Solving the Hong Kong delivery challenge for Taobao orders

Royale International, a Hong Kong-headquartered global express delivery services company, has solved 7-Eleven’s unique parcel inventory problem using a combination of Amazon Web Services (AWS) cloud services.

Founded in 1908, Royale International has diversified its service portfolio from traditional courier services to warehousing to specialized services, such as time-critical delivery, e-fulfilment and financial research distribution.

Coordinating Taobao shipments for 7-Eleven

About 18 months ago, Royale International partnered with convenient store chain 7-Eleven to provide a delivery service called Retail Distribution. Under the partnership, Royale International exclusively delivers goods shipped by Taobao online stores from mainland China to 7-Eleven stores in Hong Kong for subsequent collection by customers. The partnership also required the courier provider to manage 7-Eleven's parcel inventory, in terms of the number of parcels in-store.

At the initial stage of the service, Royale International did not have the required IT infrastructure to support this service.

Steven Kwok, project manager, Royale International Group"When the first Double 11 [Single’s Day online shopping festival] in 2015 came along, we faced a lot of challenges for the first time as we needed to handle oall the parcels to be directed to 7-Eleven stores," said Steven Kwok (photo right), project manager, Royale International Group.

Given that the 7-Eleven stores are generally small in size, a typical store can keep only about 10 to 30 parcels at any given time. This posed a serious challenge to Royale International in managing the inventory at 7-Eleven stores, especially during Taobao’s online shopping peak seasons.

"In the two weeks that followed Double 11 in 2015, numerous Taobao parcels have piled up in our warehouse because the 7-Eleven stores did not have enough physical space for the excessive parcels that were ordered during the shopping festival," Kwok recalled. "It took us two weeks to process and dispatch all the parcels. In the intervening period, we received countless enquiries from the shoppers concerning the whereabouts and the delivery status of their ordered items."

"7-Eleven told us that the existing inventory management model was not working. We then decided to use AWS to build a whole new infrastructure for the Retail Distribution service to deal with the spikes during the peak shopping seasons, which would otherwise create a huge backlog of parcels in our warehouse."

Target: mobile client for all 7-Eleven stores

To enable real-time tracking and parcel inventory management at each 7-Eleven store, Royale International introduced a mobile strategy, in combination with a cloud computing infrastructure.

Prior to using AWS, Royale International used to keep track of the parcel inventory in each 7-Eleven store through Excel spreadsheets each store compiles. To streamline this process, Royale International utilizes the Android device that each store equips, by installing its homegrown parcel inventory management mobile app. The app enables 7-Eleven staff to perform parcel check-in and check-out.

Meanwhile, such data are simultaneously sent back to Royale International’s Retail Distribution System, allowing the company to keep track of the overall parcel inventory status across different stores.

"With the real-time visibility in the number of parcels in each 7-Eleven store, we are able to exercise real-time inventory control. This also helps us to track and forecast the rate of parcel check-out at each store," said Kwok.

"As we expand our services to 7-Eleven from simply a courier provider to a system integrator, we aim to eventually support 7-Eleven’s entire delivery service," he added. "It is our goal to bring this mobile client system to every single 7-Eleven store in Hong Kong."

Low entry cost and flexible scaling

At the backend, Royale International deals with the spikes of parcel volume by adopting AWS EC2 to auto-scale its servers.

"We selected AWS for its low entry cost, as we could pay for its services on a monthly basis," he said. "This helped us to fulfill all the web requests made during major occasions, such as Double 11, December 12, Chinese New Year, and various events on Taobao each month."

According to Kwok, another major challenge to meet 7-Eleven's parcel inventory management requirements is to develop a platform that coordinates shipments with all parties, including the online retailers, 7-Eleven stores, the company’s own warehouse and its courier business units. On top of that, 7-Eleven is also requesting Royale International to support other new e-commerce merchants, but without modifying their existing core systems.

This was the reason for the company to adopt AWS Lambda (to build a server-less backend) and API Gateway (a managed service that enables developers to create, publish, maintain, monitor, and secure APIs at scale) for easy integration with the systems at different e-commerce merchants.

Royale International has also adopted AWS EC2 to upload inventory data to S3 for storage. To standardize the data formats across different 7-Eleven stores, the company also inserts a standard data structure with DynamoDB (a NoSQL database service that supports applications requiring low, millisecond latency).

Royale International's Retail Distribution System was initially connected to 50 7-Eleven stores and was growing quickly with the deployment of AWS and its mobile strategy.

 “We experienced 300% growth in the first six months after we adopted AWS. We are now delivering more than 1,000 packages a day to 370 7-Eleven stores. We have also expanded our business to return service,” said Kwok.

 “AWS is easy to use. It enabled us to launch the project in just three months. It is also very secure, as all connections with clients are SSL-compliant. This also helped the company to achieve the ISO9001 accreditation,” he concluded.

First published on Computerworld Hong Kong