Supply Chain Edge

Executive's Edge

Alibaba Is Making Moves in Southeast Asia

Alibaba will learn a lot about logistics as it builds its own logistics network in China, referred to as the Rookie Network (read the July issue of Asia Supply Chain Edge to learn more about it). The Rookie Network is no surprise—after all, in 2012 Alibaba founder Jack Ma said “terrible” logistics were slowing the growth of Internet retailing in China. Sources say Ma has spent eight to 10 years building the concept.

But Alibaba cannot wait for the Rookie Network to mature before venturing into international markets. Southeast Asia is particularly challenging due to the complexity 
of cultures, languages, governments, and geographies of the region. The Association of Southeast Asian Nations (ASEAN) region is made up of 10 countries and far more languages. It is geographically dispersed, with Indonesia alone having 17,000 islands. Therefore, it would be to Alibaba’s advantage to find a partner who already understands these complexities.

Partnership with SingPost
We know that Alibaba is all about partnerships, so it is no surprise that it has connected with a well-established logistics partner, Singapore Post (SingPost), in order to reach Southeast Asian consumers. With a 10.3% investment in SingPost for $249 million,
Alibaba greatly improves its access to Southeast Asia through a number of e-commerce
and logistics solutions that have already been developed.

SingPost overcame a recent decline in postal delivery by increasing its investment in
e-commerce. Now 26% of its total business is in e-commerce. This new focus is not just
a minor repositioning, but also a vision to become the leader in e-commerce services for 
all of Southeast Asia. Alibaba’s investment is seen as a means to bolster this growth, increase the customer base, and build a cooperative platform. It’s clear that Alibaba is making moves to become a true global leader. Find out just how strong of an impact Alibaba will have by watching my video, The Alibaba Effect.

Alibaba’s Opportunities with SingPost
Take a look at some of the SingPost existing offerings in which Alibaba can capitalize on:

  • vPost: This was SingPost’s first foray into e-commerce in 2003. It provides a virtual address in a foreign country to receive e-commerce deliveries which are then forwarded to the customer in Singapore.
  • POPStation: Network of lockers for order pick-up throughout Singapore.
  • Provides online booking for international parcels, which are then delivered by Speedpost (SingPost’s worldwide delivery service). This service is being promoted as an opportunity for small and medium enterprises to reach international markets.
  • SP eCommerce: Two-year old subsidiary which provides turnkey e-commerce solutions covering all of Southeast Asia.

SP eCommerce stands to gain the most from Alibaba’s involvement. Currently, SingPost 
can help build your brand storefront or sell your products on its own website (Omigo), however it is still in beta version. This is a website exclusive to Singapore, but it provides
a simple option for brands to put their products on a “forward marketplace.” Alibaba will 
no doubt be able to significantly develop this marketplace.

Competitive Advantage for Alibaba
What Alibaba stands to gain from the most is SingPost’s experience with the diverse Asian cultures in the region. The differences in languages, legal systems, and financial practices affect payment methods, delivery expectations, tax and currencies, etc. SingPost also has an existing warehouse network, including 12 fulfillment centers in Asia as well as regional distribution centers in the U.S. and U.K. Alibaba will also benefit from their three 
multi-lingual call centers in Singapore, India, and the Philippines.

There are no competitors at this point in time who have the comparable capabilities of the Alibaba-SingPost partnership. We can anticipate that this partnership will create a dominant e-commerce platform for Southeast Asia.

Don’t forget to watch The Alibaba Effect to dig deeper into this topic. For more on the evolving consumer landscape in Asia, pre-order your copy of the book China’s Super Consumers by Michael Zakkour and Savio Chan.

Best regards,

James A. Tompkins

Jim Tompkins
CEO, Tompkins International

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Tompkins International
Tompkins International