The retail landscape is changing rapidly in today’s digital age, with a fast-growing trend in online retail. According to Statista, by 2022, the number of online shoppers in Singapore is expected to grow to reach 4.4 million. By 2025, Singapore’s e-commerce market is expected to be worth US$5.4 billion, based on estimates by Temasek and Google.
The rise of e-commerce has led to a growing emphasis on customer-centricity in the formerly business-oriented parcel delivery market. E-commerce players recognize that last-mile services have a significant impact on customer perception, which affects their success in the marketplace, resulting in a need to create differentiation.
Consumers are increasingly turning to online shopping to meet their everyday needs. As connectivity becomes ubiquitous, consumers grow to expect immediacy, desiring faster delivery. According to a study by McKinsey, 20% to 25% of consumers would pay premiums for same-day delivery. However, there is a glaring inertia in the way shopping items are delivered, where online purchases can be made almost instantly but consumers still have to wait days or weeks before receiving their orders.
In addition, despite increasing customer demand for same-day delivery, more than 50% of consumers choose delivery options merely based on price while another 20% prefer the cheapest available option, based on the same McKinsey study. This highlights that while the desire for convenience is on the rise, majority of consumers remain price-sensitive.
The variety of delivery options, quality of delivery services, and affordability have become major decision criteria for customers. E-commerce players need to seek ways to provide better customer experiences and stay competitive, such as offering alternative delivery options, improving delivery times, and operating at lower costs.
Last-mile delivery in Singapore
The challenge for logistics players is providing consistent service levels to complement the e-commerce boom. Numerous startups have sprouted up in Singapore’s last-mile delivery space amidst the government’s push for change, but issues of missed deliveries remain prevalent.
The Economic Development Board (EDB) describes last-mile delivery in Singapore as “the most inefficient” of the logistics chain, due to two main problems: unconsolidated deliveries and high delivery failure rates.
A lack of delivery coordination between retailers means customers either have to deal with multiple deliveries / re-deliveries, or face substantial waiting time for their parcels to arrive. Second, high delivery failure rates result in additional cost for companies, signaling a need for change in the current approach.
As the e-commerce market in the ASEAN region grows to a predicted US$88 billion in less than a decade, last-mile delivery solutions must develop at the same pace to satisfy the expectations of millions of customers, in a sustainable manner.
The benefits of Automated Parcel Terminals
One way to mitigate delivery failure is the introduction of last-mile logistics solutions like automated parcel terminals (APTs). There are manifold benefits of leveraging this unique alternative to traditional parcel deliveries for both businesses and consumers.
First, APTs help logistics companies operate more efficiently. Compared to traditional door-to-door deliveries, more parcel deliveries can be accomplished with an APT network within the same time frame as routes are optimized to find the shortest and fastest path. When parcels are delivered to APTs, recipients are notified to collect their parcels and electronic proof of delivery is captured as part of the collection process. The delivery crew no longer needs to travel from doorstep to doorstep, personally deliver parcels, and manually collect signatures as proof of delivery, yielding significant time and cost savings.
Second, APTs help businesses realize more cost savings by eliminating missed deliveries. Through APTs, consumers can skip waiting at home and collect their parcels on-the-go, resolving the problems of delays and failed deliveries, and reducing the associated cost burden on businesses.
Third, consumers enjoy a wider variety of delivery options that suit their needs. APTs such as blu’s islandwide network and SingPost’s POPstation network can operate 24/7, allowing consumers to collect parcels at their convenience.
Lastly, some retail logistics companies can also provide same-day delivery to their islandwide APT network, with the same-day self-collection proposition addressing customers’ need for immediacy.
The benefits of having an APT network have been recognized by the authorities. IMDA has been tasked to deploy a nationwide federated locker network to transform the future of last-mile deliveries in Singapore. The nationwide locker network aims to raise productivity for companies dealing in online consumer retail and alleviate last-mile challenges faced by retailers, logistics players, and consumers.
Creating an ecosystem
Transformation in retail logistics helps catalyse the growth of e-commerce. By applying systemic innovation throughout the value chain instead of piecemeal tweaks, an effective end-to-end retail logistics ecosystem is created to better meet business needs.
This article was first published on Questex, on 29 November 2018. Information is correct at the time of publication.