A dated transcript of my conversation with Thomas on BizStart Panel program held at Technology Park Malaysia back in 2012. I tidied up the Q & A and I hope you find below conversation useful in helping you to understand more about Internet Retail.
* T - Thomas Cheah the host
* A - Adrian Oh (it's me!)
*T: What are the main differences between Internet and Traditional retail?
*A: For businesses, Internet retails means you sell things online. You might have your own branded webStore, you might sell on Facebook page, you might sell on blog (alsoknown as blogshop) or you might sell on marketplaces like ebay or lelong. The basic is that you publish your product details like pictures, pricing, stock availability etc online and you are able to take online payment for your orders placed at your website.
For the industry, we would define a "real ecommerce" experience as something you can add to cart, checkout with online payment (could be credit card, online bank transfer etc) in real time, and have your physical goods shipped to you.
As for traditional retail, we mainly refer to brick-and-mortar stores. You pick a physical spot as your store location, you stock it up with goods, you promote and you sell! You can find a few major categories of traditional retail in Malaysia:-
Departmental Store - eg The Store
Shopping Mall - eg Jusco
Hypermarkets - eg Tesco
Specialty Retail - eg Padini, or any retail which focus on a vertical niche
Convenience Store - eg 7-11
Food & Beverages - eg Pizzahut.
There are other types of traditional retails too, eg catalog shopping, TV shopping etc which are not so popular in Malaysia.
But if you look at the very fundamental, It's all the same. Just buy-sell activities.
As for pro and cons for each. In general, Internet retail is relatively lower cost to start, eStore solution like webShaper starts at only RM1 / day. As for brick and mortar, start up cost is much higher mainly due to high sunk cost like rental deposit (3 + 1 months), renovation cost and also high fixed operating cost like rental (however, I need to highlight that rental fee is actually traffic fee, it's always correlated with foot traffic).
*T: What are the issues do small businesses have with selling on the Internet? What are their common mistakes?
*A: In generala, we can divide the small businesses into 2 categories
1) Start up with little or no experience on retail
2) Existing brick-and-mortar store / retail merchant:
For start ups, I would assume they already know what to sell (else it's not considered a business!). Firstly, I think for every start ups, concept of "product-market fit" is crucial. By asking questions like, who really need the products that I am selling? Think about the market you are serving, this will determine how you should position your products, your services, your pcicing, your marketing strategy and your brand.
*T: Typical misconceptions?
*A: Build an eStore and customers will come. No advertising, No Promo, but still can get traffic. No dedicated people to take care of it. Outsource will work. Lacking of capable staffs with knowledge of SEO, SEM etc.
*T: What’s the evolving trend in Internet retail? What are the innovative business models in Internet retail?
*A: In general, etailers large and small are working hard towards selling in-stock items, faster shipping, some to the tune of same-day shipping.
Group buying has evolved into a full fledge etail site (eg living social, focus on products, innovate on auto redemption). Discovery shopping like thefancy.com is hot (pinterest merely acting as an affiliate or referral now).
Mobile (both smartphone and tablet) is already a big thing with ultra growth, and I forsee it will be a big driver for ecommerce in the next 10 years.
In 2011, 2 significant milestones happened, it signify the way things are moving forward and beyond.
Smartphones beat PC shipments - For 1st time ever in 2011, smartphones shipments beats PC shipments ~ 487 Million vs 414 Million, with 73 million more units being sold. (sources: digitaltrends.com)
E-Books Outsell Print Books at Amazon - Since April 1, Amazon sold 105 books for its Kindle e-reader for every 100 hardcover and paperback books, including books without Kindle versions and excluding free e-books. (sources: Amazon PR)
Moving forward, I foresee every business (not just retail) will need to have a mobile strategy (both app and mobile web). There will be 3 main screens for consumers - namely TVs, tablets and smartphones.
*T: What are the winning strategies and tactics you would share with Internet retailers?
*A: For start up, in general, I would recommend building brand from day one. It's one of the most valuable things for your business which will not be reflected in your balance sheet! These are the steps I recommend for start-u:ps
1) Secure a .com or .net domain, if budget allows, buy all domains (protect your branding)
2) Hire designer to design a nice logo reflecting your brand identity.
3) Invest in a solid eCommerce platform, which has good looking design, optimized for SEO and proven to handle heavy transactions securely.
4) Sign up a Trusted Payment Gateway in your targeted market
5) Sign up a reliable courier service and get a SSL to help build customer's confidence online.
6) Build a facebook page (the easiest) since it's probably the most transparent way to engage the customers online to help you to build trust.
As for strategies and tactics, this really varies case by case. It boils down to the basic again - Product-Market fit. I cited this client, Tat7.net as a case study (See his video below)
- A young entrepreneurs working on an iPhone casing (waterproof - let you dive and shoot photos!)
- Waterproof casing is nothing new, but ability to take photos when diving is!
- He didn't have a clue how to start, nor what it takes to market it online
- He came to us, we did a competitive analysis (we always did alot more for aspiring entrepreneurs who build products like us! coz we know it's HARD!)
- We share the pricing and Go-to-Market strategies, first launch into 30 days, break $100,000 sales!
And of course, never, ever compete just on price, eCommerce profit is built on repeat purchases (loyalty). and most of all, eCommerce is a marathon, not sprint.
*T: Why you enjoy what you are doing now, i.e. innovating the Internet retail industry?
*A: I like to build stuff (think lego), and I love retail and Internet, when you combine both, you get eCommerce :). That's why i'm in the business of building ecommerce platforms to empower merchants online.
I think moving forward, brand & trust will become more and more important online. and we hope we can empower small business to succeed in online retail in this increasingly competitive landscape.