11 June 2020

E27: Why e-commerce startups will revolutionise the supply chain in Southeast Asia

With their unique can-do mentality and digital innovation, startups will enable Southeast Asia’s supply chain to fulfil its potential

Companies are scrambling as their day-to-day activities are disrupted by the coronavirus pandemic. For many businesses in Southeast Asia, this is a real fight for survival. To adapt to this uncertain “new normal”, some of them are looking to diversify into new areas, such as logistics.

There are many good reasons for this. Southeast Asia is a rapidly growing market, the demographics support increased consumer spending, and it is the world’s manufacturing heart.

However, it’s not an easy place for new businesses to launch. Competition is fierce, and the region is burdened by unique obstacles, including the lack of zipcodes, developing infrastructure, and a lack of digitalisation in comparison to more developed countries.

To help bridge these gaps, those businesses are increasingly turning to startups such as Quincus. Over the last two months, we’ve been receiving regular inquiries from those looking to expand their operations into the logistics industry and seeking our technology, experience, and expertise to help them overcome the unique challenges of the Southeast Asian supply chain.

Why startups are positioned to help the supply chain adapt?

Startups are about specialisation, about finding a problem in the system and then fixing it. It’s a concept that the entrepreneur Paul Graham astutely summarised when he said that “The best startups are the ones that are tackling an urgent issue.” In Southeast Asia, that sense of urgency is palpable.

Startups have the right tools and the experience to progress the supply chain forward now.  E-commerce startups are at the forefront of this innovation. In response to the coronavirus pandemic, their acceleration of contactless deliveries and paperless payments are reducing transmission risks and will revolutionise the logistics industry’s best practice.

In addition, these kinds of innovations will enable it to mitigate disruption, increase the amount delivered, and ensure the health and safety of their workforces and the customers.

Beyond a startup’s willingness to embrace new technological innovations, what I’ve discovered is that the unique values and culture of startups give us a vital leg up with innovation and creativity. Forbes famously asked the question: “Why is it that many of the brilliant ideas of the last decade have come from start-ups?”

Startup teams are usually full of ideas, waiting for an opportunity to apply their problem-solving skills, and always looking for a way to simplify business processes that will improve customer experience and satisfaction.

Data will unlock the region’s supply chain

The effective use of data will be one of the keys to unlocking South East Asia’s supply chain potential. However, for the most part, logistics businesses in this part of the world are struggling to collect the data they need to make informed strategic decisions.

All too often, however, companies recognise the need for more data but do so without a clear understanding of how they should collect the data or smartly apply it.

An example of the right kind of data and its effective implementation can be seen by looking at driver experience. There is a lack of data shared with many drivers which could make a big difference.

One example I’ve seen consistently at Quincus is the value of knowing the best time for a driver to be ready at a warehouse to collect her packages. Our partners often tell me that this information makes the difference between a driver making her quota or creating a happy customer.

There’s a motto in the e-commerce world: traffic makes you innovative. Countries throughout Southeast Asia struggle with infrastructure that is not capable of dealing with the increased traffic leading to congestion.

E-commerce startups, using data from the drivers and roads, can translate it into optimised routes and times allowing drivers to avoid delays and therefore achieving their target.

Innovate to survive

The coronavirus pandemic has exposed the fragilities of the South East Asian supply chain, and it will have a significant short-term impact on the region’s economic health. The challenges presented by the pandemic are not insurmountable, but for the supply chain to flourish it will require partnerships with startups that have the necessary skills, experiences, and technology to reinvigorate core capabilities and establish new competencies.

No matter where a company falls on the supply-chain maturity curve, supply chain reinvention will help it become a leader.

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