Redbox to open 2 more outlets in Singapore

Singapore

LOW COST courier Redbox by AirAsia is set to open two more outlets in Singapore as it continues to expand across the region.

Besides Singapore and Malaysia, Redbox is also growing its footprint in other markets, such as Indonesia, India, Thailand and Taiwan, under phase two of its expansion, said Singapore country head Suraj Pillay. And phase three - which will wrap up by June 2015 - will tackle Brunei, Australia, Korea and Japan. It already operates in the Philippines, Nepal and Vietnam.

The concept was first rolled out by budget carrier AirAsia in 2009, although it didn't really take off at the time, said country manager Azad Deen. The current model, where it teams up with logistics partners in individual markets through joint ventures, seems to work better.

In end-August, Redbox - which is jointly marketed by R Box Asia - launched its first Singapore outlet at Lucky Plaza. It aims to garner up to 80 per cent of its business by "aggressively" going after the growing e-commerce market, while also seeking to leverage on demand from the corporate sector and foreign domestic workers.

E-commerce is seen as an industry with high growth potential as other players, such as SingPost, are making investments in the field too.

Next up for Redbox will be an outlet in Little India and a third one along Beach Road by 1Q15 to cater to the foreign worker population in other parts of Singapore.

With AirAsia's fleet and connectivity, air cargo can be delivered to the Asean region within three to seven working days, which is significantly quicker than the three to five weeks that shipping would take, said Mr Deen. Cost-wise, though, shipping works out to be slightly cheaper.

For budget carrier AirAsia, the business means little capital expenditure since the outfit leverages on its network and the existing belly-hold capacity in its passenger planes. A narrow-body Airbus A320 aircraft offers some 1.5-2.5 tonnes of capacity, while a bigger A330 would offer four to five tonnes. On a daily basis, the airline operates some 50 flights out of Singapore and at least 1,050 flights across its entire network, including those by long-haul unit AirAsiaX.

The group ultimately aims to hit volumes of 65-75 tonnes per day out of Singapore.

"The connectivity to tier one, two and three cities is incredible in the AirAsia network," added Mr Deen. The frequency of flights means that Redbox doesn't need to invest too heavily in warehouse space since it aims to load cargo from its 5,000 square foot warehouse in Changi and onto a plane within four to six hours. Investments are being made, however, towards technology and transport, such as vans.

Parcels can be picked up directly from - and dropped off to - the customer, or from its outlet in Lucky Plaza. On Monday, Redbox officially launched its Indonesian operations, which will see it introducing the business in cities such as Jakarta, Surabaya and Medan.

Sunu Widyatmoko, chief executive of AirAsia Indonesia, said: "Ancillary income adds around 20 per cent of our revenue and we are determined to boost this further with new services such as Redbox."

This comes as the region's LCCs are wrestling with overcapacity on short-haul routes, which is depressing yields.