In an exclusive interview with The Myanmar Times, Katsuhiko Umetsu, chair of Yamato Global Logistics Japan Co, spoke about the burgeoning e-commerce industry in the region, the importance of cross-border logistics infrastructure as well as the social infrastructure. Yamato Global Logistics Japan Co belongs to the Yamato Group, which in turn is Japan’s largest door-to-door delivery service company.

Mr Umetsu argued that newcomers in Asia’s online shopping sector are now in a position to grow their market share and compete for dominance. The e-commerce platform will eventually become a social infrastructure. For this to happen, service providers, e-tailers (electronic retailers), logistics firms and the government have to work together to iron out the operations and systems.

Japan recently concluded a free-trade deal with the European Union and is now stepping up its game in spearheading the Trans-Pacific Partnership (TPP), a multinational trade agreement which was abandoned by the United States which covers 11 countries. Both trade agreements open up the potential for cross-border online shopping companies. This enormous market opportunity is only possible with a coherent and efficient logistics platform.

“When it comes to cross-border trade, what is the biggest challenge? Customs clearance. Private and government sectors, e-tailers and logistics sectors need to cooperate, and align on one part; otherwise e-commerce will not be fruitful and healthy,” Mr Umetsu said.

Last October, Yamato announced the company’s three-year strategic plan which focuses on the group’s development in the following century. The firm is looking for strategic alliance partners to expand beyond its existing market. Right now, Yamato is active in Japan, Shanghai, Hong Kong, Taiwan, Malaysia, Singapore and Vietnam. China and ASEAN are, naturally, areas where it wants to penetrate further.

“But if you think in terms of the future expansion of the businesses on a global basis, there is more to be done: What are the strategies in different regions around the world, and with Belt and Road in the future? We will seek for appropriate partners who have chemistry with us,” he explained.

Yamato serves home-delivery in Hong Kong and Shanghai but will provide value-added services by utilising cold chain on a supply chain basis. In Hong Kong, the company is the authorised carrier for wine, which needs fixed-temperature delivery. It will expand its B2B [business-to-business] market share in both Asian cities.

“This is our global strategic direction for the next three to 10 years’ time. Cold chain is going to be the key driver for us,” he noted.

Currently, e-commerce is faster and cheaper, but no one talks about the quality … They all believe that the fastest spees is the solution to e-commerce. But I don’t think so.

– Katsuhiko Umetsu, Yamato Global Logistics

ASEAN a key market

ASEAN is a top market prioritised by Yamato because of its thriving middle class.

“ASEAN is going to be the key market for us, not in terms of the population but the disposable income,” the logistics expert observed.

The lifestyle of the booming middle class is upgrading and changing, and hence there is rising expectation in the standard of living.

When the income improves and there’s disposable wealth, the population will move upwards in terms of consumption patterns and seek out more. That means a growing market for e-commerce.

The solution to a successful e-commerce industry, apart from the right physical infrastructure in place, is the necessary software, coordination and cross-border logistics.

E-commerce in rural areas

E-commerce in Southeast Asia has, thus far, focused on major cities where clusters of population reside in tall buildings and shop in crowded malls.

But rural areas present a different set of issues, with shopping centres absent but logistics even more difficult. The Myanmar Times asked Mr Umetsu how rural Myanmar would shape the sector. He said the social infrastructure will need to develop. For example, many citizens use smart phones but IT literacy remains to be tackled by both the government and e-tailers. Quality is also about defining dimensions which few people pay attention to.

“Currently, e-commerce is faster and cheaper, but no one talks about the quality. Do you really want to see your parcel delivered on the same day or the next day? They all believe that the fastest speed is the solution to e-commerce. But I don’t think so,” he went on.

Back in Japan, return-merchandising and the re-delivery ratio has become a social issue. Yamato believes that e-commerce should develop flexibility in the delivery options, from pick-up locations for the delivery to the timing. For that to happen, physical investments and IT solutions are necessary.

“Every day, we deliver five million parcels, and we have 60,000 drivers – local drivers will know exactly where you live and the time that you are not home. We can predict that. But the e-tailer side does not have that kind of information. We, as service providers, share this information with the e-tailers. However, legally, that is private information – which means that the information must be secure.”

ONLINE shopping is booming in Asia, catalysed by widespread mobile phone penetration, even among people in vast rural regions who have no access to shopping malls in cities. A sound social infrastructure as well as cross-border logistics are key to the success of the sector, while industry players should not only focus on competing in delivery speed but also in terms of quality and variety to cater to different consumers.

The question is how different partners can collaborate on the private information while not breaking the privacy regulations. E-tailers should provide and develop further necessary infrastructure to capture the recipients’ information.

When it comes to cross-border trade, what is the biggest challenge? Customs clearance. 

– Katsuhiko Umetsu, Yamato

For instance, for Yamato’s delivery in Shanghai, the company knows exactly the addresses of who’s there. That information in Japan is provided in the mapping, but in China there’s a certain restriction on the mapping: it does not say who lives at a certain address. Hence Yamato has to devise its own delivery mapping with periodical revisions.

“Some business entities in China came to us to buy our information … but we absolutely refused,” he added.

Source: https://www.mmtimes.com/news/delivering-new-world-order-online-shopping-asia.html