ml spring-challenger-LooPeiFen-882-minChallenger’s online store Haichi.tech provides endless digital space to list complementary and new categories of products, says Ms Loo. PHOTO: CHONG JUN LIANG

In the first of a six-part series on the retail sector in Singapore, Esther Teo discovers how firms in Singapore can make the big leap forward by proactively embracing e-commerce

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Sep 7, 2016 
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The closure of Funan DigitaLife Mall in June shuttered many of Singapore’s most popular computer and electronic gadget stores. But for former anchor tenant Challenger Technologies, it paved the way for its next phase of growth.

Says the company’s chief marketing officer Loo Pei Fen: “It was an opportunity for us to focus our resources on developing and refining our own shopping site.”

The result was Hachi.tech, the 35-year-old company’s “most concerted, focused and complete” online store to date. It stocks information technology products available at Challenger’s physical retail network of almost 50 stores, as well as an array of merchandise ranging from sewing machines, health and fitness products, as well as lifestyle and beauty buys.

Since Hachi.tech’s launch in April, Challenger has achieved a 10 per cent increase in revenue for its third quarter, with online sales leading the charge. A recent Hachi Day online campaign this month saw online transactions surge 2,400 per cent compared to regular days.

“Because of Hachi.tech, we have endless digital space to list complementary and even new categories of products. We are reaching shoppers who never imagined they could buy a Hello Kitty sewing machine in addition to high-end graphic cards and processor components from us,” Ms Loo says.

A brave new world

Spurred by higher purchasing power, a young, wired population and improved product offerings, the retail e-commerce market has taken off in Singapore, Malaysia, Indonesia, Thailand, the Philippines and Vietnam.

The sector is now worth US$9 billion (S$12.2 billion), with Singapore accounting for about $2.7 billion. It is poised to grow at an accelerated rate of 25 per cent per year over the next five years, according to a recent A.T. Kearney report.

But local retailers are still not biting the bullet. Research by the Singapore Productivity Centre and DP Information Group this year found that e-commerce and mobile commerce generated merely 3 per cent of sales at average Singaporean retailers.

A. T. Kearney’s senior principal Nithin Chandra thinks that a change in mindset is required for sceptics in Singapore to adopt e-commerce.

I still see a large number of small businesses sitting on the fence and waiting, thinking that e-commerce is a bubble waiting to burst. E-commerce is here to stay and businesses need to embrace it now. 

A. T. Kearney’s senior principal Nithin Chandra

“I still see a large number of small businesses sitting on the fence and waiting, thinking that e-commerce is a bubble waiting to burst,” he says.

“E-commerce is here to stay and businesses need to embrace it now. Today, having a digital presence is a vital offensive and defensive strategy as it expands your reach globally and gives local consumers the option of checking out your products in-store and ordering online.”

Timely boost

Going digital now is timely as well, as governments across the region are taking up e-commerce adoption by SMEs as an important initiative, MrNithin observes. In Singapore, Spring Singapore has been encouraging local businesses to adopt e-commerce by providing financial assistance to develop digital capabilities.

To boost Challenger’s digital transformation, Spring provided the company with various tools and funding, such as the Capability Development Grant (CDG) and Customer-Centric Initiative. These helped to automate its customer service framework and loyalty programme marketed to over half a million members.

Another beneficiary is Fitlion, a finalist at last year’s OCBC Emerging Enterprise Awards and SME 1000 Award 2015 winner.

When its e-commerce business took off, the online retailer specialising in health and fitness supplements and accessories tapped on CDG in 2014 to help fund a customised warehouse management system to handle the higher sales volume.

Now, Fitlion can fulfil up to 500 orders daily without any increase in manpower. As of last year, just six years since its foray into e-commerce, it had grown sixteen-fold and achieved over $10 million in sales turnover with a customer base of over 67,000.

Hungry for growth

But Fitlion’s group chief executive officer Tan Tse Yong is not content to rest on his laurels.

The company plans to expand regionally and to reach $100 million in sales in 10 years. Also in the works is a curated marketplace featuring quality sports, health and wellness products and services for Asia.

Beyond just enhancing the seamlessness of its online purchase experience, the business is also beginning to engage social media savvy consumers with mobile, digital and social marketing, video content and CRM and marketing automation systems.

“Personalisation of customer shopping preferences, customisation of user experiences and curation of goods and services is the next big thing,” Mr Tan says.

Challenger, which expects 50 per cent of its revenue to come from its online business in three to five years, is also focusing on improving the overall customer experience on its Web store, as well as making more enhancements to its delivery options and e-wallet functions.

For retailers looking to dip their toes into e-commerce, Mr Tan’s advice is to try ready-to-use platforms such as Shopify, Demandware or Magento. Listing products in popular marketplaces such as Qoo10, Lazada and Redmart can also help retailers get a sense of how e-commerce works.

Says Mr Nithin: “There will be teething issues and failures along the way. But having a clear value proposition for your product or service and the right digital strategy could propel your business to greater heights.”

To find out more about how Spring Singapore can support your retail business, visit Spring Singapore or e-mail lifestyle_division@spring.gov.sg.

SPC-BCG Masterclasses

The Singapore Productivity Centre (SPC) and Boston Consulting Group (BCG) have launched the Retail Best Practices Masterclass Series for retailers in Singapore.

It aims to help retailers capitalise on market opportunities by facilitating access to world-class tools in decision sciences, data analytics and insights to solve business challenges more quickly and effectively. Masterclass 2 on Outlet Portfolio and Maintenance will be held on Sept 5 and 6, while Masterclass 3 on Labour and Performance Management will be held on Sept 19 and 20.

Visit SGPC-BCG’s website or email masterclass@sgpc.sg for registration.

 

Singapore Retail Industry Conference

The 25th annual Singapore Retail Industry Conference will be held on Sept 15, co-organised by the Singapore Productivity Centre and the Singapore Retailers Association. It promises to inspire companies to achieve greater sustainable growth through innovation and best practices through sharing international and local experts and key players.

Visit SGPC’s website for more information.