Lazada Thailand is making its largest investment in Southeast Asia on a new sorting facility, preparing for e-commerce growth expected to reach US$32 billion by 2025.
Kerry Express also invested in automation technology and digital mapping to increase the accuracy and efficiency of its logistics operations.
The moves signal increased competition in the local logistics sector.
According to data analytics firm Creden Data, in 2022 Lazada Express was among the few players to post a profit. The company recorded revenue in 2022 of 16 billion baht and profit of 2.7 billion baht.
"We are investing in our new sorting facility which is the largest investment in our logistics business in Thailand and Southeast Asia," James Marchant, chief logistics of Lazada Thailand, said.
Located in Samut Prakan, the Thepharak Sortation Centre uses the latest technology in automation and will combine with its two existing Sortation facilities, one in Suksawad Phra Pradaeng and the other in Chachoengsao.
The three sorting centres combined will raise Lazada's sorting capacity to more than 2 million parcels a day.
The new sorting centre will use the latest technology in automation and artificial intelligence. Compared with a manual sorting centre, it working speed is four times faster, said Mr Marchant.
The automation technology also reduces the space used in the building, increases productivity and increases operating efficiency and accuracy.
According to Google e-Conomy SEA report 2022, the local e-commerce industry's gross merchandise value stood at $22 billion in 2022 and is projected to reach $32 billion by 2025 with compound average growth of 13% from 2022-2025.
Lazada Logistics places importance on delivering orders quickly and seamlessly, ensuring efficiency from first to last mile and offers a priority delivery service option which increases demand from consumers.
Logistics and delivery services enable the company to control users' experience and differentiate it from rival platforms, said Mr Marchant.
"We expect this new sorting facility will have return on investment within three years, depending on volume," he said.
The Theparak sorting centre is Lazada's biggest facility in Thailand at 35,000 square metres.
Nutthapol Kriengchaivate, senior vice-president of Lazada Logistics Thailand, said the sorting centre is part of the company's end-to-end one-stop logistics solution, from delivery services under Lazada Express to customers' locations, and also fulfilment services for online sellers who sell on its platform from inventory and packaging to delivery. It also offers a new multi-channel logistics service aimed at online vendors who sell on multiple online platforms.
Currently, Lazada Logistics supports around 50% of its own parcel platform and also uses third-party service providers.
"We use third-party delivery providers in areas where our partners are more efficient in terms of cost and coverage and expertise," said Mr Nutthapol.
He said the new sorting centre spends less than two hours from inbound process and sorting parcels and outbound to prepare for distribution centres in other locations.
"We use automation that makes less use of staff and paper, with 360-degree AI cameras that speed up work and accuracy," he said.
Mr Nutthapol cited the company's survey that found that 43% of Southeast Asian shoppers expect next-day delivery and 55% of respondents feel satisfied with fast delivery options, which increased their purchases.
Lazada launched its priority delivery service in September 2022 to provide shoppers with the option to receive their parcels within two days after the order is confirmed. This applies to orders fulfilled by sellers, with next-day delivery for orders fulfilled by Lazada.
Currently, the priority delivery service is available in 23 provinces including Bangkok and surrounding metropolitan areas of Chon Buri and Nakhon Ratchasima.
Mr Marchant said within four years, Lazada will extend the priority delivery nationwide.