The country’s economic revival post pandemic opened doors to the e-commerce market with USD 5.9bn sales in 2021. As per Global Data’s E-commerce analytics report, the estimated sales project the growth rate of 18.3% touching USD 7.0bn in 2022.
Singapore E-commerce Market Lookout
Overall, Singapore e-commerce market has witnessed highly competitive parameters over retail shopping. The accessibility of stores at nearby distances comes as the foremost barrier. The consumer habits of offline shopping and being skeptical about ordering online also makes it to the chart. Yet, the tech-savvy Singaporeans are always connected to the internet and have shown e-commerce growth trends accounting to m-commerce and “showrooming effect”.
What is the Showrooming Effect?
The showrooming effect is when a consumer visits a store to physically check the product before buying it online at some good deal or discounted rate. This has really become a new shopping habit. A research report shows that about 73% of Singapore consumers leave a store if they find the product online or at any other place with even 5% discount. About 89% of consumers think that getting access to more information from mobile phones significantly affects their buying decisions. This ability to use mobile phones for searching products and making payments(m-commerce) as well is making more space for showrooming effect and seeping in the e-commerce market.
Below is the list of challenges in e-commerce fulfillment faced by retailers in Singapore.
1. Last-mile Delivery
“All’s well that ends well.” The last-mile delivery challenges have thoroughly reminded this quote to the e-commerce industry. The entire process of the parcel leaving the courier service and reaching at the customer’s doorstep becomes the last and most crucial link of the e-commerce process chain that connects the virtual shopping world(online) to the real product delivery(offline) at doorstep. A report from McKinsey & Company suggests that the costs associated with the last mile delivery account for about 50% of the total shipping costs.
The major challenges that Singapore faced in the last-mile delivery till date include following:
- High delivery costs.
- Parcel deliveries either got delayed or lost.
- Customers had no way of reaching out for queries. The only option was to order and wait.
- The geotagging of delivery boys' locomotion wasn’t efficient.
- There was a mismatch between the delivery workforce fleet size for the fulfillment of the fluctuating order capacity.
- Smart technologies like artificial intelligence and data analytics weren't integrated for ease of delivery routes and management.
Singapore still lacks an omni-present ecosystem of last-mile delivery companies or services to level-up the entire e-commerce shopping experience. Companies like Ninjavan show up to curb this challenge.
A well-structured setup backed with technology is the most prominent and probable solution for the last-mile delivery challenge. Additionally, considering following pointers also help ease the last-mile hurdles.
Multiple-vendor Sourcing & On-shoring
Having a multi-vendor or multiple-supplier strategy is like placing your eggs in several baskets instead of one. This combats dependency on a single supplier in times of crisis. Thus, unforeseen costs and stock outs are taken care of. Multiple vendors provide competitive buying options and backups for the entire supply-chain. Vendors, especially the locals or on-shore ones significantly reduce the delivery time of the orders.
Artificial Intelligence for Planning Routes
Having multiple vendors, it is then mandatory to train the delivery fleet to pick up the right order from a particular vendor and drop it to the respective customer. Algorithms backed with AI can help plan better quantities and routes for the delivery fleet to optimally utilise the time to achieve the fulfillment capacity. Use of advanced technology like delivery by driverless vehicles is also being promoted. Singapore’s first drone delivery service started in May 2020.
Planned Warehouse Sourcing
Just like it is good to have multiple vendors, it is also beneficial to have your products placed at multiple warehouses. However, stocking the products at the right place in the right quantity at different locations is the key for efficiency and convenience. A planned warehouse layout and structured product placement in several such warehouses saves shipping costs and delivery time. Thus, enabling ease in the last mile delivery link.
2. High Real Estate Prices
Singapore is known for skyrocketing real estate prices. It is very difficult for investors or even well established people of Singapore to set up a huge multi-functional warehouse. The time and rate of ROI (return-of-investment) is likely to not favor this business model.
In addition, the centralisation of warehouses in a place like Singapore has the following disadvantages.
High Outbound Costs
Singapore has remote access to malls and shops all over. With a centralised setup, a product has to travel further to different locations to the retailers. This increases the shipping costs and overall outbound costs.
High Shipping Time
The more a product takes to travel from a centralised warehouse to a retailer and further to the customer, the more dearly and time consuming the entire process becomes.
Therefore, a decentralised warehouse planning model serves best of Singapore’s geography and consumer market.
The primary solution that e-commerce investors figured out comprehends the solutions discussed above (challenges). Multiple small warehouses are erected in various geographical locations within Singapore. However, routing multiple orders to different warehouses and synchronising inventory stock and other fulfillment operations can be resolved by integrating a single Warehouse Management Operating System.
3. Distorted Inventory & Management
The pandemic highlighted a surge in e-commerce orders across the globe. That is when warehouses got to know the need of bridging the gap between their real inventory and its data or count. Inventory distortion is a major challenge not only in Singapore but also in the worldwide e-commerce market. Even retail inventories account for about 63% of accuracy only. The warehouse inventory is the next topic of concern altogether.
The major factors of mismanagement include following:
- The centres faced frequent stock-out or overstock hurdles.
- There was a mismatch between the registered data on manually updated sheets and the actual inventory.
- The warehouse associates and managers faced difficulty in placing and removing products across the inventory.
- The return-orders and processes related to it were not integrated well.
Taking a specific example, Singapore witnessed an insane egg shortage in the pandemic times hit in 2020. There was an abrupt gush in demand for essentials. It happened that retailers ordered more and more eggs to meet the rise in demand. Once satisfied with demand, it was reported that the distributors had to throw away 250,000 eggs in June in the same year. Similarly, car-chips hoarding and fluctuations in demands of the Singapore market put the carmaker’s production lines at halt in fiscal year 2020-21. Recently, the threats and adversities as an effect of the Russian-Ukraine war led Malaysia to ban its chicken exports to Singapore. This is a big dead-lock situation or dilemma for Singapore.
