Singapore Post has invested a whopping $182 million for the launch of its e-Commerce Logistics Hub (Singpost.com 2017). It has three storeys, and has two floors for warehousing. There is a fully automated facility for sorting parcels in the ground floor of the building, and it has a capacity of up to a hundred thousand parcels every day. The parcels that are to be shipped both within Singapore and to destinations outside are processed here. The construction of this regional hub is quite an achievement in the expansion of the e-Commerce logistics network of Singapore Post.
Threat of new entrants
The market for Singapore Post in the South-East Asia region, if profitable with a high level of return, will boost the creation of newer firms, which will consequently decrease the rate of profits and the market share of the company. However, since the capital requirement for the establishment of a new firm is quite high in this line of business, it is to be estimated that the competition faced will be limited and will possibly pose very little threat to the position and market share of SingPost. Also, Singapore Post has been in existence for the past hundred and fifty years (Glowik 2017), and thus, the question of customer loyalty is also to be considered; they will possibly be more willing to choose them over any new entrant because of this brand loyalty.
Threat of substitutes
The availability of alternatives or substitutes outside the sphere of the Singapore Post services might increase the tendency of the customers of the target market to switch to them. One substitute for the e-Commerce logistics hub would be the introduction of the automated locker systems (Scalisi 2015) by other firms which would reduce the need for the customers to worry about getting their parcels delivered at the right time by the delivery boys or the SingPost workers. Also, there could be retail chains that might start delivering directly to their customers instead of using a mediator.
Bargaining power of customers
The potential factors for the bargaining power of the customers are many. For instance, the availability of alternatives or substitutes is very important in this case; the tendency of the customers to bargain for a lower price will be higher if the cost required for the alternative is significantly lower (Fabbri and Klapper 2016). Also, the amount of information regarding the logistics services to the buyers will also impact their capacity to force down the prices. SingPost can deploy a loyalty program to deal with the buyer power, but if the number of customers is very large, they will have to concede to their demands in the end.
Bargaining power of suppliers
Also known as the market of inputs, the supplier of raw materials can hold power over any firm if the number of available alternatives is very less (Heimeshoff and Klein 2014). At present, Singapore Post has an impressive range of clients, some of the notable companies being Toshiba, Adidas, Thamesbury, Philips and Xiaomi. This bargaining power is dependent on the availability of alternative suppliers, the strength of the distribution channel, and also on the solidarity of the employees. The relative cost between the switching of the supplier and the switching of the firm is also one of the potential factors.
Industry rivalry
One of the major determinants for the competitiveness of any industry is the rivalry with its competitors in the market. The potential factors in this case would be the competitive strategies that they use, along with the investment they can make for their advertisement (Dobbs 2014). There are numerous rival companies that are competing with Singapore Post in the area of e-Commerce logistics, such as iCommerce Asia, Postal Connect and aCommerce Singapore, to name a few (Bolumole, Closs and Rodammer 2015).
Political
In Singapore, the political risk is very low; in fact, the level is the lowest in the entire south-east Asian region (Tremewan 2016). The political stability is remarkable ever since their independence and the people elect representatives to run their country. The scope for business organisations is relatively good, and the standard of living is also better and improved at present. The opportunity for free speech is however limited in some cases, as there is a fear of lawsuits, which is why there is a low prevalence of debate among the opposition parties.
Economic
The free-market economy of Singapore is vibrant, and is growing at a very fast speed. Among the south-east Asian countries, it has the highest per-capita income. It is among the list of the most competitive companies with a dynamic and ever-evolving market economy. One of the important factors for this is their educated and motivated group of workers who further strengthen the business sector which is virtually free from any form of corruption (Minca and Ong 2015). The government is also actively involved in the diversification of the nation’s economy, and its geographical location is also an advantage. The availability of cheap labour from the neighbouring countries adds to its reduced costs of running a business.
Social
The social outlook of Singapore is similar to any other south-east Asian country. The families typically follow the old traditions and are very concerned with their heritage and values. The newer and younger generations are more inclined to be affected by westernisation and follow the modern values and cultural aspects (Lim and Lee 2016). They are not only hardworking but also very persistent on fulfilling their materialistic wishes. The literacy rate is also very high, and primary education is compulsory in the country.
Technological
One of the most significant reasons for the transformation in the quality of life in Singapore is the technological advancement. The internet is possibly the key factor in the increased connectivity and communicability of the country, which facilitates the businesses as well as the residents. Social networking is also boosted, and the people get to connect with the world more easily (Scott 2017). The accessibility rate for the internet or the broadband services is as high as 70%, and this has led to the establishment of offices by many multinational companies as well as the successful functioning and market consolidation for the e-Commerce sector.
Legal
There are certain regulations and legal settings that are required for the support of industrial development and the growth of the economy. The regulations and legislations are transparent and entirely tailored to be favourable for the market. The e-Commerce programme, launched in 1996, was developed with the aim of promoting e-Commerce services. Since 1998, some basic legal and technical resources for the support of e-Commerce was available, some of them being the Amendments to the Evidence Act, Electronics Transactions Act, and the Import and Export Procedures (Hanna 2016).
Environmental
The ministries and the government have been relentlessly working towards maintaining the quality of air and water and other environmental resources. One of the key problems in Singapore and other South-east Asian countries is the vehicular pollution in their urban areas, and there is a shortage of water resources as well. They are dependent mostly on Malaysian waters for supplying to their citizens, and thus, a more efficient solution is therefore needed.
After this PESTLE analysis, it can be clearly concluded that Singapore is a remarkable nation brimming with motivated and hard-working people. The business opportunities are also commendable, and is benefitted in both the domestic and international platforms.
