Buoyed by a rising middle class and some of the most engaged mobile internet users in the world, Southeast Asia has appeared to be one of the hottest regions for eCommerce growth. Google and Temasek’s1 2018 report foresees that Southeast Asia’s internet economy is likely to grow to US$ 240 billion by 2025 from an estimated US$ 72 billion from 2018.
The Philippine and Indonesia’s eCommerce markets have the potential to be the two biggest markets in Southeast Asia, but this does not discount the already large markets of Malaysia and Singapore.
If you own a brand or eCommerce store and are seeking to sell to many of these Southeast Asian countries and beyond, working with a regional fulfilment centre could help you set up your operations faster. However, you’ll still need to choose which country it's based in. In this case, have you considered setting it up in Singapore’s free-trade zone?
Where are your customers located?
Where your customers are located should determine where your fulfilment centre should be. If your customers are spread across multiple Southeast Asian countries, you’ll want a centralised location where flights can quickly reach your customers’ airports to keep delivery times short.
If you’re just starting out your expansion into multiple Southeast Asian countries, you’ll want to get a better understanding of which countries your products have high demand before making larger investments. Operating from a regional fulfilment centre first allows you to test out where the majority of your customers are before investing in any local warehouses and fleets you may have in mind.
Storing your inventory in Singapore would shorten your lead time for fulfilment and delivery to the rest of Southeast Asia. Well-known for its centralised location at the heart of Southeast Asia’s trade routes, direct flights from Singapore to Jakarta would take just 2 hours, while those from Singapore to Manila would take under 4 hours.
What about Free-trade Zones?
A free-trade zone is a type of special economic zone where goods can be landed, stored, manufactured or re-exported while generally not being subject to customs duty. If your regional fulfilment centre isn’t operating in a free trade zone, any delivery you make to your centre will need to have taxes paid on them first.
Having your regional fulfilment centre in Singapore’s free trade zone allows you to store your inventory in the centre without needing to pay for customs duties and taxes. This way, you can save on taxes while still retaining the benefits of Singapore’s centralised location.
If you’d like to find out more about how you can clear customs in Southeast Asia’s major countries, check out our customs clearance guide!
Regional fulfilment is a key part of cross-border shipping. Instead of needing to manage your inventory in multiple warehouses closer to your customers, which could take time and resources to set up, you’ll be consolidating your inventory in a central warehouse and sending them to different countries from there.
Considering that air freight is the fastest method of getting your B2C products into different Southeast Asian countries, Singapore’s modern infrastructure and world-class airport facilities would be a great help. According to the World Bank2, Singapore’s Changi airport is voted the best internationally and serves nearly seven thousand weekly flights to around three hundred and thirty cities.
In addition to that, Singapore’s customs also works 24/7. That means that shipments that arrive at Singapore’s customs on a Friday night can be processed immediately and sent straight to your regional fulfilment centre. Countries which don’t have this would lead to those Friday inventory shipments only clearing customs on a Monday, leading to an extra 2 days lead time.
In short, when choosing where your regional fulfilment centre in Southeast Asia should be, consider setting it up in Singapore’s free-trade zone to optimise your eCommerce logistics supply chain. Its central location will help cut your lead time for fulfilment to other Southeast Asian countries. Having your regional fulfilment centre in a free trade zone will help you save on duties and taxes during inventory storage.
Janio Asia specialises in end-to-end cross-border shipping for your eCommerce needs! Check out our services or speak to us to find out more!
You may also be interested in:
- Think With Google: e-Conomy SEA 2018 - Southeast Asia's Internet Economy Hits An Inflection Point