arvato_magentocom (china)_2014
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eFulfilment Supports eCommerce Growth in Asia
Presentor: Coy Zhang Director, Global Business Development Coy.Zhang@arvato.com Phone: +86 136 0043 9718
1.arvato overview
2.Challenges & Approaches
3.Reference Cases
4.Summary
Agenda
arvato – a global supply chain and BPO service provider
Warehouse space
>11.8m sqft
Global locations
110+
Call Centers
45+
Revenue
4.4 € millions
Employees
66,410
arvato China: Shanghai
20 000 sqm Footprint
86 Employees Headcount
Customers
References – Consumer Goods
1.arvato overview
2.Challenges & Approaches:
3.Reference Cases
4.Summary
Agenda
Global Brands are going local, Local Brands are going global
Major topics
eFulfilment in domestic China
Cross-border eFulfilment
eFulfilment in Southeast Asia
Market status
• Coastal areas (14% in size) have 41% of the populations and 60% of the GDP • 3 hours circle by air can cover 2/3 of China
• Concept of Tier 1-6 cities
• Fragmented logistics market
eFulfilment in domestic China
Challenge – 1
Hard for forecast new market? new channel? high volume (SKU) mixing low inventory
eFulfilment in domestic China
Different ways to try
Leverage the experience of suppliers
Put together the B2B warehouse and B2C warehouse Reduce inventory level Easy for replenishment Improve the in-stock availability
eFulfilment in domestic China
Challenge – 2
Poor logistics performance
eFulfilment in domestic China
Customer Satisfaction is Our Goal?!
Challenge – 2
Poor logistics performance
• Key is in delivery • Face-to-face contact with consumers • COD process • Return process
eFulfilment in domestic China
Transportation suppliers
FedEx/SF Yuan Tong ZJS EMS
Delivery time 1-3 days 1-5 days 1-5 days 1-7 days
Cost High Low Low High
Delivery area Tier 1-3 cities Tier 1-4 cities Tier 1-4 cities National
COD settlement High service level
POS service /
Available but not many
POS devices
Available but with bad
debt
Flexibility Standard Service Medium High Low
Advantages High quality Higher service level in
SH/JS/ZJ
Provide customized
service
Wide range of delivery
areas
Disadvantages Coverage limited No COD service Coverage limited Service quality
Long lead time
eFulfilment in domestic China
Challenge – 3
Emerging markets
eFulfilment in domestic China
60 and above
50-59
40-49
30-39
20-29
10-19
Below 10
Countryside Urban
eCom market in China country side: CNY180 billion (EUR225 billion) in 2014 CNY460 billion (EUR575 billion) in 2016
Trend: • JD.com is pushing for new delivery standard
• Hi-speed train helps for distribution network
• Ri Ri Shun (Goodaymart) – country wise network
• SF Express, JD.com are expanding to country side
eFulfilment in domestic China
Cross-border eCommerce (Export)
Postal Service Fulfilled
from China Courier Service
Fulfilled from China Special Lane Service Fulfilled from China
Fulfilled from Overseas Warehouse
Delivery Time Long (15-30 days) Short (3-7 days) Moderate (10-15 days) Short (3-7 days)
Delivery Cost Low High Moderate Moderate
Inventory Risk Low Low Low High
East for Customs More difficult Difficult Moderate Easy
Tax Registration No need No need No need Tax registration is needed
Applicable Low value goods High value goods;
impatient customers Moderate Big volume
Cross-border eCommerce (import)
Major challenges • Customs process
• CIQ process
• Duty & Tax
Free Trade Zone is still an immature solution, but worth a try.