Be it in Asia or south-east Asia, Singapore is at present one of the wealthiest nations. It is mostly because it has emerged as a high-performing logistics hub in the area. It is the home of the world’s largest transhipment container port, and is linked worldwide with over 600 ports. Also, the Singapore Changi Airport has about 6800 weekly flights to almost 330 cities all over the world. Moreover, the country’s trade value is 3.5 times its GDP (Rodan 2016). These things were possible not because of chance or coincidence; the developed and modern public policies and the extensive engagement from the private sectors have made it possible.
Connectivity: The local market in Singapore is comparatively smaller than other major transport hubs, and the development of high-frequency establishments with numerous locations is the result of a proactive and progressive government policy. The Civil Aviation Authority of Singapore has been in collaboration with the Air Services Agreements and a 130 states and territories to boost the connectivity through flights (Fu and Oum 2014). They have worked closely with the port to create one of the world’s busiest marine trade networks. Also, Singapore has agreements of free trade with more than thirty trading partners to enable better access to the bigger markets. This helps companies like SingPost with a logistics chain to operate smoothly and effectively from Singapore. These high-frequency connections sometimes help the goods to reach the consumers much faster in this way than they would through a direct shipment.
Infrastructure and processing innovations: After completing the Next Generation Port 2030, Singapore will be able to regulate about 65 million standard containers used in shipping, which would rank it as the largest integrated facility in the entire world. There have been experimentations with unmanned vehicles using smart sensors to detect shipping issues such as piracy, and data analytics to foresee traffic congestion spots. Also, there have been plans to double the airport capacity, and there is an Airport Logistics Park for time-sensitive cargo and cold-chain centres for perishable items, with regional facilities for accommodating the ever-increasing e-Commerce activity. The mindset of the government is to facilitate trade and not to control it, and trade permit approval processing has been digitised and streamlined since 1989. Permits can now be approved electronically in just a matter of moments, and a shipment encompasses more parties in the supply chain, ranging from manufacturers to e-commerce logistics companies, along with the trade finance companies and the consumers. Attempts are in place to facilitate all business transactions into one digital platform.
Private sector participation: The importance of the private sectors has been fully recognised by the government in case of policy decisions (Dembiermont, Drehmann and Muksakunratana 2013). There has been corporatisation of port and airport operations to ensure that they fulfil the needs of the industries. Ever since, the volume of cargo has increased manifold, and the increase in the competition in the private sector has made the logistics hub more efficient. An extensive consultation is also made before the approval of the public investments, and the private sectors have invested in facilities like cold chain centres and regional cargo express facilities, and the challenges are resolved by the public and private sectors together to ensure that there is no pressure on the public funds. The government has taken steps to ensure that the environment for the investors is optimum in Singapore, and has in place proper incentives for encouraging participation from the private sectors. As a result, 20 out of the 25 world’s topmost companies in the logistics field operate from Singapore.
In South-east Asia or in Singapore, the development of an e-Commerce logistics hub is integral to the nations. As recommendations for their strategy, they can have a fully-automated sorting facility for the parcels, and have sufficiently spacious warehouses, preferably with parking facilities for the vehicles. There should be state-of-the-art measures to handle large volume of goods every day to ensure smooth functioning of the logistics hub. These will help to expand their e-Commerce logistics business and will help them to capitalise and utilise the rapidly growing e-Commerce market in the area. These will radically transform their range of e-Commerce capacities and help in efficient warehousing, sorting and delivery of the goods. The process will also be cost-efficient as a result.
References
Bolumole, Y.A., Closs, D.J. and Rodammer, F.A., 2015. The Economic Development Role of Regional Logistics Hubs: A Cross?Country Study of Interorganizational Governance Models. Journal of Business Logistics, 36(2), pp.182-198.
Dembiermont, C., Drehmann, M. and Muksakunratana, S., 2013. How much does the private sector really borrow? A new database for total credit to the private non-financial sector.
Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Fabbri, D. and Klapper, L.F., 2016. Bargaining power and trade credit. Journal of Corporate Finance, 41, pp.66-80.
Fu, X. and Oum, T.H., 2014. Air Transport Liberalization and its Effects on Airline Competition and Traffic Growth–An Overview. In The economics of international airline transport (pp. 11-44). Emerald Group Publishing Limited.
Glowik, M., 2017. 4.1 Case study: Alibaba group. Global Strategy in the Service Industries: Dynamics, Analysis, Growth, p.96.
Hanna, N.K., 2016. E-commerce as a techno-managerial innovation ecosystem: Policy implications. Journal of Innovation Management, 4(1), pp.4-10.
Heimeshoff, U. and Klein, G., 2014. Bargaining Power and Local Heroes.
Lim, J. and Lee, T., 2016. NEGOTIATING STATE AND SOCIETY IN SINGAPORE. Singapore: Negotiating State and Society, 1965-2015, p.1.
Minca, C. and Ong, C.E., 2015. Hotel California: Biopowering Tourism, from New Economy Singapore to Post-Mao China. In Tourism Encounters and Controversies: Ontological Politics of Tourism Development (pp. 159-180). Ashgate.
Rodan, G., 2016. The political economy of Singapore’s industrialization: national state and international capital. Springer.
Scalisi, J.F., 2015. Smart lock systems and methods. U.S. Patent 8,947,530.
Scott, J., 2017. Social network analysis. Sage.
Singpost.com. (2017). SingPost opens its new Regional eCommerce Logistics Hub, a scalable facility to serve the growth of eCommerce in Asia Pacific | Singapore Post. [online] Available at: https://www.singpost.com/about-us/news-releases/singpost-opens-its-new-regional-ecommerce-logistics-hub-scalable-facility-serve-growth-ecommerce-asia-pacific [Accessed 27 Jun. 2017].
Tremewan, C., 2016. The political economy of social control in Singapore. Springer.
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