Last-Mile Challenges in Singapore's Food E-Commerce Industry

It’s hard to remember a time when people could “shop” off catalogues that came in the mail, or phoned-in to order from a TV shopping program. There were much less variety to choose from, and things generally took a little longer to arrive. What’s more, the potential for damaged or lost goods were also much higher back then.

Today, Singapore has a vibrant e-marketplace, and its internet economy contributes 3.2% of the overall GDP. The market for e-commerce in Singapore is now US$1.8 billion in size, and is expected to almost triple by 2025.

Singaporean consumers now have such a high level of trust in e-commerce channels that they don’t think twice about ordering anything and everything online including food items – which are now being shipped in more ways than ever before. Countless vehicles zip around every day, dropping off meals from online food deliveries such as GrabFood and Food Panda, or groceries from online grocers such as Red Mart, Prime Now, and Fair Price Online. This same bustle applies to a number of markets in Asia. In fact, we are witnessing a food e-commerce evolution across the region.

More consumers want fresh food – be it groceries, specialty cuisine, or meal kits – conveniently delivered to their homes with a click of a button, appealing greatly to those (particularly millennials) who are embracing online food retail. A study by research firm IGD revealed that online grocery sales are expected to increase to US$267 billion in 2022 from the current value of US$91 billion across Asia’s top 12 grocery markets, representing an annual growth rate of 24.1%.

Yet even though the food e-commerce industry is making things effortless for shoppers, the question is: Can companies cope with the increased demand while ensuring the highest standards are met to ensure foods are safe for consumers? Today’s millennial-driven customer base are more willing to switch to e-grocery for the convenience and quality of trusted brands, if the product offering and price are comparable and competitive among online and offline suppliers.

Is your dinner putting you at risk?
The foods bacteria love best are some of the same offerings found in catalogues of online grocers: dairy products, meat, poultry, and fish. At room temperatures, present bacteria doubles every 20 minutes.

Most consumers don’t know the temperatures at which their foods should be maintained for safe consumption and aren’t testing proteins delivered to their houses. And as there are no temperature regulations for food deliveries, this challenge lies with the individual players in the industry, knowing that a wrong step not only puts consumers at risk of illness, but it also poses a risk to the reputation of the brand and potentially contributes to the larger issue of food waste.

On this front, the Agri-Food & Veterinary Authority in Singapore states that chilled food products should be maintained at 4 Celsius or below and with a core temperature not exceeding 7 Celsius, whilst frozen food should be maintained at -18 Celsius or below and with a core temperature not exceeding -12 Celsius.

Shipping food isn’t for amateurs
Total end-to-end supply chains for temperature-controlled products such as fresh food are highly complex and difficult to navigate. As globalisation of e-commerce continues to rise, complexity multiplies. To avoid product degradation, ensure consumer safety, and protect brand integrity, it is imperative companies work with packaging partners that are able to provide qualified insulative solutions which maintain proper temperature profiles, ensure space optimisation, and reduce the overall environmental footprint.

Whilst it isn’t breaking the dominance of supermarket chains just yet, the online grocers industry is rapidly growing and evolving. These players are entering the market with entrepreneurial and innovative ideas to improve delivery, service and options. Be that as it may, it’s understandable that food safety and many of the complexities of last-mile delivery might seem new to these emerging companies.

One key challenge with online grocers is the wide range of products that they offer, each having different demands in terms of temperature and protection requirements. Whilst consumers have the ability to order a variety of products ranging from fruits and vegetables to raw meats and dry goods, it stands to reason that a free-range chicken breast and carton of milk have different needs than a packet of dry grain. Proteins, which are often shipped frozen and thawed along the way, should be placed nearest the phase change material to keep the temperature at a safe level. A liner or dunnage material must also be used so vegetables don’t freeze. These fluctuations degrade the quality of the goods quickly, making for a very delicate balance. The wrong combination of materials can easily miss the mark and have harmful results.

A major variable for the e-commerce and food delivery industry is shipping duration. Dropping a box on a doorstep mid-day will present a different level of risk than an evening delivery or a delivery in an apartment complex. However, most online grocers or e-food delivery companies are not modifying packaging or delivery strategies to account for these variations, and are putting brand equity and customer safety at risk.

To relieve the pressure of these complexities, food manufacturers, food retailers and e-grocers must partner with packaging firms that have proven experience in temperature assurance, and that can guarantee a continuity of supply with the same high quality standards around the globe.

To meet the rising demands of a growing Asian consumer base, players in Singapore’s food e-commerce space should specifically seek partners and suppliers that have certified lab capabilities to customise and design solutions that meet the required profile of proteins and be able to digitally track, trace, and monitor food temperatures throughout the supply chain. The companies that do will be able to market with confidence to consumers and demonstrate a commitment to food safety as a key differentiator in an increasingly crowded space.