SubangGrocer: From Family Grocer to `Net Success 

Standing tall among the hypermarkets and supermarkets in the
middle-class suburbia of Malaysia’s vibrant residential area of Subang
Jaya, Selangor, is Subanggrocer.com. Housed at the fringe of the prime
real estate land, Subanggrocer.com started out as an Unique Convenience
Store in late 1998. 

Owner Ray Cheng is not in the least perturbed that his rented shop lot
is surrounded by larger-than-life-sized shopping malls such as
Carrefour, Parkson and Giant. In fact, he reckons they should be
watching his next move considering that none of these supermarkets have
done any thing substantial to introduce online shopping. 

A check by Intelligent Enterprise Asia indicated that the shopping
giants are slow to response to e-commerce with the exception of Parkson
that began delving into it a year ago. A Carrefour spokesperson said
that the subject of “e” will be guided by its French headquarters while
Giant had put its e-commerce plans on the backburner after much talk. 

While the banner hanging out the front of the family-run store bears no
semblance to a dotcom practice, Cheng is not about to change the faade
to match his Internet foray. A self-taught computer user, Cheng put his
little sundry shop on the ‘Net in April this year as “added value.” 

Early Days 
Although the former warehouse manager had no prior experience in
retailing, the choice to set up a sundry shop during the recent
recession was driven simply by the fact that people needed to eat. 

“I would be lying if I say the first year was the usual, spent building
up the general business. It was like being thrown into the deep end of
the pool and everybody was struggling to stay afloat. Competition was
tough,” he recalled. To make ends meet, Cheng also offered to do PC
service and repair work for his customers. “That turned out to be a
great move, for not only did we distinguish ourselves it also
contributed a fair bit to our income.” 

After a year of weathering stiff competition to see three of the five
sundry stores along the row of shop houses close business, Cheng moved
online. “With less competition, I could breathe easy and decided to do
what has been sitting at the back of my head for so long. And I thought
now is the time to try something absolutely stunning. With my home
delivery with no minimum purchase [service], I’ve set for myself a
higher and tougher standard to follow,” he revealed. 

Together with the help of his wife, Elaine Neoh, and children: Eugene,
Jasmine and Lynette, Cheng began to assemble his goods online. High
school student Eugene, 17, was charged with the task of hard coding the
Web pages while 13-year-old Jasmine catalogued and edited the items
photographed by Cheng and his nine-year-old daughter, Lynette. 

The family took over a month to transfer 80% of the 2000 plus items
ranging from beverages, biscuits, toiletries, vegetables and other
groceries available in the store on the ‘Net. The no-frills Web site is
simply straight to the point--offering customers a choice of picking
goods that are generic or brand by brand name. 

Cheng declared that his total investment for the Web site was a mere
RM500 (US$292) spent on registering the domain name, and for IKEA
lighting and mahjong paper used for photography. He managed to recoup
his investments in the second month after the site was operational. 

The site was promoted through the neighbourhood’s newsgroup and Cheng
was encouraged by the support he received. A manager with Nestle
Malaysia got wind of Cheng’s work and offered competitive prices for
carrying Nestle products without insisting on a minimum volume sold. 

Hassle-free Shopping 
Subanggrocer.com is informative, straightforward and easy to navigate.
Customers can place their orders via e-mail or pick up the phone and
call, should they want to hear a real voice at the other end of the
line. 

“My kids and I jumped and danced for joy when the first order came in,”
he said, adding that orders have since rose from 10 daily in April to an
average of 50 today. 

Cheng attributes the rise in orders to convenience offered to buying
customers. “There is no minimum purchase or delivery charges involved in
placing orders. Goods are delivered on the same day between 6 and 10pm,”
he said, adding that it was the ultimate in convenience shopping. 

During delivery rounds, Cheng discovered that the majority of his
customers were young families or working couples apart from regulars at
his store. “Initially visitors to my site were IT savvy professionals
but the second wave of customers are the housewives and normal folk.” 

Terms are strictly cash on delivery that works fine as Cheng believes
and rightly so, that Malaysians are still a tad uncomfortable about
buying over the ‘Net. Currently 40% of the home delivery orders come via
e-mail and the remaining 60% are from phone calls. 

