‘We have start-up DNA to be agile and nimble’

What is the potential of ASEAN and how important is e-commerce in the development of trade and consumer spending in the region?

The first thing to recognize is Singapore's legacy, its history as a trading port for not only ASEAN but also for the rest of the world. It all started 200 years ago and, today, it is still interesting and very relevant. People started to come through Singapore either as a destination market, or as a trans-shipment port or airport. They still do so today as we connect the world from a product perspective and from a digital perspective.

When it comes to e-commerce, the focus needs to be around the digitalization of the business. That is what makes the e-commerce model work. When you look at a 2016 Euromonitor study, e-commerce was 7% of global trade and it is predicted to become 17% by 2021.

Southeast Asia was going to be one of the top three regions that would drive that growth.There have been similar studies that talk about how Asia-Pacific’s share of global e-commerce sales will rise from 52% to 67%. AP is booming, and Southeast Asia is a key component of that growth. When you look at Singapore's geographical advantage in terms of being able to connect quickly into Malaysia, into Indonesia, into Thailand, into Vietnam, we are very well-placed to act as a partner for companies operating in this area. We can take a lot of the technology innovations that we have developed over the last couple of years along with some we are still developing. We can actually help develop technologies in some of those other countries as well. We can do the front-end of the supply chain: all the way from source right through delivery and into market. Either we have our own infrastructure within the country or we may work with partners. For instance, in Indonesia, we work with partners to do distribution.

The timing is good as well because Singapore is chair of ASEAN this year; and in the postal world, Singapore is hosting the ASEAN Postal Business Meeting. As vice-chair of the meeting, SingPost will help shape how the region’s postal organizations can work more closely together. We are very excited about a new e-commerce-specific ASEAN postal product called ePac that we launched early this year and is now starting to take off.

Postal organizations have a huge part to play in e-commerce. About 70% of all e-commerce packages are under 2 kilos in weight. About 36% of all e-commerce is under 26 euros, roughly $40 Singapore dollars in value. Therefore, you need very low-cost infrastructure to deliver these packages and to do so successfully. With their mail delivery networks, postal organizations tend to have the lowest cost delivery infrastructure in each of the countries in which they operate. They have the scale and the infrastructure already in place and the capability. This gives them a key part to play in the delivery of e-commerce. For SingPost, it is about making sure that we are investing ahead of the curve, considering the growth we are seeing.

We invested in a new Southeast Asia e-commerce logistics hub which we opened in November 2016. This was a ten-year investment yet it hasn’t taken us 10 years to make it productive as 96% of its warehousing capacity has already been filled. We have an automated carousel, and a parcel sortation system on the ground floor, which has the capacity to process a hundred thousand parcels a day.

What was a10-year growth strategy with that investment, we are probably going to satisfy that within three years and we may consider building more of our own infrastructure. Our goal is to be ahead of the curve so that we are able to cope with those increasing volumes. We are well-placed geographically; well-placed as a postal organization to tap into that e-commerce market, and work with other operators, not just postal but also logistics as well.

This year, 56% of Singapore Post’s revenue is driven by e-ecommerce. Your digital transformation started a while ago. Can you tell us how far along SingPost is in that transformation journey? And could you tell us more about your subsidiaries’ integration and the synergies between them?

We have a significant advantage in having two very important shareholders that are invested very heavily in those areas: Singtel and Alibaba. The ability to connect the dots across the supply chain from a technology viewpoint, as well as physical flows, impresses me. We are excited by a technology which we acquired when we invested in Jagged Peak in the US. That technology is what we called “EDGE”. It is a software solution that has been specifically designed for the e-commerce industry. It helps e-commerce companies get to market more quickly, grow their sales quicker, while controlling and reducing their unit costs over time through scalability. It is a unique advantage.

Getting back to Indonesia, for example, we wouldn’t build a last-mile infrastructure there. We would instead connect with really good partners there that have the right quality service that we need for our customer base. We will use our supply chain technology and platform at the customer front end to deliver that product into the market. This model has already been tested in the US.

We also bought another US company around the same time as we acquired Jagged Peak: TradeGlobal. We have reshaped TradeGlobal now, also using EDGE technology at the front end of the business. We are in the process of bringing those businesses together as one in the US. We have also connected our EDGE technology with our e-commerce business here in Singapore and Southeast Asia, and will expand that out into Australia, Hong Kong, China, and around the world. And we would effectively create a network out of that.

Talking about integration, it is a lot less about physical integration and a lot more about technology integration. It’s about having the whole organization working off one good market strategy, one value proposition, supported by one technology infrastructure, right across the supply chain.

What would you say sets SingPost apart from your competition? What is the real key competitive advantage that makes you the go-to partner for e-commerce in Southeast Asia?

We are an organization that is coming up to our 160-year birthday and that gives us tenure, strength and trust. We also have a bit of a start-up DNA to be agile and nimble. That is actually something driven through technology and the attitude of our people. One of the things that really excited me within the first couple of weeks of being here at SingPost was the energy within the company to innovate. The company is very entrepreneurial in spirit, which is a bit unusual for postal organizations. We do have some of that start-up mentality, paired with the right infrastructure and technology.

Another important area is to be able to handle spikes of demand. If you haven’t invested in automation to stay ahead of the curve, and if your management doesn’t have that agile DNA, then you will struggle to handle the volume when it spikes. At SingPost, we have proven our ability to handle the annual e-commerce peaks for our e-commerce customers, from the year-end festive season to Alibaba’s Double Eleven event.

What would you like to achieve in the next three to five years?

We talked earlier about the emergence of e-commerce as a key revenue and profit growth stream for our organization. There is no question about whether we want to be in e-commerce, it is more about what we need to do to maximize this opportunity that we have on the table.

Our unique advantage as a postal operator is that we have our e-commerce logistics infrastructure in place for e-commerce deliveries that would not be feasible outside the postal environment. Our shareholders are unique and we have an opportunity here to be the leading player in e-commerce logistics, not only in Singapore but in Southeast Asia. We will achieve this through a trusted, collaborative, partnership approach.

We will also help connect different markets using Singapore as a hub for innovation, for technology, for physical flows, for knowhow on how to enter and grow in those markets. This is the part we have to play as an organization. It is also about creating a leadership position, not only in terms of market share, but also in terms of intellectual property that we bring to the market. The IP that we can access and bring to e-commerce in this part of the world is our competitive advantage. We want to be viewed as the connector and as a leader – all the other things that come out of that, such as market growth, will take care of themselves.