Faced with the rapid growth of the Southeast Asian e-commerce market, using overseas warehouses to ship from “home” has become a key strategy for Chinese sellers and brands to improve customer experience, reduce operating costs, and enhance market competitiveness. This guide is divided into four core sections, providing you with a one-stop solution.
Part 1: Selecting and Layout Strategies for Overseas Warehousing Models in Southeast Asia
Before choosing an overseas warehouse, you must first determine which model is best suited for your business.
- Three Main Overseas Warehousing Models:
Third-Party Overseas Warehousing:
Description: Operated by a professional logistics service provider, this service provides warehousing, drop shipping, returns, and exchanges to multiple sellers.
Advantages: High flexibility, no long-term contract pressure; low capital investment; quick activation; professional service.
Suitable for: Small and medium-sized sellers, sellers new to the Southeast Asian market, and sellers with a large number of SKUs.
Official Platform Warehousing (such as Lazada’s LGF and Shopee’s SPX):
Description: A warehousing and logistics system operated by the e-commerce platform itself or through a designated partner.
Advantages: Deeply tied to platform traffic and activity, typically with logistics identification and traffic bias; smooth fulfillment process.
Suitable for: Sellers whose core business is concentrated on a single platform and who seek to leverage platform traffic.
Self-operated overseas warehouses:
Description: The company leases or builds its own warehouse in the destination country and establishes a team to manage it.
Advantages: Strongest control, complete management autonomy; strong data confidentiality; highly customizable processes.
Disadvantages: High capital, management, and labor costs; self-assessment of compliance risks.
Suitable for: Large brands and companies with large and stable business scale.
- Southeast Asia Overseas Warehouse Location Strategy:
With numerous countries in Southeast Asia, location selection is crucial.
Core Country Hubs:
Malaysia/Singapore: Geographically central and with well-developed logistics infrastructure, they often serve as regional distribution hubs. Singapore offers efficient customs clearance, but also high costs. Malaysia (such as Port Klang and Kuala Lumpur) offers relatively low costs and wide coverage.
Thailand: Bangkok, as an economic center and transportation hub, is suitable for covering mainland Thailand and surrounding areas.
Indonesia: Jakarta is a key location, but with numerous islands, consider establishing a secondary warehouse outside of Java (such as Surabaya) to optimize delivery to the eastern islands.
Vietnam: Ho Chi Minh City and Hanoi are two key cities, covering the southern and northern markets, respectively.
Philippines: Manila is the absolute core.
Layout Recommendations:
Single-Warehouse Model: Initially, it is recommended to select a core hub (such as Malaysia or Thailand) and use it as a hub to radiate to surrounding countries. The advantages are simple management and centralized inventory.
Multi-Warehouse Model: Once sales in a single country have steadily grown, establish a separate warehouse in that country. Multiple warehouses can significantly reduce last-mile delivery time and costs, and enhance the shopping experience.
Part II: Refined Inventory Management in Overseas Warehouses
Inventory is a core asset, and good management is directly related to cash flow and sales opportunities.
- First-Mile Logistics Replenishment Strategy:
Transportation Mode Options:
Air Freight: Fast delivery (3-7 days), high cost. Suitable for urgent replenishment, high-value, low-weight goods, or trial runs of new products.
Ocean Freight: Slow delivery (15-30 days), low cost. Suitable for routine replenishment of large quantities, low-turnover goods, and heavy goods.
Land Transport (For Indochina): Land transport from Yunnan and Guangxi, China to Thailand, Vietnam, etc. offers high cost-effectiveness.
Strategy: Adopt a hybrid model of “sea freight as the primary mode, supplemented by air freight” to balance cost and timeliness.
Smart Replenishment Model:
Safety Stock: Safety Stock = (Expected Maximum Daily Sales × Maximum Replenishment Cycle) – (Average Daily Sales × Average Replenishment Cycle)
Replenishment Point: Replenishment Point = Safety Stock + (Average Daily Sales × Average Replenishment Cycle)
Recommendation: Use your warehouse management system (WMS) to set up automatic alerts. When inventory levels fall below the replenishment point, the system automatically prompts you to generate a purchase order or first-leg shipment plan.
