Today, we’re investigating the challenge of logistics for ecommerce companies in every market. Many ecommerce startups struggle with timely and cost-effective delivery on the last mile to the consumer’s door.
While Amazon sets the industry standards, imagine the challenges of delivery in rural India, China, or Indonesia with its 14,000 islands? Are drones a solution? Walmart and Amazon seem to think so. How about bicycles? Works in India.
VCs are certainly excited about logistics startups, funding them to the tune of many millions of dollars in every marketplace. The big question for e-commerce businesses is can you be profitable offering free or same-day delivery? It will be a deal maker or breaker in the future
Stay tuned as we navigate our way through the logistical challenges and some of the potential solutions for ecommerce in the US and across Asia.
Logistics Challenges & Opportunities Ahead
Is that a drone overhead or is it a future delivery from Walmart or Amazon? Alibaba, Singtel and many other e-commerce companies are taking a flyer on drone deliveries too, so to speak. See what Walmart has planned.
So is Amazon a shipping company, a technology business or a retailer? It may set the industry standard for delivery but it may have future challenges from brick-and-mortar stores offering “click and collect” according to Retail Dive. Logistics company Parcelled gets VC funding of $5 million, after Opinio receives $7 million from Accel Partners and Gojavas earlier got a $20 million investment from Snapdeal in India. Regional tax and consumer issues hurt e-commerce companies and consumers alike in India as Flipkart, Snapdeal and Amazon curtail deliveries during the dispute. On top of that, Flipkart suffered several high-profile robberies and fraud, pointing to the problems of COD.
In Singapore aCommerce closes local deliveries but keeps regional sales going. Mahindra Group launches SmartShift, its new online service. China now has 77 million rural residents shopping online, a 40% growth rate year on year. Shoppers in rural areas are expected to spend $72.4 billion by the end of 2016. Shanghai-based STO has over 10,000 service points across China and employs 300,000 workers as it plans an IPO. Colliers International releases “From First Mile to Last Mile,” a global logistics report with valuable insight. The ASEAN Economic Community is weeks from becoming a reality and a $2.4 trillion market.
Etsy ASAP Introduces Same-Day Delivery for Shoppers in NYC
Etsy has announced the official launch of Etsy ASAP, its pilot program for the holiday season. Via a partnership withPostmates, Etsy ASAP gives shoppers in New York City the option to purchase items with same or next-day delivery from participating sellers.
With this launch, shoppers can browse more than 5,000 Etsy ASAP products via the Etsy website or the Etsy mobile app. When browsing products, users on both desktop and mobile can filter their view to only see these items. Etsy ASAP will also appear on the item page for a supported product, and in the cart at checkout. Orders using Etsy ASAP will be delivered on the same or next day for a flat fee of $20. via AdWeek
Walmart testing drone deliveries, aiming to turn retail stores into mini-airports
Walmart has applied to test drone delivery in the United States — outlining plans to use unmanned aerial vehicles to drop packages at homes and retail stores — according to an application filed with the Federal Aviation Administration, as reported by Reuters this afternoon. The move pits the retail giant against its e-commerce rival Amazon in an emerging frontier for delivery and logistics. According to the Reuters report, Walmart is asking the FAA for permission to test drones for “deliveries to customers at Walmart facilities, as well as to consumer homes.”
Unlike Amazon, which is developing its own fleet of custom drones, Walmart plans to use devices from China’s DJI, maker of the popular Phantom line of drones, according to the report. Google has also been experimenting with drone delivery,according to published reports. via GeekWire
The latest data shows where Amazon might be headed next — and it should terrify UPS and FedEx
Amazon is continuing to bulk up its fulfillment-center network, indicating it’s serious about stepping into a territory historically owned by companies like UPS, FedEx, and DHL: the logistics and transportation business.
According to new data by the e-commerce software maker ChannelAdvisor, Amazon has added 21 new logistics facilities globally over the last 12 months, up 14% from last year, bringing the total to 173 facilities worldwide. Of the 173 facilities, 104 are in the North America region, with the rest spread across Europe and Asia. via Business Insider
Convoy raises $2.5M from Jeff Bezos, Marc Benioff, others for new on-demand trucking startup
A new Seattle startup has raised $2.5 million from an impressive group of investors to change how shippers connect with trucking companies. Founded in April, Convoy is using technology to create more efficiency in a $800 billion U.S. trucking industry that has largely remained unchanged for decades, explained Convoy CEO Dan Lewis. “The problem we are solving is around local and regional access to trucks on demand,” Lewis told GeekWire.
