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ecommerceIQ, together with Sasin SEC, created the Leadership Ecommerce Accelerator Program (LEAP) to provide the fundamental knowledge and skills needed to successfully run an ecommerce business in the world’s fastest growing market.

A shopper tapping the ‘buy now’ button is often seen as the last stage in the ecommerce funnel, but companies should understand that it doesn’t stop there.

The warehouse hustle bustle, weight of package, and even presentation of the delivery man not to mention the possibility of a return all can determine the extent of local success a company finds and whether if their operations make expansion plausible.

In the eighth week of eIQ x Sasin: LEAP, lecturers stress the details that make e-fulfillment successful and how each tiny misstep can lead to additional man power, longer work hours and missed deadline.

1. Setting Up a Fulfillment Center Requires A Lot Data and Elbow Grease

Kenneth Thean, aCommerce Regional Director of Solutions Design

 

LEAP2017, ecommerceIQ, aCommerce

Ask anyone about a warehouse and they’ll probably draw a building with some shelves and people in it. While these elements exist, creating the right framework to manage the flow of inbound and outbound goods means companies need accurate data.

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First step in designing a fulfillment center, analyze. Source: aCommerce

Before investing in a large costly warehouse, sophisticated technology and assets, use data to assess your actual requirements. Kenneth shares a few mistakes clients often make when planning.

“Very commonly, companies expect to see exponential growth and overestimate order volumes. Always consider the accuracy of your data, do a check to avoid unrealistic forecasts to ensure the sustainability of your fulfillment center.”

2. Kerry Express: How We Grew From Nobody to Somebody

Alex Ng, Kerry Express Executive Director

 

LEAP2017, ecommerceIQ

Kerry Express launched in Thailand in 2013 and in four short years, the company ships 500,000 packages a day, operates 500 distribution centers and is the number one parcel delivery company in the country.

How did they grow and ensure customer satisfaction at the same time? Alex attributes it to having the best people and keeping it ‘stupid simple’.

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The growth of Kerry Express in five years. Source: Kerry Express

A student asked Alex, “how do you ensure that the workplace environment is genuinely a happy one?”

“Reduce the mundane routines, bureaucracies and eliminate workplace politics. There is no room for politics at Kerry, only for real work.”

3. Market Expansion? It’s Ok to Copy and Paste

Kawin Prachanukul, Country Head and Co-founder ShopBack Thailand

 

LEAP2017, ecommerceIQ

The components Kawin had to assess when launching UberX in Thailand in only 10 days.

 

“Uber has its ups and downs, but what they have been able to accomplish in terms of market expansion is admirable,” says Kawin, ex-Uber Thailand Operations Manager.

While at Uber, Kawin shared how his first major task was to launch UberX in only 10 days. How?

“It was only possible because the company’s global team has documented and tracked each and every one of their multiple steps when launching a new market, including learnings and failures. It makes expansion easier because all the local market needs to do is copy and implement.”

The last in-class session of the program will finish on Thursday November 9th, covering payments with case studies by global unicorn, Adyen. Stay tuned for next week’s takeaways!

[LEAP Week 1] eIQ Insights: The New Ecommerce Opportunity in Thailand
[LEAP Week 2] eIQ Insights: Refinement of an Ecommerce Channel Strategy
[LEAP Week 3] eIQ Insights: Market-Product Fit First Before Anything
[LEAP Week4] eIQ Insights: Central Marketing Group’s Shares Phase II of Digital Strategy
[LEAP Week 5] eIQ Insights: Startups Need to Have an Independent Source of Income to Survive
[LEAP Week 6] eIQ Insights: In Mobile Commerce, App Install is Only the Starting Point
[LEAP Week 7] eIQ Insights: Logistics and Fulfillment, The Other Side of The Ecommerce Coin

Here’s what you should know today:

1. Singapore-based ShopBack expands to Thailand

Cashback startup Shopback has announced its official expansion to Thailand – making it the sixth markets in Southeast Asia.

There are currently over 100 merchants in its Thai platform to date, including big names like Expedia, Booking.com, Sephora, Pomelo, Lazada, Grab, and Uber. Consumers can expect to receive maximum 30% of rebate when using ShopBack.

Besides Thailand, ShopBack also present in Singapore, Malaysia, the Philippines, Indonesia, and Taiwan. The company currently has 3 million users and has paid over $10 million in cashback to its customers.

Read the full story here

2. Amazon Prime Day breaks record, sales grew by more than 60% 

Amazon announced that its third annual Prime Day was its biggest day ever, with sales grew by more than 60% from the same period last year and surpassed its 2016 Black Friday and Cyber Monday results.