Inventory updation and management accounts for major money-saving and money-making in the e-commerce logistics and fulfillment industry. The major solutions to aforementioned challenges include:
Smart Inventory Management
The latest technology and software products like Warehouse Operating System provided by Hopstack ensures multiple-channel inventory synchronisation (including multiple storage warehouses) in a single software. It integrates real-time inventory tracking, planning, placement and replenishment control based on smart data analytic tools and artificial intelligence. The return order processes and management is also included in such products.
Inclusion of Buffer Capacity
The buffer capacity stock comes at an additional cost that one adds to normal forecasted inventory. Smart inventories already have forecasted data based on purchase behaviour and seasonal trends. Including buffer capacities in inventory planning combats costs associated with sudden demand spikes. Thereby, enhancing the overall inventory optimization.
4. Omnichannel Order Management
Order management became a challenge only when customers got several touchpoints to place their orders. Today a warehouse or fulfillment center gets orders from brick-and-mortar stores, social media platforms, e-commerce platforms or other online marketplaces like Shoppee, Lazada, Amazon, etc. The major order management challenges faced by Singaporean e-commerce market are as following:
- It was difficult to track and prioritise the orders coming from multiple sources.
- The management of multiple spread-sheets for order records by staff at different same and different centers was a tedious task. It was vulnerable to a lot of entry errors and syncing errors.
- There was no aligned system for tracking a particular order-cycle through the center’s processes, beginning from order received, picking & packing, batch-sorting and the order dispatch.
The best solution to efficiently function an omnichannel order management is automating the process with an Automated Order Management Software. This integrates all the possible platforms from which an order comes and ensures the quickest picking, packaging, batching and dispatch of it using proprietary algorithms.
5. Warehousing Picking Rate & Accuracy
The most essential and unnoticed task in the fulfillment process of e-commerce is warehouse picking. Singapore, just like all the other e-commerce markets faced following challenges in order picking:
- A lot of time was wasted in to & fro while picking the right order by the warehouse associates.
- Warehouse managers couldn’t track the overall performance or even the troubles faced by warehouse associates.
- Inefficient use and improper maintenance of digital equipment made the process manual, slow and prone to errors.
- Manual data and readings often lead to inaccurate order picking.
The best way to optimize the entire warehouse operations between order received and dispatch is to adopt a software product like that provided by Hopstack that provides end-to-end Automated Outbound Fulfillment. It contains proprietary algorithms that optimize picking, create smart pick-lists and optimize picker routes and much more.
6. Optimal Packaging
Did you think of ordering and shipping a couple of nail-paint bottles as an order? It is a very small and delicate order to process. Packaging is integral for product safety and displacement in the entire journey until it reaches the customer. Yet, the customer demands and expectations have disrupted the e-commerce market.
Singapore e-commerce giants like Lazzada and Shopee have claimed to be eco-friendly yet did not have efficient packaging processes and strategies. Lazada did not show any e-commerce-friendly efforts unless a 2018 Eco-study highlighted about Lazada having no sustainability policy. The inputs accounted for 65% reduction in plastic packaging materials as compared before.
Technology and automation is the best solution again. Automated cartonization software algorithms identify the best possible packaging configurations for a given order in order to save packing material and costs involved. Therefore, also retain an ecological balance.
Companies also come up with innovative solutions to cautiously consider ecological balance in their processes. For example, RedMart (now acquired by Lazada) is a popular e-commerce grocery company in Singapore that provides a ‘Go Green’ Delivery option to its customers which takes a little longer than the standard delivery. In this, the van doesn’t depart for delivery unless it's full. The company also uses biodegradable plastic bags only for its product packaging needs.
7. Cross-border Shipping
The major convenience about e-commerce is shop from anywhere to get anything worldwide 24*7. This opens doors for not just domestic or intra shipping but cross-border shipping as well that ships products of Singapore brands to other countries and allows the entry of foreign brand products. The biggest challenge in this case is the logistics costs amongst all the other affecting parameters.
Singapore has relieved the cross-border custom clearance norms for certain countries like Philippines and Malaysia. All the major gigantic warehouses are constructed in Malaysia (to combat high real estate finances) considering the Singapore customer demands. The logistics are eased and highly facilitated between the two countries. Government also has taken several initiatives over the years with programmes like SPRING Singapore (now known as Enterprise Singapore) to curb the e-commerce challenges in Singapore and promote business. Moreover, having a single-point operating system like Hopstack that integrates within it a lot of omnichannel platform vendors (like Amazon, Lazada, Shoppee, etc.), carrier options (like UPS, DHL, FedEx, etc) and cross-border freight brokers (like Janio, Shippo, etc.) makes the warehouse management system subtler.
Singaporeans are tech-savvy and often browse the internet to gain additional insights. This greatly affects their consumer behaviour and expectations. The last-mile delivery is one of the biggest challenges the country is trying to cope with. Additionally, high real estate economics of Singapore doesn’t allow a single warehouse setup and is replaced by several scattered warehouses or fulfillment centers. Managing multiple orders to route into an ecosystem of distinct warehouses is a challenge again.
Software products like Hopstack’s Warehouse Operating System easily synchronises these multiple warehouse setup and additionally automates a lot of other fulfillment processes involved like: real-time inventory tracking and management, smart picking, packaging, batching and shipping. Schedule a demo today to know more about the all-in-one solution to fulfillment logistics challenges.