South East Asia to see e-fulfilment boom and significant warehouse automation

South East Asia to see e-fulfilment boom and significant warehouse automation

16 June 2021

  • asia ecommerce

 

Across the world, e-commerce is booming. According to a new report by payment provider PPRO, the South East Asia region will see e-commerce growth of 5.5% in 2021. Singapore, Malaysia, Indonesia, the Philippines, and Vietnam will be the top five South East Asian markets leading the charge for growth over the coming year.

Analysts such as Kantar are forecasting that e-commerce sales in South East Asia will grow from $62 billion in 2020, to $172 billion by 2025. For instance, in Singapore where locals traditionally bought their groceries in physical shops or markets, now 70% of people are doing their food shopping online. In Indonesia, 55% are buying online more frequently – including medicines and cosmetics - all spurred on by the Covid-19 pandemic.

Generally business owners in South East Asia are feeling positive about future growth prospects, with 63% saying they are optimistic about the future. It is one reason why strategic alliances among the larger operators are now so sought after among the e-commerce giants in Asia, like Alibaba, Shopee, Lazada and Tokopedia. According to data from iPrice Group, Shopee was the most-visited site in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam in the third quarter of 2020. Only a year earlier, Lazada was number one in the Philippines, Singapore and Thailand, while Indonesia’s most-visited site was Tokopedia.

Spurred on by the Covid-19 pandemic, one of the hottest trends to emerge is q-commerce (quick commerce), especially in grocery retailing. Alongside this is the trend for micro-fulfilment, whereby delivery of goods to consumers can be accelerated by using smaller, urban micro-fulfilment warehouses designed to cater 24/7 for an intensively populated area. These new sites are more likely to be run using automation than paper, as products must reach consumers in the most efficient way possible within hours rather than days. For instance, one of Singapore’s best known online grocery specialists, RedMart, now offers an early morning breakfast delivery slot for customers.

Being able to fulfil these rapid delivery grocery e-commerce orders - especially in a region known for its hot weather – is creating a new range of specially equipped micro fulfilment centres. These can be small, urban dedicated warehouses serving a ‘spoke and hub’ distribution model for multiple outlets or in some cases, in the backs of the physical stores themselves. In the latter example, this can prove distracting for the store and a dedicated e-fulfilment operation is typically the most effective.

Using best of breed automation technology such as warehouse management system (WMS) software, e-fulfilment sites can operate highly efficiently with minimal floorspace and human intervention. Stocks with limited shelf life can be rotated automatically to minimise any wastage and goods located and scheduled for customer delivery in minutes. It is far less costly than operating a large central distribution centre run by robotics and full automation. In densely populated South East Asia it is a far more flexible and viable business model.

There are three principal requirements for an efficient micro-fulfilment operation. They are as follows:

  • Tight integration with an e-commerce storefront such as Shopify or Magento, to ensure that order picking and delivery scheduling occurs the instant an order is placed.
  • Real-time visibility of stock availability to ensure that the customer ordering is not disappointed with an out of stock item or served a replacement. Customers need to see what is available and be confident they will receive those items.
  • Efficient warehouse management, ensuring that once ordered, the right stock items can be located by pickers quickly and scheduled out for delivery. Fulfilment of e-commerce orders is more time consuming than traditional bulk shipping, so having a technology solution like a WMS that will support multi-order picking simultaneously is a sound investment.

In addition, for cold chain environments handling frozen and highly perishable items - like fresh food and medicines - having the ability for pickers to work hands free using voice directed technology is a further advantage. It means stock orders are spoken to the operators allowing them to work more quickly and efficiently.

There are many benefits to investing in WMS software for your e-fulfilment warehouse or facility. A WMS will ensure that operations can run efficiently / accurately with minimal staffing required and it helps to provide a Covid-19 safe and comfortable working environment for e-fulfilment operatives.

According to Bain & Co the long-term outlook for South-East Asia’s digital economy is very robust with consumers placing ‘greater trust in technology’ and market forces ‘creating significantly greater online supply’. It means that e-commerce will see permanent growth in the region. Given the commercial opportunity presented by e-commerce across South East Asia, the return on investment in a WMS can often be recouped within 12 months or less and we expect a positive outlook.