Rising costs and low customer loyalty a double-whammy for online merchants
Consumer devotion to online shopping is still growing – but merchants are faced with the ...
© Timon Schneider
Chinese e-commerce group Alibaba’s logistics arm, Cainiao Network, is offering customers the option of moving parcels from Ningbo port to the Thai capital, Bangkok.
Operating three times a week, the service will see Bangkok-bound parcels sorted in Cainiao’s consolidation warehouse in Yiwu, in Zhejiang province, before being moved to Ningbo to be shipped to Bangkok.
A contact at Cainiao told The Loadstar the company was not working with a fixed liner operator, although it has an affiliated liner operator, Transfar Shipping.
“We aren’t chartering or operating a whole vessel. We will aggregate all parcels bound for Bangkok and ship these out,” said the source.
“This is an economic option, because many of our customers buy small parcels and it doesn’t make sense for the shipping cost to be equivalent to, or higher than, the price of the goods.”
The parcels are orders placed on Tmall and Taobao, two of Alibaba’s e-commerce platforms, with delivery as fast as 15 days. The service is launched in addition to a trucking service to Thailand to provide consumers with a cheaper shipping option, bringing an almost 50% reduction in shipping costs, from $2.60/kg to $1.40.
It was launched after assessing local consumers’ preference for more economic shipping options, coupled with their purchasing behaviour, which typically reflected more frequent purchases of small and light items online. It meant shipping cost remained small, relative to the item cost, reducing the barriers to purchase items from Tmall and Taobao.
There are now 10m Chinese in Thailand, accounting for 14% of its population and, as the Covid-19 pandemic fuelled online shopping, Tmall saw increasing business from Thailand.
JP Morgan’s latest Payments Trends Report for Thailand in 2020 shows its B2C e-commerce market growing steadily since 2017, and is now worth $27.7bn. Growth is expected to continue at a compound annual growth rate of 7.7% to 2023. Cross-border is almost 30% of the overall e-commerce market in Thailand, with almost half of online consumers having already made a purchase from abroad.
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