The hassle-free proposition also translates to savings for Cheng. He
pointed out that expensive solutions as the single biggest barrier that
stops retailers or wholesalers from wholeheartedly embracing online
shopping. 

“Imagine going to a computer vendor and he looks at what I have and
names this ridiculously high sum to automate my sundry shop. I did all
that with just a Pentium PC hooked to a scanner,” he added. 

Instead of investing in promotions and advertising his online shop,
Cheng sticks to the old fashioned business ways of nurturing customer
loyalty. “My way of building loyalty is to be authentic and win over
mindsets,” he said, adding that 30% of this monthly revenue today is
from the ‘Net. 

First Mover Advantage 
With only six months experience in the dotcom world, Cheng illustrates a
sharp understanding of how to maximise e-commerce and the ‘Net for his
business. He believes that the business on the ‘Net is built for
ordinary and small folks like himself. 

“We need more small businessmen to bring practical and down-to-earth
business plans for e-commerce to take off. As we have little access to
funds, we must make money quickly instead of making projections and
hyping everything out of proportion,” he said, adding that “pure plays”
will not survive in the local e-commerce scene. 

He pointed out big companies tend to make unrealistic promises through
their projections and is not as clear cut as in the case of
subanggrocer.com. “If I don’t make money, I will have to close shop.” 

“We need to go down and reach the common folk and show them how to use
technology and make it accessible to them. There must also be benefits
and personal gains on their part. I am providing a no-risk scheme with
my venture on the ‘Net.” Cheng’s success has spread as he has received
queries from as far as Kota Baru in the East coast state to Penang up
North on how they can do this. Suppliers are also equally curious and
want to explore their options with his idea. 

Several multinationals including Unilever, East Asiatic Company, New
Zealand Milk and Carlsberg are negotiating with Cheng to promote their
products at comparable prices on his Web site. 

Encouraged with his success and spurred by enlightenment, Cheng has
outlined plans for the coming months. This includes expanding his
business in the Subang Jaya district. 

He has had offers from the launderette nearby and restaurant next door
to pick up laundry or deliver food to his grocery customers. 

“I am weighing the idea carefully. Laundry is okay but food is iffy as
people will not wait an hour for delivery--hungry people are not happy
people,” he said. 

Also on the drawing board is introducing high value items such as wines
and food hampers to his customers in the neighbourhood. 

Plans in the pipeline also include partnering with other sundry shops
and suppliers nationwide. He has already identified the Ampang,
Damansara, Bangsar, Bandar Utama and Petaling Jaya neighbourhoods in the
Klang Valley as starting points. Cheng will apply his bottom-up approach
to help other sundry and convenience shops build online presence and
grow customer loyalty. 

Subanggrocer.com also teamed up with the Fresh Product Shop, a green
grocer nearby to offer fresh vegetables, meat, fish and other
perishables online. Cheng claimed that prices will be “the same as any
real store” and orders will be delivered to buyers on the same day at no
extra charge. “You can expect more smart partnerships in the coming
months. I’m lookig for a vet to take over my pet food section and a
pharmacist to head my drug store offering e-mail advice online to
customers,” he added. 

“Next year, I will be personally going round the country, sharing my
knowledge on how to build an e-commerce Web site with other grocers,
convenience stores food outlets and any other retailers. 

Though we may be individually owned we can co-operate online by linking
all the Web sites in a single portal.” 

“Many people like my bottom-up approach to building a portal. When they
[big supermarkets] want to measure up to me, they will be competing with
me in an area where I’m strongest--personal bonding with the customers.
This is what online customers will come to expect and hopefully will
become the de facto standard for online grocers.” 

He added that his strategy also includes empowering the customer to use
technology and by watching them use it, he is able to learn from them.
“I am not going to predict the way [they shop online], they can show me
the way.” 

More importantly, Cheng is motivated to go all out and restore the
battered image suffered by sundry and provision stores surviving by
their skins since the supermarket shopping arrived. Their presence is
further dimmed with medical halls and gas stations that offer the same
products. 

He truly believes that sundry shops can lead the way with the ‘Net.
“What I do is a catalyst for change. Sundry shops are akin to shields
and I want to arm them with the sword as well.” 

By Anita Devasahayam
Published in Intelligent Enterprise, September 2000