MALAYSIA’S e-commerce market is expected to grow to US$3.8bil in 2018, according to BMI Research, and the National e-Commerce Strategic Roadmap is projecting e-commerce here to grow at an average rate of 11% a year.
With such accelerated growth, the logistics needed to serve a rapidly increasing number of customers is astounding.
Naturally, the industry is experiencing a bottleneck, particularly in the last-mile delivery portion.
A robust last-mile delivery service is key to supporting the e-commerce boom and this has, so far, eluded many retailers, notes Empire World Express Sdn Bhd managing director Allan Yeo.
However, new logistics services startups are coming into the picture to help turn the tide.
Yeo foresees more of these startups coming into the market over the next three years, fuelled by increasing volume and demand for last mile delivery services from e-commerce. It is not just about retailers getting the products out to the customers. There is also growing demand for reverse logistics as more retailers offer free return services.
This trend will continue to feed the booming e-commerce industry in Malaysia.
“Last-mile delivery is a big business as retailers that go online prefer to outsource rather than invest in picking, packing and distribution facilities. Increasingly, consumers are demanding same-day delivery and this could mean a shift towards local couriers closer to the end consumers,” notes Yeo.
While Yeo says the growing number of startups in the market does not really pose a threat to its business, it is important for Empire to remain on its toes. After all, these startups have the capability to scale quickly by leveraging on technology and could become more prominent players in the industry.
While the volume coming in from e-commerce is big, margins tend to be thin and there is a need to have the capacity to deliver large volume efficiently by using available technologies.
Empire is also investing in its own technology to boost its capacity to handle the e-commerce segment.
But logistical challenges remain for networks outside of the Klang Valley or other urban centres. Last-mile delivery on these routes tend to be underserved, leaving room for more players to come in.
The potential in the local market is not lost on foreign startups as well.
Aiming to take a slice of the booming e-commerce logistics cake, a slew of high profile Hong Kong-based logistics startups, including Lalamove and GoGoVan, have expended into Malaysia. Hong Kong-founded newcomer Pickupp was the latest to join the fray last April.
Meanwhile, Grab, the dominant ride hailing operator in the Asean region, has also started its delivery services, adding to the already crowded and competitive field.
Closer to home, Ezyhaul, a Singapore-headquartered logistics technology startup, has set a lofty goal of having at least 3,000 trucks registered on its platform within the next 12 months. Currently, Ezyhaul’s network in Malaysia consists over 1,000 trucks of various capacities.
Another Singapore-headquartered last-mile logistics startup Ninja Van also expanded into Malaysia two years ago. It has been working with several big-name brands in the region, like e-commerce websites Lazada, Zalora, and Qoo10, as well as popular online marketplaces like Shopee, and retailers like Charles & Keith, Watsons, and Guardian.
Competition in the space is definitely heating up, but plenty of small boys are finding their niche as they exploit pockets of opportunity in a fast growing and crowded market.