SEKO’s Gagne: Time to get real about cross-border e-commerce
Few freight-forwarders are willing to admit openly that rapidly expanding cross-border e-commerce can be potentially disruptive. Within the supply-chain, airfreight has traditionally found its role transporting goods from low-cost manufacturing centers and injecting them into distribution networks that then supply retail outlets within the country of sale. No longer is that the case, according to Chicago-based SEKO Logistics, which has chosen to pursue an alternate path, based on the acknowledgement that “shift happens.”
“If you look at the numbers in just the United States alone, between 2014 and 2015, we have turned into an almost net airfreight exporter, doing more airfreight consolidations outside of the United States,” said Brian Bourke, vice president of marketing at SEKO. That is nearly a complete reversal of SEKO’s business, which was once reliant on inbound volumes, and this change is “almost exclusively attributed to the rise of e-commerce,” he added.
In an effort to embrace the shift, SEKO has been establishing “e-commerce gateways,” to serve as new hubs in the altered supply-chain. Most recently, the opening of a 50,000-square-foot facility in Hong Kong, on the border of Shenzhen, aims to capture an increasing share of China’s online consumer market, which is expected to reach US$1 trillion by 2017.
Air Cargo World sat down with SEKO Logistics’ COO, James Gagne – just weeks before he was named as SEKO’s new president-elect, effective Jan. 1, 2017 – to understand how its new Hong Kong facility is helping its global customers sell through e-commerce channels in Asia.
Q: What was the rationale for establishing SEKO’s e-commerce gateway in Hong Kong, rather than in mainland China?
Traditional retailers active in wholesale, retail and [business-to-consumer] B2C are really looking for one infrastructure to service the local market, the regional market and B2C with one facility. Hong Kong is very well positioned to be a key “omni-channel” hub for the entire Asia-Pacific region for wholesale, retail and B2C fulfillment for a number of reasons. In China, you have issues with customs, and we have found that setting up the gateway in Hong Kong enables us to service [not only] global markets, but also the region. For example, we are working with customers today who are buying products from Taiwan and South Korea that are going through our fulfillment center [and into mainland China], and having that done through Hong Kong is a lot more seamless and streamlined than in Shanghai. That being said, Shanghai still plays a major role on the domestic front for inbound consolidations from overseas. Hong Kong, on the other hand, can be inbound and within the region, as well as outbound.
Q: How are goods moving to and from the new Hong Kong hub?
The vast majority of clientele we are servicing today use a combination of commercial airfreight and courier transport. Products are moving in and out of the facility very quickly. Usually within 12 to 18 hours upon arrival at the fulfillment center, they move out with labels destined for the final customer.
Q: What are some of the order fulfillment-related challenges international companies face when trying to market their products through China’s e-commerce portals?
China is a whole different game when it comes to e-commerce order fulfillment. It is highly-regulated in terms of what it takes to setup a “.cn” website, and most companies choose not to do that. Many go through Tmall.com, the Alibaba platform. That will assist with getting a start, but this also has its challenges as it relates to the consumer experience, especially [regarding] after-sales – what happens with returns, customer service and getting questions answered. Such platforms don’t allow getting those questions answered.
Q: How is cross-border e-commerce fulfillment changing in China/Asia Pacific?
What we’re seeing, really, is the need to integrate between a front-end provider and a back-end provider on the full-frontal logistics side – the front-end meaning content marketing, language, fraud-check, payment, how to channel sales through social media to the website – things like that. Very few companies are, today, in a collaborative mode between the front- and back-end to be able to provide a more seamless, API-leveraged solution to get going and to actually link the front and the back end. We’re advocating that [retailers] team up with a partner that enables them to aggregate across multiple platforms while still potentially maintaining a host website overseas, where they channel traffic to that website. SEKO has been developing, and is soon to launch, its own solution that links both the front-end and back-end systems, which aims to service not only China, but nearly any region of the world.
For more information on innovative strategies to capture e-commerce, join us for networking and discussion at Air Cargo World’s new ELEVATE 2016 Conference, Oct. 10, in Miami. Click here for details.
