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Online marketplaces bat for better logistics to cut delivery time

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By Anna Gabriela A. Mogato, Reporter

DESPITE the growing trend on e-commerce which was thought to put brick-and-mortar stores in the backseat, online marketplaces are betting on securing more physical spaces to speed up the delivery of goods.

In a local setting, Lazada Philippines chief executive officer Raymond N. Alimurung last week said that setting up warehouses in other areas in the country to store products closer to its recipients to cut short delivery time would help expand the e-commerce site’s customer base.

Noting that this drives better growth in the market, Mr. Alimurung said that “we continue to improve our logistics. The more reliable the logistics becomes, the more the customers trust the e-commerce.”

Lazada Philippines chief executive officer Raymond N. Alimurung shows the new features of the Lazada mobile app. — Photo: Anna A. Mogato



This likewise coincides with Lazada’s goal to achieve next-day delivery nationwide, similar to its parent company Alibaba Group’s target to achieve 24-hour delivery within its home base in China.

“We want to provide the premium experience. If it’s someone else’s warehouse it’s hard to commit to deliver it by the next day,” Mr. Alimurung said.

“The reason we are ambitious is because e-commerce, based on what we look at is only 1.5% of retail. It’s still on the early days,” he added.

With about 70 million products traded by around 30,000 sellers in Lazada’s platform, this would mean more options for consumers to choose from.

Having already set up a 30,000 square meter (sq.m.) hub in Laguna and a 5,000 sq.m. warehouse in Cebu, Lazada has now set its sights in putting up a third warehouse in Davao within the year.

While Mr. Alimurung declined to disclose the amount of investment, he noted that it “will not be anywhere near the size of the Luzon warehouse.”

“The objective of Lazada is not to attempt in anyway to put all the inventory on the warehouse. The idea is our marketplace enables sellers,” he added.

“When I mean enable, I mean enable them to sell at our marketplace even if the stuff is in their warehouse.”

Lazada’s warehouse will be mostly used for products to be sold in its recently unveiled LazMall, which only allows certified resellers of premium brands on the platform.

Alibaba Group VP Jungong Sun — Photo: Anna A. Mogato

‘SMART DELIVERY’
Online retail juggernaut Alibaba Group also sees warehouses as key to its global expansion.

The company had recently announced that it would be embarking on a mission to deliver goods from China to anywhere in the world within 72 hours amid the growing patronage for e-commerce.

In an interview with BusinessWorld on the sidelines of Asian Development Bank’s (ADB) Digital Development Forum 2018 on Wednesday, Sept. 5, Alibaba Group Vice-President Jungong Sun said that to pull off the company’s 72-hour delivery worldwide campaign, this would mean more “strategically placed” warehouses to house the goods closer to the destination.

“[To achieve] reasonable delivery process, [we have to consider] strategic locations of warehouses to reach [its destination] the fastest time possible. Warehouse accessibility [is crucial] for smart delivery,” he told BusinessWorld through a translator.

The Chinese e-retail giant announced this campaign almost a week ago, having already eyed five hubs across the world with its logistics arm Cainiao Network Technology Co., Ltd and struck a partnership with Emirates SkyCargo to handle deliveries.

In his keynote speech during the ADB forum, Mr. Sun said that by 2036, the company is eyeing to help 10 million small and medium-sized enterprises improve their profit and develop their businesses. This, he said, would serve two billion consumers worldwide and create 100 million jobs.

“The goal is [still] to have a zero-inventory, the goal is not to prolong the stay of the inventory in the warehouse China,” he added, given that the platform also offers food products such as fruits and vegetables.