This article first appeared in Digital Edge, The Edge Malaysia Weekly on March 28, 2022 - April 3, 2022

Currently, fulfilling e-commerce deliveries from local sellers to buyers on the same day is still difficult to achieve, especially across states. This is because many e-commerce sellers rely on centralised warehouses in the Klang Valley, observes Ng Yi Ying, founder and chief technology officer of AllSome.

But she is eager to see that happen, and wants to do it by creating flash hubs — or mini warehouses — around the country instead of relying on centralised warehouses in the Klang Valley. These flash hubs will be located in shoplots, restaurants and any property with empty space.

Her idea is for e-commerce sellers to distribute their inventory to flash hubs across the country — depending on where their top buyers are — to shorten the delivery distance. At the same time, anyone with empty space and resources to handle the delivery management can apply to become an AllSome flash hub.

“We are trying to cater for the demand of people who want to get things fast. We joke that when we do secret Santa during Christmas, we always end up buying two presents because the first one [which we ordered online] couldn’t reach on time,” says Ng. AllSome is an e-commerce fulfilment platform that provides cross-border export services, package tracking, supplier management and other services.

“Timing is very important, especially for e-commerce. Most of the procurement hubs are in the Klang Valley, but the majority of the market is actually not. We have clients whose top markets are in Pahang or Kelantan, but there are no procurement centres there and cross-state deliveries sometimes take forever to arrive.”

Centralised warehouses tend to serve hundreds of clients and the workers spend a lot of time packing orders. By the time that is done, the cut-off time to hand over the parcels for same-day deliveries would be over.

Additionally, “the average distance that can support e-commerce same-day or instant delivery is 40km. Technically, the nearer the distance, the more practical it is. So, the best delivery distance, in terms of time and delivery cost, is 5km to 15km,” Ng says.

That can be difficult to achieve through centralised warehouses. AllSome flash hubs, meanwhile, can shorten the delivery distance and even allow consumers to walk in and take away their orders.

AllSome currently has 500 flash hubs in the Klang Valley and plans to launch another 500 in Penang, Johor, Kelantan, Perak, Sabah and Sarawak. Its delivery partners include Teleport, Lalamove and Grab, which are integrated into the AllSome platform.

“We are starting with a network of 1,000 locations. We will need 10,000 locations, such as petrol stations, to have a higher density and support a quick e-commerce experience in Malaysia,” says Ng.

The company has been doing an alpha and beta testing of this system since last December. Due to the huge inflow of e-commerce orders during Christmas, it was unable to focus on doing instant deliveries. But according to Ng, it successfully tested out the use of flash hubs during the festive period. Each hub is able to process an average of 200 to 500 orders a day.

“We are like an Airbnb for procurement. We partner with space owners who have extra time and we install our software on their premises. Once the order is received in their system, they will pack the order and hand it over to our delivery partners,” says Ng.

“When we onboard the flash hub owners, we filter them in terms of their location and the size and security of their space. We also do a background check to ensure that they own the premises.”

The e-commerce sellers will send their inventory to AllSome’s sorting hubs. The company then analyses where the sellers’ top buyers are and distributes the inventory to those states.

In the past two years, the logistics industry has been overwhelmed by the high demand for e-commerce orders. Videos of warehouses being inundated by parcels went viral and in some other countries, stories of delivery riders protesting due to overwork were heard.

It is challenging for AllSome to perform instant or same-day deliveries, Ng observes, because of limitations faced by the last-mile delivery partners as well. Sudden events such as flooding or traffic congestion would impact their timeliness.

“[Timely delivery] requires optimisation from not just one party. That is why we integrate all the delivery partners into our platform. We’ve even analysed their delivery performance to see what their strengths are,” she says.

“We analyse which location and what product type they can handle, do data analytics and optimise [for the best outcome] before handing the goods over to our delivery partners.”

Many warehouses are dabbling in automation and robotics to accelerate their processes and reduce the need for human labour. AllSome has been focusing on using artificial intelligence and software for data analytics instead of investing in automation, Ng says, because the flash hubs are small.

“In the huge centralised warehouses, [workers] spend up to 70% of their time walking. They need to pick and sort the item, pack it and walk out to hand it to the delivery partners. Flash hubs save that time and we’re quite efficient,” she says.

Her long-term goal is to recruit more business premises to become flash hubs and give buyers an instant purchase experience.

“We are also going to try matching sellers of sports products, for instance, with flash hubs in gyms so [they have] a proper branding and to improve the offline experience. We are also planning to expand into Singapore and Indonesia.”

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