Hello, I’m Leo Sato (@slamdunk772), the CEO of applemint, a web marketing service provider in Taiwan!
Did you know that in 2020, Japanese retailers, including e-commerce, invested 350% more in Taiwan than the previous year? As the effects of the Coronavirus linger, Japanese products are eagerly awaited in Taiwan, and more and more companies are strengthening their investment in Taiwan. However, inventory and logistics management is a concern when expanding into Taiwan.
As I have explained in the past applemint blog (written in Japanese), many companies entering Taiwan first attempt to import products manufactured in Japan and sell them in Taiwan (a method known as cross-border EC). However, leaving everything up to the intermediary will cost too much commission fees, and the distributor will not make any money.
After four years of experience in Taiwan, applemint recommends that the companies hire people in Taiwan to manage your warehouse and import/export operations yourself.
However, for companies that haven’t entered the Taiwanese market, there are still some things to consider, such as what kind of logistics companies are available and whether there are any convenient services that can manage everything from warehouse management to shipping!
So, in this article, I will introduce you to some of the most popular logistics companies and the latest logistics services used in the Taiwanese EC industry! Read this blog to learn about the trends in Taiwanese logistics that will help you expand your business in Taiwan in just five minutes.
If you are thinking of expanding your business to Taiwan, we hope that you will learn the basics of the Taiwanese logistics industry and its services before competitors do, so that your expansion into Taiwan can proceed efficiently and smoothly!
The Taiwanese EC Market
Overview of the Taiwanese EC market in 2021
According to Taiwan’s Ministry of Economic Affairs, retail sales in the EC market in the first half of 2021 totaled about 800 billion yen, a whopping 25 percent increase over the same period last year!
The prime reason for this is that in the first half of 2021, people were restricted from going out in Taiwan due to the coronavirus and had to shift the primary way of shopping to online shopping.
As of the first half of 2020, Taiwan’s Internet penetration rate has reached 85.6%, and the retail online sales penetration rate has reached 8.9%. However, the penetration rate of Taiwan’s e-commerce is still low compared to the 25% penetration rate of advanced e-commerce countries such as South Korea and China, and is expected to grow rapidly in the future!
It is said that if the 8.9% rate were to increase to 25%, it could lead to online sales of 600 billion yuan (more than 2 trillion yen), which would be a huge opportunity for overseas companies expanding into Taiwan that are well suited to EC!
Pros and Cons of stocking in Japan vs stocking in Taiwan
So, which is better for a Japanese company to start EC sales to Taiwan, stocking in Taiwan or stocking in Japan? In this section, I will introduce the advantages and disadvantages of the three patterns: inventory in Taiwan, inventory in Japan, and using a sales agent.
|Stock in Japan (without local subsidiary)||No need for a Taiwanese local company||Importers must bear customs duties and apply for them, handling returns is complicated, local payment cannot be handled, shipping takes time|
|Stock In Taiwan (with local subsidiary)||No need for users to go through import procedures, local settlement can be handled, inventory management/shipping/settlement can be done quickly||Procedures for establishing a local subsidiary in Taiwan are required|
|Using a sales agent||no need for a local company in Taiwan, inventory management/shipping/local payment can be handled in Taiwan||High commission (around 20% or more)|
As applemint has been emphasizing for a while now, if you are serious about expanding into Taiwan, we recommend at least setting up a local company, hiring Taiwanese people, and doing the warehouse management and shipping locally.
In the following blog post, you’ll find all you have to know about how to survive in Taiwan, based on the experience applemint has had over the past 4 years!
3 Major Logistics Providers in Taiwanese EC
Next, I would like to show you the logistics companies that you should know about if you have inventory in Taiwan for EC. The names and service features of the three most commonly used logistics providers in Taiwan are as follows!
Logistics Provider #1: Hsinchu Logistics
Hsinchu Logistics was established in 1938 and it is the second largest logistics company in Taiwan in terms of sales. Originally, Hsinchu Logistics was a BtoB-centric logistics company, but since early 2013, it has joined hands with e-commerce agencies to support e-commerce delivery.
Hsinchu Logistics already has EC delivery sales of over 50%, and in the first half of 2021 during the peak of Taiwan’s coronavirus disaster, its operating revenue improved by 13% compared to the previous year, making it a hot topic. Hsinchu Logistics is now providing various services such as warehousing and distribution processing in partnership with EC-related companies.
Hsinchu Logistics also supports the delivery of small products and motorcycles as it meets the demand for small quantities and short delivery times for EC sales. The company’s strength lies in its extensive know-how in EC logistics.
Logistics Provider #2: Kerry TJ Logistics
Kerry TJ Logistics is the third largest company in Taiwan’s logistics industry in terms of sales, providing a wide range of delivery services from fashion to medical supplies as well as EC, and is said to have a 35% share of the total cargo volume in Taiwan.
