Specialists Provide Distribution Solutions in Surging Asia-Africa E-commerce

July 19th, 2017

Supply chain experts assume critical distribution roles by providing tailored solutions for companies in surging e-commerce sectors of Africa and Asia.

Booming global e-commerce has expanded ever faster with the emergence of middle class consumers in Asia and Africa, whose business is set to lift online trading worldwide to an estimated $4 trillion in 2020. But to meet soaring demand marketers must stock and transport goods to often remote clients via limited infrastructure, and navigate myriad regulatory and customs complexities attendant to increasing cross-border e-commerce. Those challenges have led traditional marketers and pure internet players alike to seek help from supply chain specialists, who determine the best ways to get goods to buyers as fast and economically as possible.

That trend is growing fastest in Asia-Pacific, which already represents 50% of the global e-commerce market. China made up 80% of the region's 2016 trade, as the nation's second-, third- and fourth-tier cities – home to the majority of China's population – began joining the country's expanding 340 million online shoppers.

Meanwhile, in addition to continued growth in more mature internet markets like Japan, South Korea and India, consumers in Southeast Asia -- Indonesia, Malaysia, Vietnam, Singapore and the Philippines -- are flocking online in ever-greater numbers.

"A major driver of this trade is increasing use of mobile devices for e-commerce, and not only in places where internet access isn't high," says Ludovic Laungani, the Singapore-based Regional Asia-Pacific E-commerce Solution Manager for Bolloré Logistics, of the m-commerce trend some observers say already constitutes 50% of all Asia-Pacific e-transactions.

"Consumers in larger cities who initially bought online are now being joined by people in more remote locations, where e-commerce is the only way of getting things like diapers, watches, new smartphones or the latest pair of shoes that aren't available nearby," Mr. Laungani adds. "Often, that's done via mobile."

Ordering is the easy part; getting such goods quickly to waiting consumers is a harder affair.

In addition to assisting traditional marketers adapt supply chains to handle growing online business, logistics and transport specialists are also working with enormous Asian marketplaces like Alibaba and Lazada to set up and operate their widening distribution networks. The challenges in doing that are considerable. Final destinations are often in remote areas with limited access, and finding reputable transport partners locally can be difficult.

"Awaiting the creation of region-wide networks, you go with the best players in each spot – we use four different last mile partners in the four regions of Malaysia, for example," Mr. Laungani says, stressing the importance of reliability.

"Nearly 95% of purchases were cash-on-delivery when Asian e-commerce began, and they're still 65% today," he notes. "So you need partners who are as solid delivering to even difficult last-mile destinations as they are dependable in handling cash payments."

Similar geographical, transport, and financial challenges confront online marketers and supply chain specialists in Africa – the world's other blossoming e-commerce giant.

African consumers are projected to spend nearly $75 billion online annually by 2025. And, as in Asia, internet purchases already rival brick-and-mortar options that offer less choice, higher prices and required travel to shops.

A main feature of that effervescent African e-commerce is the large role of international marketplaces involving European and China merchants. Those are expected to represent considerable shares of African sales in 2020, varying largely by national market maturity in modern retail -- 20% in South Africa, for example, versus the anticipated 70% in Nigeria.

Also similar to Asia, meanwhile, is the growing number of African e-consumers using mobile devices – not illogical on a continent where 93% of the population owns cell phones, according to Afrobarometer.

"These African consumers have leap-frogged traditional retail networks by buying goods online or via mobile devices for delivery to their door," says Xavier Personnic, Director of Fast-Moving Retail Goods and E-commerce activities for Africa at Bolloré Logistics in Paris.

Mr. Personnic also notes the challenges marketers subsequently face getting orders to African end-users.

"Merchants, especially international players, have to work through limited transport networks, warehousing complications, enormous distances, security issues and customs evolutions for e-commerce administrative procedures," he says. "That requires the help of specialists with hands-on experience in Africa's differing markets."

Another common trait between e-consumers in Africa and Asia makes successfully surmounting those difficulties from the start vital for longer-term business, too.

"These consumers are just as demanding anywhere else, and any quality, price or delivery promises that aren't met will result in future lost business," Mr. Personnic notes. "You need to know what goods are worth importing vis-à-vis cost, what supply chain options are best adapted to those, and how local transport, security and customs complexities can be managed fast and effectively. That takes local expertise."

An example of that scaling marketing and distribution activity to demand, Mr. Personnic says, was sportswear retailer Decathlon's establishment of an e-commerce partnership with African marketplace operator Jumia. It allowed Decathlon to test its assortment before launching brick-and-mortar stores, and use Jumia's depth to reach more consumers.

"Other non-e-commerce pure players without any African entities, but with the willingness to open outlets could use this type of cross-border capability to access African markets," Mr. Personnic stresses.

Key Figures
  • 20%

    More fuel-efficient for the Boeing 787 and the Airbus A350

  • 70%

    of Urbanisation is expected by 2050

  • 27

    mega-cities are expected by 2050, with at least 10 million people, compared to 1...

  • +18,4%

    of growth for E-commerce retail market in Europe in 2015

  • 82%

    of goods are moved by road

  • 1 billion

    Population in Africa

  • 60%

    of Africa’s population will be urbanized by 2050

  • 7,5%

    of growth for Indian GDP in 2014

  • 4,9%

    of growth for African GDP in 2016

  • 6,1%

    of growth for East Asian GDP in 2015, the world’s fastest-growing region

  • 19 224 teus

    transported by the MSC Oscar, the largest container ship in the world

  • 396 m

    is the size of the MSC Oscar ship

  • 120 h

    is the Non-Stop Flight Record done by Solar Impulse

  • 4,5%

    of growth in 2015 for Global Airfreight demand