However, the results maybe skewed as last year’s event was shorter as it was only last for 24 hours (compared to this year’s 30 hours) and involved fewer countries. However, the results is still notably impressive given that July tends to be a sluggish time for retailers.

Amazon has successfully using Prime Day to drive both sign-ups for its annual Prime membership and promote its products.

Read the full story here

3. JD.com can soon replace Baidu’s place among China’s internet giants

JD.com has experienced a very good year so far as the recorded strong revenue growth and signed a major partnership deal Farfetch, a global luxury fashion site. For these reasons, the analysts are predicting JD.com will soon overtake Baidu in term of market capitalisation.

JD.com is also gaining ground in market share. While Alibaba’s Tmall controls nearly half (48.5%) of China’s B2C ecommerce market, JD.com now controls 33.8% market share, according to figures from iResearch China.

Their recent partnership with Farfetch will also gives JD.com a significant boost over Alibaba as it will reinforced JD.com’s reputation for authentic and high-quality goods, an issue that continues to plague Alibaba.

Read the full story here

 

Tucked away in Singapore’s Little India is a 24-hour retail centre that is never devoid of foot traffic. There is little doubt Singaporeans don’t know what and where Mustafa Shopping Centre is. The company was on the annual Enterprise 50 list for five consecutive years from 1995 – 2000, and has outlived plenty of other retail centres.

What makes it so enticing?

Shoppers say the enormous product selection and bargain prices. The 200,000 sq ft space is composed of seven floors selling over 300,000 items ranging from Indian spices, wheelchairs and vitamins to gold and DVDs.

Everything is available at any hour of the day – money exchange, flight tickets, postal service, and restaurants. The store has even become one of Singapore’s tourist attractions, but a quick search of online reviews suggests that the retail experience has drastically changed since the megastore’s heyday:

 

And to think it might get even more crowded. The 46 year old company recently announced the closure of its 65,000 sq ft flagship branch in Serangoon Plaza earlier this year due to construction. This essentially cuts Mustafa’s retail space by a quarter and all products will be stored in its remaining branch in Little India.

With all this in mind, and a growing selection of cheap goods more readily available online, how many more trips will Singaporeans undergo to save a few dollars?

Without an influx of returning shoppers and smaller customer reach with the closure of its second branch, how can Mustafa ensure the continued growth of its business? We take a look at some factors:

1. Singapore’s Average Shopper

Euromonitor International data shows that average annual disposable income per capita in Singapore is now US$27,664 and predicted to reach US$30,143 in 2020. This is quite high in comparison to consumers in the rest of Southeast Asia who make less than US$500 a month.

Even so, modest retail growth was witnessed in 2016 due to Singapore’s slowing economic rates of 3.3% to 2.2% YoY. More price-sensitive shoppers means good things for low-cost sellers like Mustafa but consumers are more likely to go online to compare prices, especially for more expensive products such as electronics.

And this is where they will find a plethora of pure-play sites such as ShopBack, Ebates SG, and Lazada SG to save on well-known brands and everyday items with cash back and daily offers.

[Singaporean] Consumers cited convenience, cheaper prices and direct delivery as key reasons to turn to internet retailers — VISA report

Purchasing from overseas websites is also highly attractive because of the absence of Goods and Services Tax on imported goods of S$400 or less, which puts more strain on traditional retailers.

Mustafa ecommerce

It’s important to note that Singapore’s population is aging and less willing to endure a cramped, unorganized and adverse customer experience to buy discounted mouthwash. Although shopping is still seen as a social activity, a consistent terrible customer experience is enough to outweigh small savings.

As one online commenter suggested,

“If you’d like to avoid crowds, try not to come here during peak shopping months, which runs from October to the following October.” — Indu Balachandran, FirstPost

2. Expansion Opportunities

The company could look for another venue to open a second branch but a quick overview of Singapore’s expensive rental costs and competition for prime locations against players like Apple also opening up shop makes that option look dim.

The high cost of renting retail space has slightly declined since 2015 but the massive space that Mustafa needs to operate would set the company back a hefty amount if average rent was still S$24.35 – S$36.25 per sq ft like it was two years ago.

There are also many additional challenges to opening a department store. The company was denied its request to convert a warehouse into a wholesale retailer and given a SGD$10,000 fine for unauthorized commercial use in that same location. They were also slapped with a court order to suspend business for 40 hours after overcrowdedness and fire-safety concerns became too serious.

But even if Mustafa was able to secure a perfectly suitable location to house its next brick and mortar branch, now they need employees to run the business. How much would that cost?

Let’s say at least 50 employees to start where a customer service rep in Singapore makes approximately S$32,267 a year. Each employee would need to generate value to make up for employment and training costs.

