SP eCommerce takes retailers & brands online at Cloud-enabled speed

Retailers and brands looking to establish an online presence quickly and efficiently without having to invest in heavy infrastructure and set-up cost can do so by outsourcing this to an e-commerce enabler.

One such service provider is SP eCommerce (www.specommerce.com), a business unit of Singapore Post Ltd (SingPost). SP eCommerce was set up two-and-a-half years ago to do just that, said its CEO, Marcelo Wesseler.

“Our main aim is to help brands and retailers with their online presence across the Asia-Pacific — to help not only brands that are within Asia but also brands coming from the US and Europe to Asia,” he told Retail Asia.

Within a span of 30 months, SP eCommerce has secured more than 1,000 businesses, both global and regional brands as well as local companies. In addition, it serves more than 1,000,000 registered B2C customers in Singapore.

Brands and retail groups which have entrusted their online sites to SP eCommerce include Adidas, Levi’s Singapore, Levi’s Korea, Muji, Triumph, Toshiba, Canon, Philips, Norbreeze, Xiaomi Inc, Deckers Outdoor Corporation and JRunway

“We manage their entire IT infrastructure, taking care of everything that each customer needs,” said Wesseler. Th is begins with developing their e-commerce site (which then runs under their own dot.com) to seamlessly managing the creative content, the products, even the advertisements, traffic, payment, fraud control, warehousing and fulfilment to last-mile delivery of orders.

Online retailing in South-east Asia is at its infancy. In percentage terms, online retailing is a mere 1% of total retail volume today compared to 15% in South Korea and 10% in China where it was just 2% four years ago.

Potential of e-commerce "humongous"

’Wesseler believes the potential for e-commerce in the region is “humongous”.

He projected that online retailing could reach 10% within the next three years. He expects the fastest online growth to be in apparel and mobile devices. “We also see very good traction in supplements, cosmetics, toys, baby products, and even lighting,” he said.

SP eCommerce has expanded its product offerings with the launch of ezyCommerce in April this year. Developed together with SPRING Singapore and IDA (Infocomm Development Authority), it is “a fully integrated end to-end e-commerce fulfilment solution to help small and medium enterprises (SMEs) and small retailers in Singapore to kick-start and/or grow their online business”.

Using a cloud-based platform, ezy-Commerce automates the order-to-fulfilment cycle, enabling SMEs to outsource their inventory management and order fulfilment.

“We have very good pickup and the response has been significantly more than we have expected,” said Wesseler. “First, we want to make sure that the local SMEs can sell overseas.

“They put their products in our warehouse and we can distribute their product catalogues, for example, to Amazon in the US and also to local marketplaces such as Lazada and Rakuten in this part of the world. Th is allows them to go online very, very quickly without having to invest too much in their own site and infrastructure.”

SP eCommerce is ready to market ezyCommerce in the region, beginning with Australia in June, followed by other South-east Asian markets within the next three months, Wesseler confirmed.

Also, gearing up for the future boom in e-commerce in South-east Asia, SingPost is building a S$182-million (US$135-million) regional e-commerce logistics hub. Located in Tampines, Singapore, the three-storey 553,00 sqf hub is expected to be operational by the second half of next year. The company stated that the facility will feature “some of the most technologically advanced and innovative automation systems which will significantly improve productivity and lead to lower cost and higher  operational efficiency”.

Using the Cloud 

On using Amazon Web Services (AWS) as SP eCommerce’s strategic underlying infrastructure, Wesseler said they started “from day one with AWS”. He cited affordability, flexibility, scalability and speed as some of the benefits of leveraging the AWS Cloud solution.

“It has significantly lowered our cost and it allows us to test and learn very quickly without necessarily spending a lot of money in the process. We are able to use the same infrastructure to roll out multiple sites across the region.”

The scalability that comes with the infrastructure is also another essential factor in the e-commerce environment. One of the key value prepositions for SP eCommerce is that with the AWS Cloud infrastructure, it is able to launch a brand within three months of signing the contract. In some cases, it took less than three months. Time-to-market is critical for retailers and rands, said Wesseler.

With this cloud-based infrastructure, SP eCommerce has quickly established itself as a full service e-commerce enabler that provides global and regional brands with an end-to-end managed online solution. It is a fully inter-connected service managed by three development teams based in Singapore, the US and India, and backed by an extensive fulfilment and logistics network of 24 distribution centres in the region and beyond.

What’s trending on the online retail stage

Asked to share insights into some key trends in online retailing, Wesseler identified three: O2O (Online2offline) commerce; mobile; and omni-channel retailing.

O2O commerce: O2O has been in existence some time although not all retailers may be aware of it, he said.

“It is already happening without the retailer necessarily knowing it,” he pointed out. “If you look at the purchasing behaviour of consumers, you will find that a lot of people actually start by researching online first before they make their purchase. And then, they might buy online or they might buy offline. A lot of cases they still buy offline, especially in South-east Asia. But the research definitely happens online.”

Mobile commerce: With countries in the Asia-Pacific region accounting for more than half of the world’s mobile phone subscribers (1.7 billion unique mobile subscribers), mobile commerce is an important trend, according to Wesseler. A retailer’s site needs to be a mobile-responsive or ‘mobile-first’ site to cater to this growing consumer segment.

In its Advisory Report 2015 — Developing e-commerce Market Entry Strategies in Asia-Pacific, SP eCommerce recommends online retailers to “offer fully mobile-optimised sites and experiences that go beyond being ‘mobile friendly’”.

There is a marked difference between a mobile-first and a mobile-friendly site. The latter “simply makes a website viewable on a smartphone, requiring cumbersome scrolling or zooming, [while] a mobile-optimised website loads easily with content scaled for efficiency”.

The report suggests adding mobile commerce best practice features such as geo-location to direct customers to the nearest off -line store, incorporating mobile product videos; optimising product image galleries and including social media share buttons.

Omni-channel: The third significant trend, according to Wesseler, is omni-channel  retailing whereby “the consumer has the same experience online, as well as offline.

He said: “One of the advantages that traditional retailers have versus pure online retailers is their customer acquisition is actually cheaper. If you look at the P&L of e-commerce companies, their biggest expense is marketing. Marketing and logistics are the big expense items.

“It is difficult for an e-commerce operator to drive traffic to the site if nobody knows it. If you are on Orchard Road, you get natural traffic. That doesn’t necessarily happen online. So, because of that, marketing is so expensive… there’s something called the customer lifetime value, so you spend a certain amount to acquire a customer and the customer has a certain lifetime value.”

He said that offline retailers need to convert their customers to become online customers as well. “There’s a huge opportunity especially for a Singapore retailer because there are a lot of tourists here, so a lot of shoppers who go to Orchard Road, they probably visit the store once a year or even less. If they [the offline retailers] can capture that customer data and convert them to online, it translates into a huge business opportunity for them.”

According to Wesseler, the Omni-channel trend is currently happening in more mature markets such as Singapore, Hong Kong and South Korea, and mobile is gaining market share in emerging countries like Thailand and Indonesia, while O2O is happening in pretty much every market.

Biggest Challenge:  Aside from key trends, Wesseler also pointed to a looming challenge for retailers in this region. The biggest challenge for retailers here is not competition from the store next door or the fear that online sales would cannibalise a store’s offline sales, he said. It is the competition from other regions.

He elaborated: “We have interviewed many of the businesses listed in the Top 500 Internet Retailers in the US, and more than 70% are actually planning to come to Asia without a physical footprint. So, they ship from US directly to South-east Asia. A good example is Amazon.com. You can now get a lot of products from Amazon with free shipping to Singapore which is great for consumers but if you are a retailer, what that means to you is that your closest competitor is not the guy in the mall next door.

“If you are in Orchard Road, it’s not the guy in the Paragon; it’s actually in the US, in China … it’s anywhere in the world except your neighbour. What retailers need to realise is that they’d better get ready for this; otherwise, they will probably face huge challenges going forward.”