Convoy today announced the funding round, which was led by Code.org founders Hadi and Ali Partovi. Other participating investors include Bezos Expeditions — the investment arm of Amazon.com CEO Jeff Bezos — Salesforce.com CEO Marc Benioff, Expedia CEO Dara Khosrowshahi, Dropbox CEO Drew Houston, former Starbucks President Howard Behar, KKR CEO Henry Kravis, eBay founder Pierre Omidyar via Omidyar Technology Ventures, and several others. via GeekWire
Is Amazon a shipping company?
Amazon is, above all, a retailer. The retailer, really, that has pretty much single-handedly defined e-commerce and changed nearly all aspects of retail in the process, at least in some way. And Amazon is also a tech company. It’s that Amazon knows everything about you and Wal-Mart knows nothing about you. Wal-Mart may have discounts, but they may not be relevant to you at all. But in another area that has Amazon dominating and disrupting delivery the e-retail giant is also scrambling. Via retaildive.com
Delhivery hikes investment in Parcelled
Delhivery, which is focused on catering to e-commerce clients, has been adding express and hyperlocal offerings as it gets challenged by these younger set of logistics tech startups. Parcelled received around $5 million from Delhivery & Tracxn Labs, while Opinio had bagged $7 million in funding from Delhivery, Sands Capital and Accel Partners recently.
Sahil Barua, co-founder, Delhivery, told TOI, “The companies we have backed are solving crucial problems in the first mile and last mile legs of delivery. They make it easier to return parcels to e-commerce companies, provide immediate delivery options across categories from local retailers and enable a larger pool of people from the informal economy to participate in our fulfillment and delivery operations.” Via timesofindia.indiatimes.com
First Mile Logistics Provider, Parcelled, Gets $5 Mn Series A From Delhivery
Apart from the investments of Angels and VC, it is raining funds for the logistics startups as matured startups are investing in the new-age ones, ecommerce companies and others, also started showing interest in the same. Gurgaon based logistics startup, Delhivery and Tracxn Labs, has made of over $5 Mn in logistics services startup Parcelled. It is Delhivery and Tracxn Labs’ second investment in the startup, and had also participated in the seed round.
This announcement came within two weeks after Delhivery, Sands Capital and Accel Partners invested $7 Mn in Opinio, another Bangalore-based B2B hyperlocal delivery startup. Earlier, Snapdeal had also hiked its investment in Gojavas with additional $20 Mn. Via inc42.com
Roadrunnr in talks with Sequoia, Nexus & others for fresh funding
Hyperlocal delivery startup Roadrunnr is negotiating to raise a fresh round of funding from existing backers Sequoia Capital and Nexus Venture Partners besides other new investors, sources said. In a news report quoting sources, The Economic Times said that Roadrunnr has already raised $10 million from Sequoia and Nexus.
However, a spokesperson for RoadRunnr denied the same. Sources said that talks are at an advanced stage but no deal has been signed yet. Carthero Technologies Pvt Ltd, which runs Roadrunnr, had raised $11 million in Series A funding from venture capital firm Blume Ventures, besides Sequoia Capital, Nexus Ventures and others in July. Earlier this month, Russian billionaire Yuri Milner also put money in Roadrunnr, founded in 2015 by ex-Flipkart employees Mohit Kumar and Arpit Dave. via VCCircle
India: E-commerce players curtail deliveries in UP, Uttarakhand to avoid tax hassles, unpredictable customers
Flipkart, Snapdeal and Amazon, India’s three most popular online marketplaces, have stopped delivering products in Uttar Pradesh (UP) and Uttarakhand due to tax hassles, The Economic Times reported.
The report says, these top e-commerce companies will not deliver a product which exceed the value of Rs 5,000 in the two cities. The reason of the issue is that the tax authorities have implemented rules for the buyers purchasing from other states as per which, online interstate buyers will have to file a VAT declaration along with the registration number of the vehicle bringing the products furnished by the deliverer. Via dealstreetasia.com
Logistics startup aCommerce downsizes in Singapore
For ecommerce and logistics companies, battling in Singapore can be an all-out war. Sure, the country’s a crown jewel in Southeast Asia for its sophisticated consumers and booming startup scene….
