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Aeon (M) ties up with Boxed for new digital retail ecosystem

Aeon Co (M) Bhd is aiming for its new digital shopping platforms to contribute 15% to 20% of its retail revenue over the next five years, according to chief executive officer Shafie Shamsuddin.

The group that runs Aeon Retail Malaysia has tied up with American grocery e-commerce retailer Boxed to build what Shafie calls a new online retail ecosystem, which is targetted to roll out by the end of the second quarter in 2021.

“We have 16 physical locations in Malaysia, where we can build fulfillment centres, together with Boxed technology. Nobody else has this capability currently in Malaysia, ” said Shafie in an online interview.

Shafie said the new online retail ecosystem will deliver options and personalised solutions to Aeon customers who can choose to visit the malls and get their groceries and goods delivered to them while dining in restaurants, or delivered to their homes or offices.

“Aeon customers will be able to enjoy unique user experiences. Aeon Malaysia is one of the largest mall operators in the country. We have a 10% share of the net leasable area, and as such have a lot of brands and choices offered by over 4,000 tenants. Our tenants will also be offering their products and services via our online platform, using Boxed solutions, ” said Shafie.

He said this year, the group will be working on integrating the Boxed technology with Aeon operations in the Klang Valley, before moving on to other Aeon operations across the country in early 2022.

Shafie said for 2021, the group has a capital expenditure (capex) of RM200mil where the bulk will be for renovations and maintenance for Aeon malls, and 30% will be focused on digital platform and transformation.

Aeon Malaysia is the pilot for Boxed technology outside the United States.
“The Boxed platform can be applicable to Aeon companies globally. Malaysia is one of the countries that has the biggest Aeon presence in Asia, but it is not as big or complex as Japan. After implementing Boxed technology in Malaysia, we plan to roll it out to other Asean countries, ” said Shafie.

Boxed has signed an eight-figure US dollar deal with Aeon Malaysia to utilise its technology to accelerate Aeon’s digital transformation.

The two companies did not disclose the value of the deal, other than to say it would be a multi-year collaboration.
Also present at the online interview was Boxed chief executive officer Chieh Huang who said the partnership with Japan’s Aeon Group was a “good marriage” where the integrated Japanese retailer had the resources and scale, while Boxed provided new technology.

“It has been seven and a half years. We built the business with millions of customers and hundreds of millions of dollars of revenue.
“We built the technology – from the front-end software, inventory management system to the warehouse management system, and even the robotics," said Huang.

Our newest fulfillment centres are 100% automated by our own homegrown robotics, ” said Chieh, adding that there are very few companies in the world that has this kind of vertically integrated technology stack.

In August 2018, Boxed had closed a US$110mil funding round led by Aeon Group. It was reported that the two companies would collaborate on fulfillment logistics, robotics and artificial intelligence (AI)-driven data usage.

“When we first started the partnership, it was really for us to advise Aeon Group on our technology and their digital transformation. So, what we are doing here now has been an evolution of that conversation over the last two years, ” said Chieh.

Chieh explained that Boxed technology provide cost savings to its customers.
“With Boxed technology, the benefits are time saving, cost efficiencies, as well as convenience, and addressing safety concerns in this Covid-19 era. We will also provide business-to-business services to our tenants and SMEs (small and medium enterprises). In the future, we will also provide financing to SMEs through this ecosystem, via the end-to-end solutions provided by Boxed, ” said Shafie.