eCommerce Fulfillment Strategies in APAC

APAC Fulfillment Series: Part 1

eCommerce Fulfillment Strategies in APAC: Local Multi-Node vs. Cross-Border?

The Asia-Pacific region’s diverse geographic, digital and financial landscapes present real challenges that impede growth, even as online sales expand. When selling online to consumers in this region, is it better to set up multiple local distribution centers, or try to tackle customs and borders through a centralized APAC distribution center?

To understand each strategy, we’ve put together a sample case study in which we explore selling t-shirt to Japan, but first, let’s take a look at the general advantages and disadvantages of the two fulfillment approaches.

To understand each strategy, we’ve put together a sample case study in which we explore selling t-shirt to Japan, but first, let’s take a look at the general advantages and disadvantages of the two fulfillment approaches. There are two viable ways to handle fulfillment — distributing smaller quantities of inventory in multiple locations close to end customers, or storing it in a central location. The table below provides a thorough comparison of the two models.

Case Study: Selling t-shirts to Japanese consumers

Let’s apply the information above to a sample scenario. In this example, we’re selling t-shirts to Japanese consumers.

• Product: T-shirt
• Material: cotton
• HTS code: 6109.10.0004 (Men’s Or Boys’ Cotton T-shirts, Knit Or Crocheted, All White, Short Sleeves, Crew/V-neck W/ Mitered Seam At Center Of V, No Pockets Trim Or Embroidery)
• Made in: China
• Import to Japan: 6109100004 has an import duty rate of 10.9% and Consumption tax rate of 10%
• Gross weight: 0.25 kg (includes packaging)

Based on the information above, the cost of fulfilling the order locally is about 26% higher than it would be to fulfill it through our APAC distribution center. In general, the smaller, lighter and cheaper the product, the better it is suited for regional fulfillment.

There are other considerations, too — where will you book the sales and profits, how much tax will you pay on earnings, what additional work is involved in managing multiple nodes, etc. These factors are excluded from this simplified scenario.

Conclusion

In summary, there is no “one-model-fits-all” logistics solution. As consumer demand for fast shipping continues, a brand’s reputation increasingly rests on last-mile delivery capabilities – in short, whether you can get orders out to customers more reliably and quickly than your competitors.

However, as we can see in above table, for sellers, there are many more considerations than the delivery speed alone. When approaching the Asia-Pacific ecommerce market, we often recommend starting with a centralized model and adding new nodes as demand for your products builds up in specific markets.

If you are looking to fulfill your APAC ecommerce orders, Ingram Micro’s APAC Distribution Center may offer strong benefits. It’s located in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Free Trade Port). We offer fast and reliable deliveries to all APAC destinations and beyond, through carriers such as DHL Express, FedEx, DPEX International, Hong Kong Post, Yunda and SF Express, and we support various integration options, including Shipwire, API and EDI.

To continue the conversation, please reach out to us at info@ingrammicroservices.com