KL Chan’s one-stop logistical dream
iPay88’s Executive Director and one of its three founders, Chan Kok Long, observes a second tier online marketplace emerging. “But, they can’t afford the logistics or warehousing that bigger players like Lazada,11thstreet or Gem5 have,” he added.
These second-tier marketplaces are characterised by sellers who are now more niche and specialised, going the other end of the spectrum from first tier, big exhaustive, all-in-one marketplaces like Lazada and 11thstreet.
Chan said, “I forecast that these tier 2 markets are coming. Because of the mentoring which I also do, I see more products like baby and maternity goods, health and wellness products, beauty products and more.”
In any case, Chan expressed that he hoped to see the marketplace coming into one centralised location under one roof, where everything from broadband services to logistics, warehousing and e-commerce players would be located.
But the key to demand for this futuristic hub is its fully-automated warehousing and wide choice of logistics services. Imagine the warehouse being partitioned into various areas for the various different types of goods that e-commerce players want to sell.
Orders for goods would come in via online, and then logistics services would bid to do the delivery jobs, ultimately driving costs down and optimising efficiency.
If the e-commerce industry could be loosely divided into three parts – marketplace, payment gateways and fulfilment (which includes logistics, warehousing, returns, door-to-door delivery and more), the fulfilment portion has a long way to go still, in terms of maturity.
It also has the most pressure to be more developed than it is right now. “It (has to) happen because people want the lowest cost and instantaneous delivery,” said Chan.
In fact, he opined that e-commerce overall hasn’t reached its potential yet. “Even in the United States, it’s only 30- to 40-percen penetration. People aren’t demanding instant delivery. The buzzword is ‘same day delivery’ instead.”
And this status quo is likely to go on, as long as profits still keep rolling in and there is no incentive to lower the barrier for more players.
Chan’s vision of an automated logistics and warehousing hub, could help even the playing field.
Definitely there are hurdles, not least of which is the finances involved in building a location fully equipped with state-of-the-art tech wizardry. Chan shared, “The e-commerce competition is not small competition. The online marketplace is borderless, and customers are from all corners of the world.
“When people invest in this field, it’s in multiple of millions, with system development and marketing taking the biggest chunks of invested dollars.”
Location poses less of a problem.
Chan said that when speaking with property developers, they are wondering what is the next type of property to build. “Right now, office space market is so glutted, that every commercial area has occupancy rate of 60-percent.”
Chan concluded, “If in 3 years I solve the location and financial portion, what’s to stop me from doing it?”