E-commerce race logistics logistics investment

BW Industrial, a joint venture between Becamex IDC and global private equity fund Warburg Pincus on August 29, signed a strategic cooperation with Shopee e-commerce platform and integrated supply chain platform Best Inc. to develop logistics activities for e-commerce in Vietnam. Two warehouses BW Industrial provided to partners with a total area of ​​5 hectares in Ho Chi Minh City, increasing the number of warehouses for Shopee to 3 across the country to date.

Meanwhile, the first 5-hectare automatic warehouse includes 1.5 hectares of Best Inc. – a logistics service provider based in Hangzhou (China). Best Inc. has been invested by Alibaba, each day they handle more than 20 million delivery orders and expected to exceed 30 million orders by the end of the year.

Mr. Nelson Wu, general manager of Best Inc Vietnam, said Best Inc., invested in looking at the growth of the e-commerce market in Vietnam over the past time, along with a young population adapting to new technologies and platforms. Economic growth is stable. “Compared to regional markets, Vietnamese e-commerce has a lot of potential as a reason for our investment,” he said.

Mr. Tran Tuan Anh, General Director of Shopee Vietnam, said that Shopee has recently received deeper cooperation requests from brand partners to support them to develop an online sales platform, but the problem Logistics is a “dilemma for e-commerce.”

The operator of Shopee Vietnam said that logistics logistics solutions in Vietnam are still in the early stages, while the ability to meet the needs of orders for retail customers is limited, especially the system. Warehouse. “The logistics system is a premise for Shopee’s scale expansion and development when e-commerce is growing fast, especially shopping needs during peak periods,” Anh said.

Previously Shopee had connected buyers and sellers with the C2C model, the buying and selling process was not through a centralized warehouse or official distribution unit. However, this unit is moving to a B2C model, the way Tiki or Lazada has operated before. Traders believe that the central warehouse system is a way to improve order processing speed and reduce costs to gain an advantage in the e-commerce market.

In an interview with Forbes Vietnam , Tran Ngoc Thai Son, the founder and chairman of Tiki.vn also said that the application of logistics automation is not difficult but needs a large enough area and a large enough market. “Under 2 hectares, it is difficult to automate effectively,” Mr. Son commented.

According to the latest report of the World Bank research group in March, logistics costs in Vietnam accounted for approximately 21% of GDP, the highest in ASEAN. Despite significant improvement, from position 64 in 2016 to 39 in 2018 in the national logistics index, according to the World Bank, this cost is still a big burden for the economy, putting pressure on businesses. and the people.

Vietnam’s e-commerce platforms in recent years have promoted logistics systems to optimize performance and costs. Recently, Tiki also partnered with UniDepot, a warehouse and logistics provider to expand its capacity.

Lazada, meanwhile, also opened logistics centers in Ho Chi Minh City, Da Nang and Bac Ninh and announced it was an important strategy to increase customer experience.

Sharing with Forbes Vietnam , Mr. Tran Ngoc Thai Son said Tiki currently has 10 warehouses in 7-8 big cities with a total area of ​​over 10 hectares. “In order to increase the area, we have to find partners,” Tiki said and continued to seek cooperation opportunities to increase the warehouse system from 3 hectares to 10 hectares in 2019.

“If you look at logistics infrastructure in Vietnam, any company with a warehouse system of 15 hectares is among the top. Once increasing the area and application of technology, cutting intermediate stage Tiki believes that it can cut costs by half compared to the present, ”Mr. Son said.

Besides fullfillment centers, Tiki also has hubs (hubs) nationwide. Currently 99.9% of Tiki goods have to run through the fullfillment center, with the exception of some special products, such as motorcycles.

“In order to deliver goods in 2 hours, Tiki must have in stock to handle it promptly. In forwarding, logistics accounts for most of the time, therefore, order processing time must be shortened, ”Mr. Son explained and affirmed that expanding logistics capacity is also a goal for Tiki to participate deeply in. The logistics supply chain has a market size of hundreds of billions of dollars each year.

Euromonitor predicts that about 30% of Vietnam’s population will turn to online shopping by 2020. The Vietnam E-Commerce Association (VECOM) also forecasts that the market will reach US $ 13 billion by 2020. However, he said. Nguyen Ngoc Dung, vice chairman of VECOM, said that the current growth of e-commerce also raises many problems.

Logistics activities did not meet the demands of e-commerce companies. In terms of supply capacity, professional companies are estimated to serve only 30% of the order volume. “Except for large companies, small companies mostly use technology car-hailing services. That is unreasonable in e-commerce, ”Dung said and said that” logistics investment is an important factor determining success in e-commerce “.