- Inventory Data and SKU Management:
ABC Classification: Divide inventory into three categories.
Category A (High Value, Low Sales): Focused management, accurate forecasting, and frequent, small-batch replenishment.
Category B (Medium Value, Medium Sales): Conventional management, with reasonable replenishment points.
Category C (Low Value, High Sales): Simplified management, with a higher safety stock setting and large-batch replenishment to reduce procurement and transportation costs.
Regular Inventory: Conduct cycle counts or annual full inventory checks to ensure consistency between WMS data and physical inventory, and promptly identify and address discrepancies.
Dealing with Slow-Moving Items: Regularly analyze sales rates and promptly clear out slow-moving items (SKUs) through promotions, bundled sales, or returns to free up storage space and funds.
Part III: Local Delivery and Last-Mile Optimization
The value of an overseas warehouse is ultimately reflected in the “last mile” delivery experience.
- Choosing a Last-Mile Logistics Partner:
Mainstream Local Express: Partner with well-known express delivery companies in the destination country, such as:
Indonesia: J&T Express, JNE, SiCepat
Malaysia: J&T Express, Pos Laju, Ninja Van
Thailand: Kerry Express, Flash Express, J&T Express
Philippines: J&T Express, Ninja Van, LBC
Vietnam: Giao Hang Nhanh (GHN), Giao Hang Tiet Kiem (GHTK), Viettel Post
Selection Criteria:
Coverage: Can delivery reach remote areas?
Time: Average delivery time in major cities.
Price: Shipping costs.
Service Quality: Package damage rate, loss rate, and customer service response speed.
API Integration: Can it seamlessly integrate with your order management system (OMS) or e-commerce platform to enable automated order processing?
- Delivery Optimization Strategy:
Multi-Carrier Strategy: Don’t rely on a single carrier. Intelligently select the optimal/most economical channel based on order destination, weight, and customer requirements.
Delivery Time Guarantee: Clearly indicate “delivery within XX hours/days” on the product page to significantly increase conversion rates.
Reverse Logistics (Returns and Exchanges):
Establish a dedicated returns and exchange area within your overseas warehouse.
Establish a clear process: Receiving -> Quality Inspection -> Classification (Resaleable, Repairable, Scrapped) -> Processing (Restocking, Refund, Exchange).
Providing a convenient return address and process can enhance customer trust and encourage repeat purchases.
Part 4: Technology Empowerment and Continuous Optimization
- System Integration is Key:
ERP/WMS/OMS/TMS Integration: Ensure real-time data synchronization between your e-commerce platform, order management system, warehouse management system, and transportation management system. This is the cornerstone for efficient and accurate operations.
Core Functions: Real-time inventory synchronization, automated order processing, shipment tracking, and data reporting and analysis.
- Key Performance Indicators (KPIs) and Continuous Improvement:
Establish a data-driven decision-making culture and continuously monitor the following KPIs:
Warehousing-related:
Inventory accuracy (target > 99.5%)
Order delivery accuracy (target > 99.9%)
Warehouse processing time (from order placement to delivery)
Distribution-related:
Final-mile delivery time (average delivery time)
Logistics cost as a percentage of order value
Customer experience-related:
On-time fulfillment rate
Return rate and return reason analysis
Summary and actionable recommendations:
Startup phase: Select one or two core markets and partner with reliable third-party overseas warehouses. Adopt a single-warehouse hub model, replenishing inventory through a combination of air and sea freight.
Growth phase: Introduce a WMS system, implement refined inventory management (ABC classification, safety stock), and partner with multiple final-mile logistics providers to optimize experience and costs.
Mature Stage: Build a multi-warehouse network in key sales countries, deeply integrate IT systems, use data dashboards to drive operational optimization, and establish an efficient reverse logistics system.
The Southeast Asian market is full of opportunities and challenges. A well-designed and efficiently operated overseas warehouse system will be your strongest support as you navigate this promising market. We hope this guide will provide clear guidance on your global expansion journey.