27-10-2023 (BANGKOK) Lazada Thailand, a leading e-commerce platform, is gearing up for the anticipated surge in e-commerce growth in Southeast Asia by making its largest investment in the region. The company is set to establish a state-of-the-art sorting facility, aiming to tap into the projected $32 billion e-commerce market by 2025.
In line with this expansion, Kerry Express, a prominent logistics player, is also investing in automation technology and digital mapping to enhance the accuracy and efficiency of its logistics operations. These strategic moves indicate intensifying competition within the local logistics sector.
Creden Data, a data analytics firm, reported that Lazada Express was one of the few players in 2022 to achieve profitability. The company recorded impressive revenues of 16 billion baht and a profit of 2.7 billion baht in the same year.
James Marchant, Chief Logistics Officer of Lazada Thailand, emphasized the significance of the investment, stating, “We are making our largest investment in our logistics business in Thailand and Southeast Asia with the establishment of our new sorting facility.” Located in Samut Prakan, the cutting-edge Thepharak Sortation Centre will utilize advanced automation technology and will complement Lazada’s existing sorting facilities in Suksawad Phra Pradaeng and Chachoengsao.
With the combined capacity of all three sorting centers, Lazada’s sorting capacity will exceed 2 million parcels per day. The new facility, equipped with state-of-the-art automation and artificial intelligence technology, operates four times faster than a manual sorting center, significantly increasing efficiency and accuracy while optimizing space utilization.
According to the Google e-Conomy SEA report of 2022, the gross merchandise value of the local e-commerce industry reached $22 billion in the same year and is projected to reach $32 billion by 2025, with a compound average growth rate of 13% from 2022 to 2025.
Lazada Logistics places great emphasis on delivering orders swiftly and seamlessly, ensuring efficiency throughout the entire supply chain. The company offers a priority delivery service option that has garnered increased demand from consumers. Mr. Marchant stated that logistics and delivery services are crucial for controlling the user experience and differentiating Lazada from its competitors.
“We anticipate a return on investment for this new sorting facility within three years, depending on the volume,” added Mr. Marchant.
Spanning an impressive 35,000 square meters, the Theparak sorting center is Lazada’s largest facility in Thailand. Nutthapol Kriengchaivate, Senior Vice President of Lazada Logistics Thailand, highlighted that the sorting center is part of the company’s comprehensive end-to-end logistics solution. This includes delivery services under Lazada Express to customers’ locations and fulfillment services for online sellers who utilize the platform, covering inventory management, packaging, and delivery. Lazada also provides a multi-channel logistics service tailored for online vendors operating on multiple platforms.
Currently, Lazada Logistics supports approximately 50% of its parcel platform, while the remainder is handled by third-party service providers. Mr. Nutthapol explained that third-party delivery providers are engaged in areas where they demonstrate greater efficiency in terms of cost, coverage, and expertise.
With streamlined processes and cutting-edge automation technology, the new sorting center boasts an inbound process and parcel sorting time of fewer than two hours before distribution to other locations.
“We leverage automation technologies that minimize reliance on staff and paper, incorporating 360-degree AI cameras that expedite work processes while ensuring accuracy,” Mr. Nutthapol explained.
Citing a company survey, Mr. Nutthapol revealed that 43% of Southeast Asian shoppers expect next-day delivery, and 55% of respondents expressed satisfaction with fast delivery options, which have influenced their purchasing decisions.
In September 2022, Lazada launched its priority delivery service, offering shoppers the option to receive their parcels within two days of order confirmation. This service is applicable to orders fulfilled by sellers, with next-day delivery available for orders fulfilled by Lazada. Presently, the priority delivery service covers 23 provinces, including Bangkok, Chon Buri, and Nakhon Ratchasima.
Mr. Marchant expressed his intent to expand the priority delivery service nationwide within the next four years, reaching customers across the entire country.
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