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E-retailing – why some fail and some succeed

My entry into the retail business happened by accident. In 2013, I returned home from an overseas stint with what I thought was a great product that would simply fly off the shelves at major stores and supermarkets. I couldn’t have been more wrong. For two years, I felt like the ‘punching bag’ of the retail industry as the complexities of trying to list in physical stores simply overwhelmed me, ‘newbie’ that I was.

Thiban during a retail industry study trip to Mongolia

Thiban during a retail industry study trip to Mongolia

 

But I was determined not to give up. Sometime in 2015, I saw the potential that e-commerce presented, as an easier and more cost-efficient way to get my products into the market. I took a chance on what was then a relative new player in the market, RedMart, and since then have hardly looked back.

 

Today, RedMart is the biggest e-grocery marketplace in Singapore and my company, Business Engineers Asia (BEA), has evolved beyond selling on RedMart to being a strategic partner to them, helping local entrepreneurs and foreign companies venture into Singapore’s modern retail market.

 

Game changers

Prior to COVID-19, e-commerce was already recognised as strategically important for the future of business. However, it was still not regarded as critical to business sustainability, but rather as an added channel for business growth and value creation. COVID-19’s fast spread and profound impact changed all this.

 

In fact, e-commerce is now seen as the antidote to the pandemic and as key to overcoming the challenges posed by the current business climate and conditions. My own business picked up rapidly and we continued our own progress as we also became strategic partners with NTUC Marketplace. That we are today strategic partners to some major e-commerce market players, as well as we are helping local and foreign companies succeed in the e-commerce space, are strong endorsements of our prescience, we believe.

 

The mistake is in assuming that just setting up an online store is sufficient.

Support schemes

The Singapore government’s direction is also very clear – it has introduced incentive schemes for businesses to “go online”, including setting up online stores, with a focus on business sustainability and growth. These incentives can greatly support businesses in covering their costs of transition and in implementing the framework for own online stores. A whole slew of businesses took advantage of these incentives to set up online stores, however most faced challenges in ramping up sales via their online stores.

 

The mistake is in assuming that just setting up an online store is sufficient. There are many facets to building a strong foundation for an online store. I present here three important keys to success:  

 

Attraction factor: product variety

Consumers are always looking for convenience and a one-stop shop. A diverse product portfolio as such is important. Whether it is the business’s own brand of products or a variety of products under different brands, the selection of products on offer, the variations and more importantly, their positioning are key to attracting consumers shopping at a particular e-store. One of the key reasons why my company was able to position ourselves appealingly to be the strategic partners to two of Singapore’s two marketplaces is that we offered 5000-plus SKUs from over 200 brands, from both local and foreign business entities, through a unique business model that we developed.

 

Retention factor: last mile delivery with customer engagement

With a choice of e-commerce storefronts in the market now, last mile delivery is becoming a game changer. Singapore’s last mile delivery for ecommerce consists of established players such as NinjaVan, J&T, QExpress, UrbanFox as well as small startup establishments positioning themselves in various unique ways. It is important to understand how these last mile delivery companies operate and what their strengths and weaknesses are, as the entity fulfilling this will also contribute to the whole shopping experience, and hence your ability to retain your customers as well as maintaining positive word-of-mouth. The ability of a business to ensure timely and proper delivery of a customer’s order is now a necessity rather than a ‘nice-to-have’. Follow through engagements with your customers i.e., soliciting feedback on if the order was well received, was the delivery timely, etc. will go a long way in ensuring customer satisfaction, especially if they reveal issues in your processes which need to be addressed quickly, before you lose customers.

 

We practice this with some special clients like an online Italian furniture company where we tie up with a local last mile delivery partner to ensure that the customer has the benefit of special delivery times and personalised support.

 

Enhancement factor: 24×7 mentality

As consumer’s expectations grow, online stores need to be able to demonstrate why they are different. According to statistics, availability of meeting a consumer’s needs 24×7 is a strong differentiating factor. Our work with two of the biggest marketplaces in Singapore bear this out – there is a distinct rise in online orders just before a weekend as well as during the weekends. There is also demand for shorter delivery cycles. While being online offers the customer a 24×7 shopping availability, 24×7 fulfilment could be a further positive experience, helping with attraction and retention. In view of this, come 2022, we will be completely embracing the 24×7 mindset as we provide fulfillment to all our clients, even on public holidays.

 

If you review businesses that forayed online but are today struggling or are already defunct, you will notice that they either overlooked completely or only partially implemented one of the above three basic factors. In this day-and-age, where e-commerce storefronts are quickly proliferating and taking up more and more market share, companies just cannot afford to be half-hearted in their executions in this space.

 

Kanthiban s/o Rajasegran is the founder and CEO of Business Engineers Asia (BEA). He is also the creator of the business entry programme, “Singapore Incubator.”

 

Comment on this Topic

3 Comments

  1. How about price competitiveness – in this day and age of product commoditisation, people can with the click of the mouse, easily check against the best price available – and just go for that…

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    1. Without a doubt, a valid point. Definitely price plays a part – but generally based on statistics from the platforms, the changing consumer behavior and expectations indicates price is not as impactful when viewed across the consumer base (age, gender, race, income, etc.) and matched against a typical consumer’s expectations. In short, taking a broader perspective and the current consumer profile, factors are changing, in unique ways.

      Simply looking at the position of a “price factor”, will only make sense if you are looking at an FMCG based product profile with limited expectations.

      Even then, taking a single product, the factors of delivery and time (example), will impact the decision based on a buyer’s needs even if the product is slightly higher priced but meeting delivery expectations – the buyer will have a shift in decision.

      Looking at the approach of NTUC Marketplace and RedMart (the key e-grocery platforms), the difference in price has little impact as the variety and delivery commitments have shifted the consumer’s purchase patterns, where saving a few dollars has a far lesser impact on purchasing vs having the variety of products and convenience of delivery.

      In conclusion, there is no perfect ‘line up’ of factors and the importance of the various factors (example – pricing), will change over time and based on economic factors, consumer profiles and expectations.

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  2. Full disclosure. I work with the author Kanthiban at BEA and I want to thank SG Indian for the recognition & the platform to share BEA’a work. Suffice to say we at BEA, see a bright & vibrant future in e-commerce. We have been blessed in our journey thus far but to say that the road was long & arduous is an understatement.
    The Singapore Incubator that Kanthiban (or Thiban as I know him) created ‘bucks’ conventional trends and we faced many naysayers who said we will not survive nor was our business model feasible. 8 years on, we did not just survive, we are the ‘go to people’ for government agencies, business councils and embassies.
    Those who want to try their hand at getting a second source of income or have wonderful products, the e-commerce industry is poised to grow exponentially. This article is to give you some valuable tips to give you a leg up as you embark on your venture. It is an amazing opportunity as the e-commerce world is gender, age & race neutral. If you have a great product, a good market entry strategy & willing to work at it, success is a very strong possibility. And if you DO take up the challenge to dive into e-commerce, We at BEA, are happy to not just share advice but help you through your journey.
    Kudos to SG Indian & the team behind this website/ portal. I think it is much needed & I see this as an awesome platform to bring our community together in many ways. A very positive step to build a more cohesive society while we celebrate our own diversity! All the best!

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