By Anita Devasahayam
September 1, 2000
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 faŤade 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.”
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.
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.”
Published in Intelligent
Enterprise, September 2000