Digital adoption has changed consumer behaviour, with more turning to online channels rather than shopping at brick-and-mortar stores. As the COVID-19 pandemic persists, disruption to traditional, physical retail and distribution channels will continue. As the internet economy burgeons, manufacturers and retailers are building up their online presence to engage in omnichannel distribution and engagement.
The establishment of e-commerce channels has profound impacts on business processes, from supply chain management to logistics and fulfilment. From our conversations with ASEAN stakeholders, enterprises which have adopted digital solutions managed to remain competitive, while traditional businesses have had to pivot and adopt digital solutions quickly to remain sustainable.
AIBP ASEAN Enterprise Innovation Survey 2020
Shifting to omnichannel entails the need to deal with multiple distribution channels, which requires changes to business operations both on the customer front and across the supply chain. How can businesses evolve to keep up with the rapidly changing business environment and consumer preferences? We delve into the trends in e-commerce and customer experience, as well as the various innovations and partnerships that businesses may explore.
Establishing Online Presence with e-Commerce
Changing consumer demands and habits will also allow the e-commerce industry to grow exponentially as the number of internet users in Southeast Asia burgeons.
Source: eConomy SEA 2020 report by Google, Temasek, and Bain & Co.
Enterprises will have to look towards online channels to increase the customer reach and remain competitive. This may be achieved through various means, including social media, online marketing campaigns, as well as partnerships with online marketplaces and e-commerce enablers.
Established retailer Central Group shifted online and created their own application in response to evolving consumer habits. Thanh Truc Tran Ngoc, Head of Customer Experience highlighted the importance of personalised recommendations and marketing targeted products to segmented customers.
In Singapore, Marina Square Shopping Mall worked together with Lazada to help 30 stores go online by creating a virtual replica of the mall. Leveraging Lazada’s e-commerce marketplace provided physical retailers with the opportunity to attract more customers amidst changing consumer habits.
Enterprises may choose to establish proprietary e-commerce websites, partner with e-commerce marketplaces or make use of social media. The key lies in aligning their business to suit new customer preferences and offer convenience to support their business outcomes.
Omnichannel Distribution Management
With omnichannel comes complex supply chains that entail an integrated view of the end-to-end supply chain from supply and demand planning to warehousing and last-mile delivery.
Some enterprises may choose to build up their in-house capabilities while others may engage in partnerships with e-commerce and logistics providers. At Luxasia, Satyaki Banerjee, Chief Operations Officer, shared how the company’s pivot towards e-commerce and omnichannel retail eventually resulted in setting up an e-commerce enabler for brands to get into e-commerce. On the other hand, Kino Indonesia attempted to set up their own warehouse but eventually realised that enterprises should also consider technology partnerships and e-commerce enablers for warehousing and inventory management and forecasting. This allows for retailers to focus on business strategies and growth.
Third-party logistics (3PL) service providers are engaged to support businesses in managing inventory, warehouses and delivery fulfilment. Fourth-party logistics (4PL) service providers oversee the entire supply chain for manufacturers. For example, Go-Fresh GoJek in Indonesia engaged 3PLs to handle large orders that GoJek riders are unable to deliver, allowing them to efficiently fulfil their orders. (Insights Logistics quote
For businesses engaging in e-commerce without physical stores, or having difficulty handling massive orders, 3PLs will support them in managing their inventory and providing logistical support to ensure smooth business operations.
Logistics and e-Commerce Services in SEA (Source: TechinAsia)
Customer Experience for the New Consumer
Successful omnichannel operations require businesses to engage their customers more than ever. Communications technology has enabled enterprises to reduce distance to the customer with chatbots equipped with AI functions. While communication tools like chatbots can increase a customer’s accessibility to assistance and communications with customer service, there are instances where customers will still require human assistance. Automated chatbots may handle basic requests and queries, allowing for efficient problem solving, and ultimately serve to improve customer satisfaction and retain customer loyalty.
In Thailand, Charoen Pokphand Foods (CPF) uses chatbots to handle 80% to 90% of the problems that their customers have. These chatbots were made accessible from their mobile phone, making them convenient for the users and reduced time lags.
Agile and Visible Last-Mile Deliveries
Enhancing the customer experience by providing them with visibility of their orders allows for greater transparency between businesses and their customers. Customers are kept informed of their delivery status, and any losses and delays during order fulfilment may be minimised. Constantin Robertz, Co-Founder & CEO of LOCAD highlighted a key challenge posed by omnichannel retail - the availability of inventory to fulfil orders from multiple sales channels.
ASEAN e-Logistics pioneer NinjaVan allows for algorithmic allocation of deliveries and real-time tracking of shipments. With big data analytics, NinjaVan was able to revolutionise the way B2C business was conducted. This successful implementation of shipment-tracking shipments has increased the efficiency of order fulfilments while enhancing the customer experience.
The Way Forward
An online presence is becoming the norm for enterprises looking to reach a wider customer base today. Technology like AI, ML and big data analytics incorporated into business processes for e-commerce and omnichannel distribution and retail will reinforce the online presence that enterprises are prioritising today. It is important that enterprises explore their options in digitalising towards both excellent customer experience and back-end supply chain management and distribution.
We will be delving deeper into the challenges and outcomes ASEAN enterprises are facing on their journey towards omnichannel retail and distribution at the upcoming AIBP Focus discussions in June and July: