Ecommerce businesses are sprouting rapidly in Singapore. In the recent years, there are new Ecommerce businesses entering the market each year. Huge interests to join the Ecommerce market are fueled by the strong demand in Ecommerce shopping, or otherwise known as online shopping, by Singaporeans. This strong demand in online shopping is projected to increase at a steady pace in the future as Singaporeans become more comfortable with online shopping. Online shopping have distinct competitive advantages as compared to retail shopping – cost savings and convenience.
As Ecommerce businesses grow, their operations grow as well. One particular operation that will be increasingly tedious and complex for the Ecommerce businesses is the logistics handling and delivery. It is not easy to sort and distribute the items to a large number of residents in Singapore daily. Many Ecommerce business have thus, seeked Ecommerce delivery solutions from logistics providers in Singapore. As Ecommerce businesses grow, the logistics providers benefits and grow as well.
Some people say that these Ecommerce businesses that chose to outsource their operations to logistics providers have chose the easy way out. They even commented further that if the Ecommerce businesses handled the logistics and delivery tasks themselves, they would save money in the long run. I wouldn’t disagree with the first comment – which business do not want to make their operations and processes simpler and straight-forward? It will be a smart move to make things easier. However, I will have to disagree with the second comment that Ecommerce businesses can save money if they handled the deliveries themselves. No matter how big the Ecommerce business’s delivery volume is, they will still pale in comparison with the logistics provider’s delivery volume as the logistics provider consolidates mass delivery volume from various businesses. Hence, the logistics provider will be able to achieve an economy of scale that allows them to sell at a price even lower than the cost of delivery for the businesses that choose to conduct the deliveries themselves. Since it make financial sense to outsource the operations, I do not see why the companies shouldn’t do it. Besides, they will be able to save a lot of effort and time if the delivery operations are outsourced. It is operationally sensible as well.
I guess many Ecommerce businesses understand this. That’s why they chose to outsource the logistics operations to the logistics providers in Singapore. It is definitely a win-win situation for both businesses.