Rise of E-commerce in Malaysia and their incredible demand for industrial warehousing real estate.

Increasing Warehouse Demand driven by Ecommerce; Lazada, Shopee, Malaysia

Warehousing needs and E-commerce shorter waiting times and growth are a reflective result of each other as it is a synonymous relationship. As E-commerce site Lazada hit the 1 million item sales mark within the first hour of its 11.11 Sale, with its first order being delivered as early as 1.20 am, according to Lazada, it took only 13 hours to surpass the previous year’s 11.11 sales record, a staggering statistic that shows the relentless growth of e-commerce in Malaysia.

Meanwhile, Shopee recorded three times more orders in the first hour of 11.11 compared to the same period of time last year. The country’s second-largest online shopping platform sold 1 million items by 2 pm and its most popular categories included Home & Appliances, Groceries & Pets, Baby & Toys, and Mobile & Accessories.

Lazada Warehouse at Subang Jaya. Photo by Allan Lee

So how are these record-breaking sales year after year being managed by the e-commerce giants in Malaysia? The simple answer is to design strategic supply-chain management apart from just finding strategic venues to house the millions of inventories.    

We looked at Alibaba’s and Amazon’s playbook, the secret to growth and fast shipping was in the first and last mile, which meant that they needed to have huge warehousing space to pre-empt the orders to be ready for shipping partners when the orders are in. In Lazada’s case, they took cues from their parent company, Alibaba and got directly involved with the shipping and warehousing operations itself, apart from just working with their partners to save on precious shipping times.

Cainiao, the logistics arm of Chinese e-commerce giant Alibaba, has announced the official launch of operations at its new smart warehouse in Huiyang, Guongdong province.

In 2017, Cainiao launched its first robotic smart warehouse in Guangdong, south China province and employs more than 700 robotic workers to fulfil orders. Their mission is to provide same-day delivery within China and up to 3 days of delivery for international orders.

It’s quite a tall order, but looking at how synchronised the robotic warehouses can be, it can be made very efficient with its space to house more items and have less human interaction. Which is why in the near future, Cainiao is working with Malaysia Airport Holdings Berhad (MAHB) to develop a 60-acre plot of land for their first robotic warehouse extension outside of China under the Digital Free Trade Zone (DFTZ) initiative by the previous government, championed together with Patrick Grove of Catcha and Alibaba’s Jack Ma.

Malaysia is still behind Alibaba and Amazon in its effectiveness of e-commerce, we’re slowly but surely we’re moving to a more automated system as time goes on.

 Lazada Warehouse at Subang Jaya . Photo by Mohd Izwan Mohd Nazam

In the mean-time, as we continue to see growth in e-commerce, let’s look into what is needed for a warehouse setup. And why one cannot simply just rent or use an empty building and use it for warehousing purposes?

Especially if there is machinery involved, it is mandatory to make sure that the building has got it’s CCC that is designated for its purpose.
You can read more about understanding what a CCC is and what’s important about it here. https://asklegal.my/p/how-does-malaysia-ensure-that-its-buildings-are-safe-to-live-in

With regards to the industrial real estate market movement, in a recent interview with The Star, Real Estate company, Rahim & Co’s CEO, Siva Shanker shared that there are virtually no speculators within the industrial sector. As he feels confident that it’s mainly because the sector is close to equilibrium. By that, he means that the demand and supply are as close, so the industry sector is seen to be resilient even as during these pandemic times.

Rahim & Co’s CEO Siva Shanker expects the industrial sub-sector to see the quickest recovery post COVID19. Photo by Sam Fong.

A quick look into iProperty and Property guru search, you’ll find that the sizes and types are still largely fragmented, and hard to navigate to find what you’re looking for. You will need to find a specialised Real Estate agent who is focused on Industrial Properties and is able to find the type of property that will suit your needs, from load-bearing, to power supply, access roads, large vehicle loading and especially finding one that is flexible for companies in the E-commerce space for growth.

There are also other factors to include, for example, if you have heavy machinery involved, you’ll need to make sure you have the information to the maximum floor load rating for heavy machine operations. 

Keeping in mind the static weight of the machine, and also the operational loads and vibrational loads imposed when the machine is running. To determine if the factory floor strength is adequate, you need to have the installation of the machine reviewed by a competent building engineer.

Align with Siva Shanker’s view, we certainly hope that this demand will play out as it increases growth in the industrial sector, as well as placing more jobs for the public to get involved in, overall improving Malaysia’s economy.

This post is in collaboration with Industrial Malaysia, to look for comprehensive real estate services for Industrial Properties such as warehouses and factories in Klang, Shah Alam, and Subang areas, you may check their site here.

If you’re thinking if it’s the right time to buy or if you should wait to purchase your property especially during the Coronavirus / Covid19 period, you should read our previous post here before you decide.

Visit Bumbung.co for the best residential listings in PJ, Bangsar, TTDI, Damansara Utama/Jaya, Tropicana, Ara Damansara and Bandar Utama.

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