So, while Singapore makes sense as a regional HQ where international companies make decisions for Southeast Asia, large retailers are really only interested in consumers from bigger markets like Indonesia, Philippines, Thailand, and Vietnam. aCommerce had a hypothesis when they went into Singapore and hired a logistics team: they would pitch the region but cross-sell Singapore, and customers would bite. Turns out they weren’t that interested. Via techinasia.com
Mahindra launches SmartShift to connect cargo owners, transporters
Mahindra and Mahindra Ltd, a part of $16.9 billion Mahindra Group, on Tuesday announced an online platform to connect cargo owners and transporters. The venture named SmartShift will be a technology-enabled load exchange platform, the company said at a press conference in Mumbai. Cargo owners, both businesses and individual users, can access the SmartShift service through a mobile app available on Android, the website or a dedicated call centre….
According to a McKinsey and Co. study, inefficiencies in logistics infrastructure costs the Indian economy an extra $45 billion, about 4.3% of gross domestic product (GDP), every year. Freight traffic will multiply 2.5 times growth by 2020 from the 2010 levels, further straining India’s infrastructure, the study had said. Via dealstreetasia.com
China to Further Develop Rural E-Commerce
E-commerce in China’s rural areas has been developing quickly in recent years. Data shows the country now has 77 million rural residents shopping online, a 40-percent growth rate year on year. Shoppers in rural areas contributed some 180 billion ($28.3 billion) yuan to China’s economy last year. The figure is expected to hit 460 billion yuan ($72.4 billion) by the end of next year. via CRI News
Chinese delivery firm STO Express plans ‘back-door’ listing amid ecommerce boom
The express delivery sector grew around 50 percent each year between 2010-2014 and handled 14 billion parcels last year, State Post Bureau data show. But, it has remained elusive for investors due to the dominance of private and state-owned firms.
“We want to improve our governance and services, to build up the STO Express brand,” she added. “China’s express delivery companies do not currently have the same standards as overseas firms, the listing will be conducive to this.” Shanghai-based STO has over 10,000 service points and employs around 300,000 workers, according to its website. Last year, it launched its first overseas logistics hub in Japan. Via reuters.com
E-Commerce and New Delivery Paradigms Shaping Future of Global Logistics
Colliers International Group Inc. today issued “From First Mile to Last Mile,” a global logistics report examining the primary factors that will impact the global pattern of warehousing and logistics over the next generation, as well as the elements already shifting global trade flows and retail formats. In Asia Pacific, as global giants such as China and India develop their port-centric facilities and link these to a developing rail infrastructure, the growth in Asia Pacific intermodal logistics is set to become very, very big.
“Our analysis finds that e-commerce and evolving delivery methods are the primary factors driving the shape of the logistics sector both today and in the future as e-retailing is slated to increase significantly in cities and towns across the globe,” says Dwight Hotchkiss, U.S. and President of Brokerage Services. “This will result in the creation of new and innovative space at the initial ‘First Mile’ level, including mega distribution centers, and the ‘Last Mile,’ where there is already a proliferation of e-fulfillment distribution centers on the edge of urban areas.” Via marketwired.com
SMEs not sold on ASEAN Economic Community vision: Survey
The ASEAN Economic Community is weeks from becoming a reality, but ahead of its inauguration by year-end, some smaller companies remain concerned about obstacles that may still stand in the way of the US$2.4 trillion market.
Ninja Van is among those companies. The Singapore logistics firm is less than two years old, but it is already a big player in e-commerce transactions here. Ninja Van helps retailers deliver parcels to consumers by providing that crucial “last mile” to their doorsteps. To keep its blistering pace of growth of 30 to 40% month-on-month, Ninja Van has expanded to Malaysia and Indonesia, and plans to enter Thailand, Vietnam and the Philippines next year. Ninja Van’s segment of the logistics business – the so-called last mile – is one area that will be further opened when the proposed ASEAN Economic Community comes in force. Via channelnewsasia.com
The last mile is both the dream and the curse of e-commerce companies across Southeast Asia. As the region’s consumers become more comfortable with online shopping, there are challenges but also opportunities for logistics companies to grow their business. E-commerce companies and VCs certainly hope that’s the case.
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