Logistics and transportation providers like UPS, FedEx, and DHL are continually investing in capabilities that enable e-commerce merchants to meet growing global demand. Their incentive: on a global scale, cross-border e-commerce is expected to exceed US$300 billion with 130 million cross-border online shoppers by 2018, reports Paypal.

Market analysts are even more optimistic about the Asian market, especially China. According to EMarketer Inc, e-commerce in China is projected to reach US$1.01 trillion in 2018, more than doubling from US$426.3 billion in 2014. China’s National Bureau of Statistics indicates that online shopping accounted for 10.7% of total retail sales in China in 2014.

A study released by UPS and comScore Inc. entitled UPS Pulse of the Online Shopper states that China became the world’s leading e-commerce market in 2013. It also suggests that total online transactions are projected to total US$540 billion in 2015. Analysts predict China’s e-commerce market will be larger than those of the US, Britain, Japan, Germany and France combined by 2020.

“While the online shopping revolution might have started in the United States, this is one consumer trend that will hit its zenith in the East,” says Daryl Tay, director of enterprise product strategy, UPS Asia.

The UPS study also indicates that along with e-commerce, mobile commerce (or m-commerce) is a booming trend. 

“The growing popularity of m-commerce in China aligns with the trend we’re seeing: the consumer’s desire for greater flexibility,” says Richard Loi, president of UPS China. “Delivery speed and alternative delivery options are two key differentiating factors for online businesses to succeed in the ambitious growth of e-commerce in China.”

Developing trends

Creating personalized e-commerce experiences and providing alternate delivery locations (ADL) are helping retailers boost customer satisfaction. In fact, the Asia segment of the UPS/comScore study reveals that online shoppers want alternative delivery locations and payment options. It also indicates that mobile is a catalyst to omnichannel shopping and suggests that retailers should address limitations. The study points out that free shipping is still important along with a greater emphasis on returns.

“While Asian consumers still prefer to have the majority of their online orders delivered to their homes, there is a growing trend for ADLs – 45% of respondents indicated a preference for ADLs, the highest amongst counterparts in Europe, Mexico and North America,” said Tay.

According to the survey, Asia leads all markets with 45% of respondents stating they prefer to have their online orders delivered to locations other than their home. When they are unavailable to sign for a package, 33% said they want their items shipped to a local retail location authorized to hold packages for pickup at their convenience.

These locations are a popular choice for Hong Kong online shoppers (47%), but the least preferred in China (27%). Half of Chinese online shoppers prefer to have their packages shipped to another location such as their office.

“Together with insights gathered from working with customers in the retail segment, the kind of data gathered in the study enables UPS to offer tailored solutions with multiple perspectives,” Tay says.

For example, in December 2014, UPS launched an exclusive partnership with 7-Eleven that saw select outlets at Shell petrol stations across Singapore serve as ADLs for UPS packages. “This enhanced service was driven by the growth in e-commerce and online, cross-border transactions as well as the need to offer customers in Singapore greater control over their shipments by providing them secure and convenient delivery alternatives,” Tay said.

Cross-border trade

As a partner to some of the major online retail merchants globally, UPS regularly assesses industry trends, and works closely with its customers to develop innovative solutions to address challenges and enable growth. For example, UPS formed a strategic alliance with Alibaba.com in 2010 to support AliExpress. “And as with all our retail customers, we continuously look at ways to enhance the user experience for end-consumers,” Tay adds.

According to Tay, however, one of the biggest barriers to improved logistics performance in international trade is the time and cost of crossing and transiting through international borders. This can add greatly to the cost of trade. 

“The World Economic Forum’s Enabling Trade Report 2013 estimates that lowering supply-chain barriers could increase e-commerce cross-border trade by as much as 60%-80%,” he said.

Consequently, UPS engages with Customs authorities around the world to share best practices and jointly look for ways to reduce the barriers to trade. “For example, UPS’s close cooperation with Chinese Customs  to ensure the implementation of the Cross Border E-Commerce clearance channel, a standardized clearance management system to smoothen the import of e-commerce shipments, has benefited our online retail customers who do business in China,” Tay said.

Other efforts

Other companies have their eye on online retail customers in China and are jumping on the e-commerce bandwagon.

In July, DHL eCommerce announced that it was expanding its operating in China by focusing on cross-border and domestic e-commerce services. In doing so, the company launched a new DHL eCommerce Shanghai Terminal in Jiuting. The Terminal functions as a central point of consolidation of e-commerce goods from China for global distribution.

Additional plans call for launching additional drop off centres in North and South China by the end of 2015.

DHL eCommerce already operates its own centre out of Hong Kong. The Shanghai centre is expected to reduce transit times by up to three days for manufacturers, particularly in eastern and northern China.

While Alibaba mainly caters to businesses seeking to buy wholesale goods, Tmall, which operates as an independent business under the Alibaba Group, offers a portal for sellers seeking to market goods directly to Web shoppers in China.

Last year, Alibaba began a US$1.6 billion programme to build 1,000 county-level and 100,000 village-level Taobao service centres to provide e-commerce and logistics services to underdeveloped parts of China. Taobao, also founded by the Alibaba Group, is China’s largest consumer-to-consumer online shopping platform.

In July, Wal-Mart Stores Inc. took full ownership of Chinese e-commerce firm Yihaodian.com by buying out the 49% stake that it did not already own to accelerate its push online. The investment will help Wal-Mart target China’s fast-growing online market at a time when largely brick-and-mortar retailers are feeling the pinch of competition from online rivals.

The move was made possible by the Chinese government’s change in policy in June that now allows full foreign ownership of some e-commerce businesses. The goal is to encourage foreign investment and the development and competitiveness of the sector.

Also in July, Unilever extended its partnership with Alibaba to boost its consumer products sales in China’s less developed regions. In 2014, the company opened a store on Tmall Global. This makes it possible for the overseas retailer to sell and deliver goods directly to Chinese consumers online via government-based free trade zones and China-bonded warehouses.

In March 2015, Amazon.com opened a store on Tmall.com in its effort to reach Chinese shoppers. Imported food, shoes, toys and kitchenware are listed on Amazon’s store.

Echoing Amazon’s model is Beijing-based JD.com, which has been called China’s other online goliath. JD buys goods from manufacturers and distributors and holds the inventory in its own warehouses. Besides investing in warehouses and order-fulfilment centres around China, the company operates its own fleet of trucks and more than 20,000 couriers for quick delivery in China’s big cities.

By Karen E. Thuermer

Correspondent | Washington