E-Commerce Changes Supply Chain Logistics
18 Apr 2018
The E-commerce boom and customer demand for same and next day delivery have forced E-commerce companies and their logistics partners to adapt both their warehousing needs and delivery model to remain competitive in this rapidly changing industry.
Prior to the rapid expansion of E-commerce, large retailers did not have warehousing and logistics networks in place which could deliver goods from any point in the country within a twenty-four-hour period, which is now becoming the new standard of customer expectation.
The time taken from warehouse to customer via retail outlets was not the primary consideration when assessing the location of warehouses, with cost being of greater concern. Now if E-commerce companies want to remain competitive, the location of their warehousing and logistics network, facilitating next day delivery throughout the country, is of paramount importance.
In Bangkok, the concentration of E-commerce company warehousing is in and around Bangna-Trad Road from Kilometre 15-23. This area has become the prime logistics hub in the country providing an ideal location with good transport links to the airport, from Laem Chabang Port and into Bangkok and the surrounding provinces.
Bangkok remains the largest market for E-commerce companies in Thailand and they manage their countrywide logistics out of central warehouses in the Bangna Trad area, supplemented by smaller drop off and pick up points across the country. Major E-commerce and logistics companies namely, Lazada, Shopee, Aden, Pomelo, Central Group, Kerry Express and DHL Express Thailand, have facilities located in this area.
James Lamrock, Vice President of Regional Operations at one of the newer E-commerce companies, Pomelo Fashion commented that "E-commerce businesses in the (SEA) region are growing extremely fast, in order to keep up with increased order volumes and assortment expansion, requirements are generally shorter duration leases and flexible lease terms - while individual space leases may be of shorter duration than traditionally expected, fostering these relationships can be extremely valuable in working with the tenant as they grow into needs for larger or even multiple fulfilment locations."
Pomelo’s space requirement in 2018-2020 has increased fivefold since 2014.
Adam Bell, Head of CBRE’s industrial and logistics property team believes that over the coming years, the continued expansion of Thailand’s E-commerce businesses will not only drive demand for logistics space but also see ongoing changes in the supply chain, logistic operations of E-commerce companies and their logistics partners as E-commerce strategies and concepts develop.
While Thailand’s E-commerce is still at the early stage, more firms are likely to offer wide range of E-commerce concepts and strategies to adapt to the ever-evolving needs of a consumers.
An article written by Pobporn Svetasobhana, analyst, CBRE Research & Consulting, CBRE Thailand for Bangkok Post dated 18 April 2018.