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Inside Singapore Post Limited’s Quest to be A Global eCommerce Player

Singapore Post Limited (SGX: S08) had hosted a presentation for its fiscal fourth-quarter earnings release recently. The company had shared a webcast of the event and there was one statement which caught my attention when I watched the webcast. It is something Singapore Post’s investors might also want to take note of.

The company’s chief financial officer Mervyn Lim said:

“We have successfully connected the dots in building a global eCommerce logistics platform with our US acquisitions. We are now serving more than 100 monobrands worldwide, generating more than US$4 billion in gross merchandise value transacted on our eCommerce sites.”

In the quote above, Lim was referring to the acquisitions of the US-based TradeGlobal and Jagged Peak. As a brief background, the former is a US-based end-to-end eCommerce provider for premier fashion, beauty, and lifestyle brands. The latter is an eCommerce software and services provider for single channel, multi-channel, and omni-channel businesses. Both acquisitions were done in October last year.

How do the acquisitions “connect the dots” for Singapore Post’s ambition?

From regional to global

Marcelo Wesseler, Singapore Post’s chief executive for eCommerce, made this point during TradeGlobal’s acquisition:

“Full service eCommerce solutions have traditionally been geographically confined. This acquisition will offer a one stop solution for brands to grow their businesses globally. Using localised capabilities in the two largest eCommerce markets, Asia Pacific and North America, brands will also be able to provide their customers with a seamless shopping experience.

This acquisition strengthens our e-commerce logistics platform by enhancing our scalability and capabilities, for instance to handle major surges in traffic and transactions during peak shopping seasons.”

TradeGlobal serves more than 60 leading brands, providing Singapore Post with a new set of customers. Meanwhile, Jagged Peak brings to the table over 20 warehouse locations across US, Canada, and Europe.

Under one roof

Soon after the acquisitions were made, TradeGlobal, Jagged Peak, and Singapore Post’s eCommerce division were integrated to form SP Commerce.

In the announcement for the above, Singapore Post said that the integration of TradeGlobal and Jagged Peak enables it to expand into the US, the largest retail market in the world. Singapore Post also touted the integration’s unique ability to provide the company access to China and the rest of the Asia Pacific region.

Furthermore, Singapore Post also shared snippets from a Forrester study in the announcement that noted that 83% of B2B (business-to-business) sellers are in the process of upgrading or implementing an eCommerce offering or planning to do so within the next six months.

This could be where Singapore Post comes in.

The combined SP Commerce entity would have about 1,000 eCommerce clients and 50 distribution centres across at least 18 countries. Singapore Post believes that its integrated approach, fulfilment capabilities, and international scale can support businesses which are interested in making the eCommerce leap.

By the numbers

Singapore Post’s eCommerce-related revenue leapt by more than 60% year-on-year to over S$400 million for its fiscal year ended 31 March 2016 (FY15/16). But it’s not all sunshine and roses though – Singapore Post’s margins are expected to be lower when the eCommerce-related segment takes up a larger slice of the overall pie.

With SP Commerce, investors might want to keep an eye on its future growth as well as profit margins.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.