Online buys now more likely from the region than far away

Friday, October 23, 2020 - 05:50
5 -min read
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ONLINE purchases are increasingly less about buying things from far away, and more about buying from merchants closer to home - a trend emerging from a combination of supply-chain disruptions and limitations in freight capacity.

Parcel-forwarding service Buyandship should know. Its data shows that the number of parcels shipped to its warehouses by Singapore users between January and September this year has jumped 180 per cent from the previous year.

Its chief executive Wilson Chan said that last year, approximately 60 per cent of parcels were from Buyandship's warehouses in the US and UK.

But with the demand for goods from Western retailers having moved to Asian ones, the proportion of parcels from those warehouses has fallen to 47 per cent this year.

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The global crunch in freight capacity is one of the contributing reasons for this shift.

The International Air Transport Association's latest data says that although global air cargo demand rose by 1.8 percentage points between July and August this year, it is still down 12.6 per cent from last year's levels.

Buyandship's Mr Chan said: "US and UK shipping time to our central hub in Hong Kong almost doubled in February and March as the number of flights was very limited.

"As a result, many Buyandship users started purchasing from other Asian online shopping sites to enjoy faster delivery."

Supply-chain disruptions are prompting merchants to source closer to market. Mark Shorney, regional vice-president for operations at FedEx Express, said: "There is a move towards diverse sourcing and digitisation to build stronger, smarter, decentralised supply chains that are more resilient and help ensure a lasting recovery."

Local startup Janio, which offers international e-commerce shipping services throughout South-east Asia, has observed a similar trend.

Its co-founder and chief operating officer Syed Ali Ridha Madihid said that while e-commerce flows continue to come from traditional sources such as Greater China, they are increasingly coming from within Asean.

"We have seen that the industry is experiencing a two- to three-time increase in e-commerce volumes trading between Singapore, Malaysia and Indonesia. We believe this increase is driven by the inability to travel to neighbouring countries."

SingPost, on its part, has experienced a 100 per cent year-on-year surge in domestic e-commerce volumes originating from Asean countries in the last six months. Malaysia and Thailand have been the top two countries exporting e-commerce items to Singapore customers.

Janio's Mr Syed said that, with the approach of the "traditional" peak period for e-commerce sales - 11.11, Black Friday/Cyber Monday and 12.12 - these figures will likely keep climbing.

Buyandship's Mr Chan expressed similar optimism, noting that their new Thailand and Indonesian warehouses have been growing quickly as well.

"We believe our Thailand-to-Singapore and Indonesia-to-Singapore parcel-forwarding services will become more important in the next six months," he said.

It is not just merchants in the region who are clocking increased sales from online sources.

ezbuy says consumers are also increasingly buying local. In fact, regionally, Singapore posted the biggest change in this regard: 581 per cent more customers are making grocery purchases from local vendors than from overseas ones.

In response, ezbuy on-boarded more Singaporean retailers during the circuit breaker.

Merchants such as Megamart, which sells parenting goods, saw an increase of 50 per cent in sales and 20 per cent in customer growth.

ezbuy noted that Premium SG and Home.y, which sell mobile, electronic and home appliances, have grown their sales by almost three times.

It is also worth noting that shoppers are looking beyond necessities. In the early days of the pandemic, the surge in demand was driven largely by necessities, in particular sanitisers and masks, but shoppers are now looking at other lifestyle items.

Shopee for instance, has noted that more shoppers are going online first for food products. Zhou Junjie, chief commercial officer at Shopee, said the number of users who make multiple orders each month has grown 20 times.

Following Singapore's circuit breaker in Singapore, demand for items like laptop tray tables, computer peripherals and pre-paid SIM cards have risen. Workout gear, beauty products and home appliances like mops, hand mixers, electric ovens and hand blenders have also sold well.

With the peak season for e-commerce expected in the coming weeks, might this further strain airfreight capacity limits?

The chief executive of DHL Global Forwarding for the Asia-Pacific, Kelvin Leung, said he does not expect airfreight capacity in general to come back in "full force" until the end of next year, or even the year after.

He also noted that demand for this space is expected to be more volatile, increasing the need for flexible and alternative transportation flows and warehouse networks.

FedEx's Mr Shorney said countries in Asia will continue to focus on cross-border commerce with neighbouring markets.

"In fact, intra-Asia trade accounts for up to 60 per cent of Asia's trade ... (and) we expect that shorter, more localised supply chains will characterise and serve these market links, giving Asian startups and small businesses one of the best market environments to operate in."

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