Delivering Digitalization: Gotofreight’s Ecosystem Connects the World
By Norris Tangen
While the company Gotofreight Limited might not be a household name, the China-based logistics company is responsible for delivering much of the world’s cross border ecommerce. The AmCham China Quarterly spoke to the company’s Co-founder and CEO Wilson Wong about the company’s digital first strategy, the growth of cross-border e-commerce, and the rise of globalization.
Gotofreight (GTF) Limited was initially established under Best Services International Freight Limited Company as a traditional cross border international forwarder and logistics company. However, as Wilson Wong-GTF’s CEO and Co-founder-explains, the organization soon recognized they needed to adjust their strategy. “We realized that digitalization was imminent, and we needed to upgrade our strategy. We evaluated our services to better shape our future strategy, which means we have been focused on digitalization,” he says. Wong continues, “We set up Gotofreight as the mother company with nine sub-brands beneath it, similar to Google and Alphabet. After we pivoted our strategy, we became an O2O – online digital platform to offline service network – driven company. By setting up GTF as a holding company, we have been able to build our own logistics ecosystem and create one platform for all parties in the supply chain.” Wong describes the process of connecting data exchanges between partners as the company’s first step towards achieving full digital transformation. “As an O2O business, an upgraded online platform is essential to connect the global offline service network. In some countries we don’t have our own facilities, so it’s imperative that we can communicate efficiently with our overseas partners,” he says.
Reflecting on the rapid rate of digitalization, Wong recalls the organization’s early days, “When we established the company in 2010, we were still using MSN, email, and QQ to communicate with our overseas partners and customers.” He continues, “Looking back you can see the digital phases roll out. Now, we have smart phones and our APP which gives customers and partners all the information they need instantly.” To enable this efficient and instantaneous delivery, Wong says the company has invested heavily in building its own digital ecosystem. Beyond the internal IT system to manage company data, the firm also developed its own enterprise resource planning (ERP) system. An ERP system enables organizations to automate and manage core businesses processes for optimal performance, essentially allowing different business applications to talk to each other and share a common database. Wong shares that this system is essential to realizing one of their top priorities: streamlining all external and internal processes – not only for their partners, but for customers. He explains, “A customer can login to the APP and monitor every process. By ensuring efficient exchanges of information and delivering that information to the customer, we make them happy and we save them time that would have been spent dealing with our service team. As a result, our team can spend more time focused on innovation – that is, how to improve collaboration, efficiency, and customer value.”
Today, in the age of digitalization, Wong says a key aspect of communication is finding the right balance. “Our customers can connect to our system anywhere, anytime, to monitor shipments and see if there are any issues. But, at the same time, they do not want to be overwhelmed with information. We work to not overwhelm customers with information, but instead deliver the valuable information when they need it,” he says.
As ecommerce companies like Amazon, Ebay, JD.com, and Alibaba achieved success in their respective domestic markets, they have become increasingly focused on international expansion. Wong remarks, “Since 2011, the big players want to play in the global market not just in the domestic market. And, at first the B2C model was very simple, companies like Amazon signed contracts for small express parcel delivery with companies like FedEx, UPS, or DHL – they didn’t need a freight forwarder. However, by around 2015, the cross-border ecommerce businesses were expanding too rapidly and were unable to keep up with demand. This is where Chinese logistic companies like ours came in and began to work out solutions to fulfill small parcel B2C shipments from initial shipment to final delivery as well as large fulfillment by Amazon deliveries to large warehouses.” Wong explains that in order to meet the requirements of these giant e-retailers, GTF implemented a rigorous SOP system. Those systems went on to set industry standards. As Wang observes, “Ecommerce logistics has really been led by Chinese logistic companies. At the time multinationals didn’t care about this area, they viewed it as a minor detail. But Chinese logistic companies saw the opportunity for big business, and an opportunity to work out the end-to-end solutions instead of seaport-to-seaport solutions.” Ultimately, Wong says the initial investment and risk led to a golden opportunity, “We have become one of the top logistics service providers for cross-border ecommerce.”
Now, with the cross-border ecommerce boom in full swing, the sector has become more competitive. But as Wong says, GTF has a head start, “We began in 2011, but since 2012, we’ve seen cross-border ecommerce expand faster every year.” Wong points to another hugely successful China-based company, SHEIN. Valued at over $100 billion as of April 2022, SHEIN is one of the world’s largest fast-fashion retailers, and as Wong notes GTF is one of the top three logistic service providers for the brand. Wong says the two companies share a similar approach to long-term success, “They started the company in 2008, and until 2011 their growth was not huge. Then, around 2015, they started to see real payoff and substantial year-on-year growth. And then of course, especially in 2020 and 2021, the company saw skyrocketing growth with all of the online shopping during the pandemic.” Wong explains that GTF’s role as a top service provider for the brand has been well-earned, “We have grown with them from 2011 on. We understand their needs and our strategy aligns with their customer platform strategy. Every year we ask, ‘What is your strategy?’ and then we identify what we need to do to support their strategy and grow their business.”
Naturally, Wong says that China’s zero-COVID policy has been hugely disruptive to GTF’s operations. He points out that one of the biggest challenges they have dealt with recently is the lack of coordination of pandemic measures at the provincial and municipal levels. “Each city has different regulations. For example, one of our drivers goes to a city and needs to provide a 24-hour negative COVID test, or maybe the whole city gets locked down. I’ve told our colleagues that for the time being if it’s not necessary to travel then it is best to stay where you are.”
Despite ongoing challenges, Wong says he appreciates the central government’s efforts to enable business to continue operations. “China has so many industry supply chains. If one factory in Southern China is short on essential parts, then their production lines cannot work either. Then, this summer the central government worked to address this issue, they sent notice to the provinces that they needed to ease lockdowns or risk destroying the economy.” However, Wong says that they are still facing issues, with some cities enforcing much stricter controls than others. “This is the big headache,” he says.
Strategies for the Future
In the next 10 years, Wong says globalization and digitalization will be core strategies. In regards to digitalization, he says, “It’s a process. We have improved over the past 10 years, and we will keep going for the next 10 years.” In terms of globalization, Wong notes how much China has progressed since initially opening up in 1979 and then joining the World Trade Organization in 2001. “Industry is growing and growing. The competition is also so strong and it’s getting stronger. Now, Chinese companies in every industry are focused on expanding and cultivating the global market,” he says.