JP Morgan shared this neat chart below. The average employee of an offline retailer generated US$279,000 in gross sales compared to the average electronic shopping and mail-order house employee who generated an average US$1,267,000.

Offline expansion may not be in the cards right now but the promise of ecommerce is that Mustafa can sell its products and services to anyone in the region.

3. Future of Retail

Weak tourism, a notable decline in retail sales last year and even a small drop in retail space rent paints a pessimistic future for Singapore in the coming years. Online retail sales in Singapore, however, are expected to reach US$5.4B GMV for 2025.

mustafa-online

Mustafa makes a relatively small profit margin of 10-15% on most products to keep prices lower than competitors. The company imports large quantities of goods directly from cheap sources such as Thailand, Malaysia, the US, etc. and saves additional costs by cutting out the distributor.

Regardless of its popularity, there are already a slew of online and offline businesses, especially specialty shops, that Singaporeans frequent for bargain deals and special sales without the uncomfortable crowds, i.e. AnchorPoint Shopping Center. But offering budget prices cannot save the slow death of traditional retailers.

Ecommerce shouldn’t be seen as a separate channel but instead as another store branch.

What happens when one branch is closed and the other is too far away? You either do a quick Google search for the company’s online webstore or you go into a competitor’s store.

Bargain hunters have no brand loyalty but brands online are able to build and maintain relationships with customers via email marketing and ad-retargeting touting upcoming promotions and discounts. Mustafa has only word of mouth to rely on, curious foot traffic and its social channels, which are currently not being put to the best use.

Source: Mustafa Facebook page

More pure-play brands are moving into the offline territory by adopting omni-channel strategies after realizing the importance of a positive customer experience. Electronics brands like Samsung, Huawei, Parisilk and Lenovo are adding online channels through partnerships with e-marketplaces Qoo10 and Lazada in addition to letting Singaporeans test products in their flagships.

Multi-channel retailers are benefiting from having an online presence growing at 11% CAGR, which mitigates any worry that ecommerce will cannibalize traffic to offline stores.

Mustafa is one of the best-primed offline retailers in Southeast Asia to dominate commerce with an omni-channel strategy.

Would Mustafa Do Well Online?

Probably, but there are many other factors to consider. The business already meets the standard requirements to successfully launch an ecommerce business: large number of SKUs, strong branding and awareness, existing customer base and an experienced entrepreneur running the entire company.

The purpose of going online is to give your customers access to your products or services at anytime – the exact same concept of Mustafa’s 24/7 offline store.

In 1999, Mustafa did try its hand at an online website aimed to do B2B ecommerce but shut down after experiencing losses due to credit card fraud.

Although that problem still persists in today’s retail world, most notably in the US, credit card and tech companies are introducing their own ways to combat hackers: 3-D Secure, two-step verification and tokenization (Apple Pay, Android Pay, etc.).

These are four paths the company could use to test the online waters:

  1. Ecommerce ‘popshop’ where customers can submit online remittance forms or check a list of products offered in store. This bare-bones landing page would be able to capture visitor data and activate them in the future with bargains on social channels such as Instagram or Facebook.
  1. Add a shopping functionality to the current Mustafa website that already experiences on average 260,000 visitors per month, most likely to view the latest foreign exchange rates.
  1. A mobile application where shoppers can sign up to order and pay for products and services such as remittance, flight booking or restaurant takeaway.
  1. A chatbot on the Mustafa Facebook page that facilitates transactions through Messenger and answers FAQs.

Other Hurdles to Mustafa Going Online

Opening an webstore means choosing the right product offering, presenting it attractively online and safely delivering it to the end customer. A key piece Mustafa lacks is online infrastructure but given the strong selection of service providers in the region, it’s not hard to find a suitable partner to handle content management and last mile.

Chief Logistics Officer from aCommerce, Mitch Bittermann, who also lived in Singapore for six years, advises Mustafa to evaluate if the company’s margins would cover the cost of operating ecommerce. He also suggests a few ways Mustafa could leverage its existing resources.

“Using the shopping centre as a fulfillment center would allow next-day or even same-day delivery. Given Mustafa’s reputation for faulty products, it would be simple to hire an employee to QC items before delivery right at the store and lower chances of returns,” comments Bittermann.

“They also wouldn’t want to offer its entire offline product selection online, for example food wouldn’t sell since HappyFresh and Redmart already exist.”

Where Do We Go From Here?

Sometimes ecommerce works, sometimes it doesn’t. But as consumers on this side of the world only further develop a ‘digital habit’ thanks to new online services, it’s only a matter of time before retailers clamber to where everyone else is.

