SingPost Targets E-Commerce Logistics Market

Singapore Post is shifting gears from declining mail demand to refocus its business efforts on logistic services for e-commerce companies. The postal service, in which Chinese e-commerce giant Alibaba Group now holds a roughly 10% stake, currently earns a quarter of all revenue from Internet-related business, just four years after the strategy shift.

According to U.S. research company eMarketer, the online shopping market for the Asia-Pacific reached $525 billion in 2014, surpassing North America for the first time. In 2017, the Asia-Pacific market is forecast to expand to over $1 trillion.

SingPost was quick to seize on the trend. Targeted at working online shoppers, SingPost now operates around 70 locker-like facilities called POPStations in the city-state, offering users the option of receiving their purchases outside of their homes.

POPStation is just one of SingPost's recent strategies to expand its services catering to e-commerce transactions. The efforts have been spearheaded by CEO Wolfgang Baier, who took over the top spot in 2011 after providing consultant services to SingPost for McKinsey & Co.

Due to the ever widening use of the Internet, the "postal industry was suffering a decline in mail volume," said Baier. In contrast, online shopping was growing quickly. "Within SingPost, we saw that parcel volumes were growing because of the rise of e-commerce."

The company is now investing about 182 million Singapore dollars ($131 million) to build a large-scale logistics hub in Singapore. It plans to consolidate e-commerce stock intended for Southeast Asia in the new facility. This will speed up operations considerably.

Looking ahead, Baier is planning further investments to push ahead with e-commerce related activities. "We will focus on three pillars: technology, people and (logistic) infrastructure, with particular emphasis on technology. Our aim is to become the region's leader for e-commerce logistics," he said. "When we started focusing on e-commerce, people were laughing. But we have big global brands as clients, and people take us seriously now."

Postal companies around the world are now chasing the e-commerce boom, with many turning to Asia. SingPost is one of the front-runners, and the transition has helped its financial performance. Supported by growth in e-commerce related businesses, its revenue for October-December 2014 increased 7.6% year-on-year to S$239 million, with net profit rising 7.3% to S$42 million. The company, which went public in 2003, has also enjoyed steady rises in the value of its stock.

http://asia.nikkei.com/magazine/201...to-e-commerce-logistics-to-capture-new-market