Like Hsinchu Logistics, Kerry TJ Logistics was mainly focused on BtoB, but with coronavirus, it actively entered into EC logistics in the metropolitan area, and the ratio of EC-related logistics increased from 10% to 30% in 2020. What makes Kerry TJ Logistics special is that it has sales offices in every town and village in Taiwan, and can respond smoothly to any location.
The company is also strong in the medical field, which means they have the know-how to handle thorough temperature control and delicate products.
Logistics Provider #3: Taiwan Pelican Express
Taiwan Pelican Express was established in 2000 as a result of a partnership between Taiwan’s Dong Yuan Group and Nippon Express. It is known as the first logistics company to launch door-to-door service in Taiwan.
Although the company’s sales are not as large as those of the other two companies introduced above, it is characterized by its relatively reliable quality due to the involvement of Nippon Express, as well as by the fact that it is developing new services one after another.
Specifically, there is a home delivery service for 3C-related repair parts in cooperation with FamilyMart, speedy delivery within three hours, and delivery specializing in gourmet food! Currently, the percentage of sales related to EC is about 30%, but it is expected to increase more and more with the expansion of the EC market.
So far, I have introduced these three companies, but there are also other logistics companies such as Global Express that are smaller in scale but focus on EC logistics. What the best logistics company for you is depends on the type and size of the products you handle, so please find the best logistics company for your company.
Reference (written in Chinese)
Warehousing and Logistics Services in Taiwan
Finally, I would like to introduce a relatively new logistics service that has recently attracted a lot of attention in Taiwan for those who are considering EC for Taiwan.
Smart Warehouse: Logistics Republic
First of all, let me introduce you to Taiwan’s largest smart warehouse service that fully automates everything from inventory management to packing and shipping. Its name is Logistics Republic.
Logistics Republic was created by Taiwan’s largest logistics real estate company in 2014, and it has huge warehouses with a total floor space of 150,000 square meters in four logistics parks in New Taipei, Taoyuan, and Taichung, where everything from packing to shipping is fully automated.
In addition to PChome, Taiwan’s largest EC mall, famous brands such as H&M, FamilyMart, and Baoya (a drugstore similar to Matsukiyo in Taiwan) also use this service, and it is called the AWS of the warehouse industry in Taiwan.
The Logistics Republic is the first company in Taiwan to introduce AGV (Automated Guided Vehicle), which is also used in amazon’s warehouse, to fully automate warehouse management.
In addition, for warehouse-using companies, we have recently developed an app that manages everything from inventory management to delivery in collaboration with a Taiwanese delivery companies. It can be said that Taiwan’s logistics DX service is attracting a lot of attention right now.
If you are planning to expand your business to Taiwan and rent a warehouse, one of the best ways to do so is to use a smart warehouse service like Logistics Republic to manage your inventory efficiently, rather than hiring a lot of people!
Logistics Blockchain Platform, Aiwan Technology
Secondly, I would like to introduce Taiwan’s first blockchain platform specializing in logistics, which was started in 2017 by a company called Aiwan Technology. It may sound complicated, but in simple terms, it is a service that digitizes documents.
In the logistics industry, a large amount of paper documents have been created in each process, from service contracts to receipt and payment, delivery notes, invoices, and payment management. The service of Aiwan Technology has changed the way these paper documents are processed by encrypting the documents using a secret key and exchanging them electronically through a blockchain platform.
The amount of documents processed in logistics is massive, and by going paperless, the logistics industry can save 20 billion yen and 300 million pieces of paper annually. In addition, the digitization of documents will improve the efficiency of work, as the related parties can easily create and check documents and invoices online!
So, if you aim to expand your business to Taiwan and to manage your inventory locally in Taiwan, I hope these logistics DX services help you to efficiently do so!
Lastly, I will briefly introduce to you what applemint is.
applemint is committed to helping companies that want to start an e-commerce business in Taiwan. From cosmetics to health food, anime goods, and more, we have helped both Japanese and Taiwanese companies with their EC business from the standpoint of a local Taiwanese marketing company.
Based on the knowledge and experience we have, applemint is able to respond to a variety of needs, from cross-border EC to advice on entering the local market, and is able to provide optimal support in real time while monitoring the local situation.
As I mentioned at the beginning of this blog, Japan’s attention to the Taiwanese market is now greatly increasing. After the pandemic is over, it is expected that expansion into the Taiwanese market will become more and more competitive, so I believe that the key to success is to prepare early and be ready for expansion now.
If you have read this blog and are even a little bit interested in expansion to Taiwan and applemint, please click here to contact us! We will do our best to help you expand your business into Taiwan.
Click to contact applemint.