Key figures of the Malaysian market
Total Online Sales in €bn
Internet users (2014) 68%
(Ø T5= 79%)
Online buyers (2014) 18m
(Ø T5= 38m)
Online spend per customer p.a. (2014)
305€ (Ø T5= 1,099€)
Sources: Internetlivestats, VATlive, ADMA, ITU, Webcertain, Coface A1 (best), A2, A3, A4, B, C, D (worst)
0.7 0.9
1.1
1.3
1.6
1.8
2.0 2.3
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
2012 2013 2014e 2015e 2016e 2017e 2018e 2019e 2020e
17% CAGR
eCom of total retail (2014) 4.4% (Ø T5= 6%)
Mobile subscriptions, share of population (2013)
145% (Ø T5= 121%)
Mobile share of total internet traffic (2013)
20% (Ø T5= 10%) 10%
11%
12%
12%
13%
19%
20%
0% 5% 10% 15% 20% 25%
Film
Shoes
Gift for someone
Books
Healthcare
Clothes
Travel
What Malaysian Internet Buyers Buy Online, 2012 (multiple answers)
at least 10% below T5 on average at least 10% above T5
T5= average of Top 5 European countries (UK, DE, FR, IT, ES)
GDP per capita (2014) 7,813€ (Ø T5= 28,346€)
CoFace Rating (2013)
(creditworthiness)
A2
(Ø T5= A3)
VAT Sales/Service
Tax (5%-15%)
Population (2014) 30m (Ø T5= 64m)
Language Malaysian
Currency Malaysian Ringit
(MYR)
eFulfilment in Southeast Asia
Destination Country Origin
SG HK* SH** JP TH
SG SD/NBD 1 1 1 3
TH 1 1-2 1 2 SD / NBD
MY 1 1-2 1 2 2
ID 1 2-4 1 2 3
PH 1 1 1 2 2
VN 1 1-2 1 2 1
BN 1 4 3 2 5
AU 1 1-3 3 2 5
HK 1 SD/NBD 1 1 2
JP 1 1 1 1 - 2 2
KR 1 1 2 1 2
TW 1 1 1 1 2
IN 1 2-4 2 2 3
CN 2-3 1-2 1-4 2 5
* Custom clearance depends on actual clearance time and commodity type. ** Same day custom clearance for SH outbound if cut-off time of 11.00am is met.
eFulfilment in Southeast Asia
eFulfilment in Southeast Asia
Regional Hub Location: • Shanghai – China
• Hong Kong / Singapore - Southeast Asia
• Mumbai – India
1.arvato overview
2.Challenges & Approaches:
3.Reference Cases
4.Summary
Agenda
REQUIREMENTS • Manage multi-brand transactions for Luxury Beauty from a single
source.
• All orders from EC channels including official website, call center and other digital sales platform are handled by arvato
• Distribution to end users nationwide
ORDER PER DAY
2,000+
SKU ON STOCK
3,000+
• Integrated eCommerce solution
• Shop- and content-management
• Online Marketing
• Logistics fulfillment & nation-wide delivery management
• Online and mobile channel order processing
• Online payment and COD payment management
• Customer services
SOLUTION END-2-END
ECOMMERCE
INVENTORY ACCURACY
>99%
Reference Case – Multiple carrier strategy; integrated solution
REQUIREMENTS • T-mall platform setup
• T-mall online shop management
• Ecommerce operations
• 3rd Party e-commerce platform creative design
• Fulfillment and delivery management
Reference Case – Multiple warehousing strategy
ORDER PER DAY
200+
ORDER CUT-OFF TIME
4 PM
• Integrated ecommerce solution
• Shop- and content-management
• Online Marketing and online payment
• Logistics fulfillment
• Backend IT services
• Nationwide delivery management
SOLUTION END-2-END
ECOMMERCE
INVENTORY ACCURACY
>99%
REQUIREMENTS • Manage order related customer queries
via phone and email support
• Provide a reliable IT backend landscape with integration into webshop
• Enable client to benefit and leverage from proven infrastructure and solutions to increase net sales earnings
SHIP TO COUNTRIES:
SG, AU, MY, TH, VN, ID, BR, PH
ON-TIME DELIVERY
>99%
• Systematic country rollout across Asia Pacific to foster brand loyalty and increase net sales
• Customized fit-out for Garment-on-Hanger (GoH) inventory, high value accessories including “Gift-wrapping” packaging service” to suit fashion seasonality and complexity.
• Support the customer in their geographical expansion to meet the exponential growth of online ordering across Asia Pacific
• Setup fashion specific fashion warehouse including fitting and operation’s processes for distribution and returns management
• 24/7 TAPA compliance, temperature and humidity control environment, photography room
• Call Center Support – email, phone, OTSR
• SAP driven warehousing, distribution and return processes
• Results oriented partnership targeting cost reductions and revenue growth/ shop turnover
SOLUTION
Reference Case – eFulfilment Crossing Boarders in Asia
INSPECTION & PACKING
Packing Process
eCommerce is booming in whole Asia
Customers become more and more demanding (they won’t wait for too long)
Many different options in the market
Brands needs to find reliable partners who understands the whole value chain and the
detailed process.
Summary
Thank you for your attention!
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