The move online will not be a painless process but each retailer will reach a point and ask themselves, “should I be online?”. A quick look at Macy’s, Best Buy, Sears or any of these other offline retailers paints a pretty clear picture of ‘adapt or die’.

1. Alibaba Group is now Asia’s richest company

Alibaba’s market value rose to US$261 billion in New York last week, overtaking Tencent’s US$255.98 billion capitalisation in Hong Kong on Thursday. Read the rest of the story here.

 

2. In Japan, You can buy a priest on-demand from Amazon

Proponents of obosan-bin argue that conventional temples already operate like businesses — just the kind that put a lot of blind pricing pressure on the customers they ask donations of. Read the rest of the story here.

 

3. Indonesia’s fast growing fashion startup Sale Stock is laying off over 200 employees

Most of the employees were from the customer service department. However, the company is still hiring for technical positions. Read the rest of the story here.

 

4. ShopBack Joins MDEC’s #MYCYBERSALE as official cashback partner

#MYCYBERSALE is Malaysia’s largest annual online sale event. The 5-day national event will see e-retailers like Groupon, Lazada, Zalora, Qoo10, Photobook Malaysia, and more to collectively customize their products as well as services to surprise shoppers with best value deals and up to 90% discounts. Read the rest of the story here.

 

5. Ralph Lauren, Michael Kors dominate luxury’s online market share

Consumers visited luxury brand Web sites a total of 185.2 million times in the last 12 months, a decrease of 11.2 percent year-over-year, according to a new report from PMX Agency. Read the rest of the story here.

The Salvation Army organization has partnered up with ShopBack in Singapore, an ecommerce cashback startup to encourage online shoppers to simultaneously shop and do good, reports Retail News Asia.

From now until 31 August, ShopBack Singapore will donate $10 to The Salvation Army for every first purchase made by users who sign up for free at www.shopback.sg/salvationarmy. No minimum spending is required. Josephine Chow, Country Head of ShopBack comments, #ShopBackGivesBack was chosen as it serves as an apt representation of both our business and social responsibility outreach.

To foster the initiative, ShopBack Singapore will be raising the Cashback tier from 30% to 40% for the Good ShopBack Samaritans.

Shoppers can also enjoy exclusive voucher codes to help them save more as they shop from over 500 online stores such as Taobao, Guardian, Expedia and Cathay Cineplexes.

Generally, the public equates social responsibility with big corporations since they operate on a larger scale but the startup is interested to see how they can give back whilst still maintaining a sustainable business.

ShopBack is only less than two years old, and sees a steady 20% month-on-month growth across the region in five markets, and gains at least six orders per minute for its online partners. The startup also launched its first mobile app last week, which climbed to the top of the shopping category for ‘free apps’ in less than 24 hours. The Salvation Army will be able to benefit from the startup’s large consumer reach.

In the near future, shoppers will be able to donate accumulated cash back straight to an organization of their choice, without having to take cash out from their wallets.

The integration of charity organizations and cash startups can provide online shoppers with multiple ways to contribute to society.

A version of this appeared in Retail News Asia on July 13. Read the full version here.

shopback-logo-cropped, ShopBack Dominates iOS Store

Source: Tech in Asia

ShopBack, a service that lets you get cashback on your ecommerce purchases from over 500 merchants in Singapore, launched its iOS and Android apps yesterday. The app is now the top free app in the shopping category in the iOS App Store, and number four (as of July 5 at 9.45am SGT) in the top free apps category in Singapore.

Founded in August 2014, ShopBack has since raised $1.1 million from investors. It acts like an affiliate marketer for ecommerce sites, collecting a fee for every purchase made through ShopBack, part of which is passed to consumers. A variety of marketing methods such as influencer marketing through actor Tosh Zhang, Facebook paid marketing, email marketing to its existing user base, and YouTube videos were used to drive app downloads.

ShopBack Dominates iOS Store

Ecommerce cashback apps are not a new concept

San Francisco company Ebates was doing it since 1998, and in 2014 it was acquired by Rakuten for $1 billion. In Indonesia, Ardent Capital funded Snapcart, offers a cashback app for offline purchases, to encourage O2O behavior. Asia has seen an ecommerce boom only in the past few years, fueled by a combination of venture capital fervor, greater internet and smartphone penetration, and rising incomes in emerging markets. The ecommerce market is nascent but fast growing.

ShopBack doesn’t appear to have generated the same amount of enthusiasm among Android users yet, as it’s nowhere near the top rankings there. For developed countries such as Singapore, the concept may be successful as the market has reached maturity but for many countries such as Indonesia and Philippines where Android users are dominant, adopting the simplest of ecommerce behavior still has a long way to go.

A version of this appeared in Tech in Asia on July 5. Read the full article here.