As the eCommerce industry continues its rapid growth trajectory in Malaysia, the incumbent postal service provider, has stepped up to the challenge with the launch of a new eCommerce offering called Pos Fulfill.

Pos Fulfill is trailblazing a new business division dedicated to delivering warehousing and fulfillment services tailored for the unique demands of the eCommerce sector.

Sumesh Rahavendra, Chief Digital Transformation Officer at Pos Malaysia, explained the rationale behind this strategic move: “Ecommerce fulfillment is a space where we’re talking about marketplaces, e-tailers, direct-to-consumer brands, all the way down to individual sellers and social sellers, and how they fulfill their orders to get products into the hands of customers.”

Sumesh Rahavendra, Pos Malaysia

Sumesh also described this interesting space as being a “slightly schizophrenic” depending on “where you are in your evolution as an organization that is selling online.”

Despite this, Pos Malaysia recognized the sizable opportunity here to add value by developing a differentiated offering.

The differentiated offering

“We are by no stretch of the imagination, new to the eCommerce game, we have years and years of experience, right from the very first weeks of eCommerce in Malaysia, through to where we are today.

“And Pos Fulfill is kind of new, we only launched it recently as part of our transformation plan, because the model of Pos Fulfil is different to that of the traditional eCommerce fulfiment model,” Sumesh said.

What sets Pos Fulfill apart is its innovative asset-light operating model that leverages Pos Malaysia’s extensive existing real estate footprint. Rather than having to rent or build out expensive new warehousing space, Pos Fulfillment operates micro-fulfillment centers at underutilized areas of Pos Malaysia’s nationwide network of operations centers and post offices.

“The primary hinge of our model is that, minus the one new dedicated fulfillment center we recently opened, all of our other sites are based in our current locations,” Sumesh noted. “Because we already pay rent and have this space, we don’t have any incremental real estate costs in standing up these mini fulfillment centers, other than the direct costs of racks, people, and operations.

This gives Pos Fulfill a significant cost advantage they can pass on to customers through lower pricing. Beyond the cost benefits, this model also enables speedier deliveries by positioning inventory much closer to end consumers across the country.

New versus Traditional

The traditional eCommerce fulfillment model works on a hub model with a handful of large warehouses that couriers must collect parcels from, which increases shipping times and costs for the seller. What Pos Fulfill has done is standup facilities nearer to areas of high demand, enabling next-day delivery at lower shipping costs.”

Rolling out this bold plan was not without hurdles. Key challenges included bringing in leaders with the right eCommerce skill sets, managing change and getting buy-in from operations teams, as well as building up credibility among eCommerce clients as a relatively new entrant in the fulfillment space.

“We’ve got to do a lot more of what we are doing.”

“Some prospective customers were initially skeptical,” Sumesh recounted. What followed was a lot of face-to-face conversations, attentive listening to their needs and concerns, and explaining unique advantages and differentiated offerings to gain their confidence.

A rigorous focus on execution has been critical to successively standing up the new business. In 20 months, Pos Fulfill has gone from a standing start to operating nearly 250,000 square feet of fulfillment operations space across Malaysia. Advanced technology has also played an essential role.

“This is a very tech-driven business as much as it is operations-driven,” asserted Sumesh. This business has to ensure processes are easy and convenient for the customer by ensuring seamless integration and data flow between their order management systems and warehouse management systems. Technology plays a huge role in terms of enabling seamless end-to-end order flow, integrations across the board and basically end-to-end visibility with fulfillment operations.

Defining its horizons

Pos Malaysia still has big ambitions for the business’ continued expansion and evolution. Beyond onboarding more eCommerce clients and continuously enhancing its core offering, potential future avenues include developing specialized fulfillment solutions for niche industry verticals like healthcare.

“I’ve been pushing my team to look at how we can get more industry-specific as well. For example, hospitals which have very manual supply chains with huge expenditure on consumables like gauze, bandages, gowns, and so on,” said Sumesh. “Could we  get into the consumables space and really make a difference there?

“Once you get into sectors like that, you’re identifying niche opportunities and doing a good thing as well.”

As it writes the playbook for its asset-light distributed fulfillment model, Pos Malaysia is poised to be a trailblazer that redefines eCommerce logistics across Malaysia.

“We’ve got to continue doing what we’re doing and do it a lot more and get better as we grow,” affirmed Sumesh. “Eventually, customers themselves will dictate what they want us to do to keep exceeding their expectations. If that involves adding new technology, that is what we will do.”

He identified staying close to the customer and proactively soliciting their feedback, as a good practice that will steer Pos Fulfill’s roadmap.

“I believe we have a differentiated product at a more affordable price for customers, and that, for me is a significant value proposition to go to the market,” Sumesh concluded.