Global e commerce summit 2015-china e commerce delivery management-uco
Post on 28-Jul-2015
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About the Speaker
Long Wong
• COO of UCO.com, the market leader for cosmetics eCommerce in China
• 2004-05 Amazon.com HQ, responsible for World Wide Transportation system projects
• 2006-07 Head of Supply Chain & Transportation at Amazon.cn
• 2009-10 Head of Supply Chain & Logistics at Metersbonwe
• Various eCommerce start-up experience
• Which are the key dimensions to consider for offering eCommerce delivery service?
• What are the different trade-offs and options for each of these dimensions?
• How to execute (best practices) to achieve the desired result?
If you have to set up your consumer delivery solution for your company’s eCommerce outlets in China today, what should you do?
Do You Need Payment Collection? • Cash-on-Delivery • Prepaid
How to Define Tiers of Service? • Speed • Service
How to Optimize Cost? • Partnership • Competitive
Other Considerations • Peak management • Air restrictions • White glove / High value / Temperature control
COD Requirement Would Limit Supplier Options
Non-COD: National common carriers (the 四通一达—YTO, STO, ZTO, HTKY, Yunda, TTK, GTO, ZJS, etc) are competing fiercely but customer brand loyalty starts to emerge – Wide coverage
– Carrier coverage and performance (speed and service) could vary greatly by region
– Relatively low price
COD: Regional Carriers (落地配), ZJS (宅急送)/SF Express/EMS (Nationwide), Common Carriers such as YTO is getting into this space – Performance of different regional carriers can vary greatly and would require more
management oversight (service level, cash remittance risk)
– Regional carriers only make sense if COD volume is high, because of line-haul requirement
– Regional carriers have lower COD rate (usually included in delivery rate); COD rate for national carriers vary from 1% to 5%
– Regional carriers usually have better service than common carriers
Carrier Capability Overview
STO/YTO/ ZTO
HTKY/Yunda/ TTK/GTO
ZJS
Normal Day Volume ~2-5MM ~0.5-2MM ~500K
Cost Low Very Low Low
Coverage Very Good Good OK
Peak Management OK ? OK
EMS
China Post (Small
Package)
SF Express / FedEx
QF Express/ Regional Carriers
Cost High Low High Low
Coverage Nationwide Nationwide Good/Limited Limited
Peak Management OK OK Good ?
Achieving Service Differentiation
• Delivery Speed – Warehouse processing speed
(ship time) is more important
– Warehouse location may have bigger impact on Ship-to-Delivery time
– Same Day delivery—is it necessary?
– Managing customer perception and expectation
• Last-Mile Service – Some carriers have the
perception of better service to consumers
– Actual service is greatly dependent on the courier
– In absence of strong consumer preference, speed and meeting delivery time expectation matter more
Key: Trade off between cost and speed/service, and executing on
carrier selection strategy Need to understand factors that would affect speed and service
Collection Sorting Last Mile Delivery
Shipped Late
Processing backlog at
collection point
Traffic control at sorting center
Backlog at delivery station due to last mile
capacity
Adverse weather
Rude/untidy delivery person
Sorting backlog/Mis-
sorting at sorting center
Not enough line haul capacity / No direct route
Line haul delay due to weather
Line Haul
Life of An “Unfortunate” Package
More to Think About
• Peak Management • Will you carrier partners take care of you during peak (e.g. Double-
11)? • What’s your commitment for service (pick up and delivery) during
Chinese New Year? • Air Restrictions
• Different airports, different carriers at different times have different standards for air restrictions
• Greatly affect delivery speed and thus expectation management to consumers
• Special Service Requirements • White glove/Oversized—use LTL and specialized companies, will
limit delivery areas • High value—special handling, shipping insurance • Temperature control—pack better, or be prepared to pay and only
serving in selected metro areas
Leave it to God vs. Control Freak
• Outsource – Pick reputable carriers that
can meet your obligation to consumers: • COD—SF Express, ZJS
• Premium service—SF Express, FedEx
• Standard service—STO or YTO, for air restricted products, use ZTO or Yunda which primarily uses ground line-haul
– Promise all your volumes and negotiate for best price; re-bidding regularly
• Pick Best of Breeds – Sign multiple carriers for each
service obligation
– Need to have system in place to select the most appropriate carrier for each package (Ranking Agent)
– Ability to exclude smallest possible region for carrier assignment (as speed/service varies greatly by carrier by region/last-mile delivery person)
– Low price will come to you due to competitive nature of the industry
System Requirements
Jurisdiction Engine
Delivery Data Tracking & Feedback Loop
•Flexible & versatile rule setting (e.g. air restriction) •Filter out non-applicable ship method
•Use tracking data to discover service problem and mitigate proactively
•Solution for delivery area definition (zip code is not commonly used in China) •Solution for parsing Chinese address •Ability to exclude based on key words
•Select carrier based on estimated cost & service performance considerations
•Integrate with CRM & ranking rules
Rule Engine
Ranking Agent
U-TMS Logic
6,000+ Inquiries Daily
5,000+ Orders Daily
(Peak Day 500K+)
200,000+ UV Daily
3,000,000+ Paid Customers
30+ International Brands
1.2B+ CNY Annual GMV
(2015 estimate)
Institutional shareholders
include Alibaba and China
King King (002094); latest
round of fund raising:
RMB150M
Cosmetics is our ONLY Business
500+ staff
ex-Alibaba
ex-Amazon
UCO by the Numbers…
16
Target Consumer Analysis Go-to-
Market Strategy
Product/ Pricing
Strategy
Pre-Sales Service
Traffic Drive/User Acquisition
Store Positioning & Design
Order Fulfillment & Delivery
Post-Sales Service
Loyalty Program/ CRM/Cust
Sat
Taobao Channel
Management
Overall Brand Mgmt & Ecosystem
+
• We cover the China eCommerce ecosystem, and our channel management includes Taobao/Tmall and major B2C platforms such as Jumei, JD.com, VIPShop/Lefeng, Hitao, etc
One-Stop eCommerce Solution
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