Going Seamless Boosts Customer Traffic
Senheng Electric (KL) Sdn Bhd was established in 1989 by the Lim brothers. The company has its humble beginning as a small mom and pop consumer electronics shop in Pandan Jaya with an initial stock worth RM30,000. Prudent in managing his finances, Lim was able to open up a new shop every year using internally generated fund.
In 1993, Lim went to Taiwan to observe and learn firsthand how a chain store operates. The exposure in Taiwan taught him how to standardize his business processes and procedures to make it easier to run his stores.
Upon his return, he adopted the business model employed at renowned chain stores like Poh Kong, 7 Eleven, Bonia and 99Speedmart. The company went on to become the leading consumer electronics chain store with 121 stores nationwide.
However, starting from 2014 to 2016, Lim saw his business declining by about 6 to 7 ercent annually. He discovered that customer traffic had migrated from offline to online. Senheng had already gone online by then, but its online and instore businesses were operated separately, each in its own silo with distinct activities.
Lim learned that with the introduction of new technologies, digital stores are gaining prominence in the retail business. The increasing popularity of smartphones has led consumers to expect to be able to shop whenever they want, wherever they are. Consequently, the industry is moving from multichannel to omnichannel point of sales and touch points which offer customers the same product choices.
Retailers need to innovate and build up a strong and coherently integrated online and offline presence so as to offer a seamless shopping experience to customers.
The Nine Elements
As a retail business, continuous improvement in efficiency is paramount in enhancing customer satisfaction. Seamless technology not only serves to boost the company’s annual sales turnover, it also enhances the customer’s end-to-end shopping experience.
For a seamless business model to work, both the online and offline shopping experience must match in terms of goods, services, and benefits. Senheng’s seamless business model comprises the nine crucial elements that address all the issues that can arise from the moment a customer places a purchase order right up to delivery and installation of the goods ordered. This enhanced efficiency helps to minimize errors and consequently reduces operating costs.
In its effort to implement the seamless retail concept, Senheng has enhanced the nine essential elements comprising product, pricing, inventory, logistics, payment mode, repairs & services, loyalty programs, promotions, and sales partner benefit.
Senheng has standardized its product offerings across channels and aims to provide the largest assortment of stock keeping unit (SKU) in the country. The company has invited some 40 international brands to open shop in its online store under the shop-in-shop (SIS) concept.
Prior to this, the company’s e-catalogue had to be updated manually every day by the staff, but now the SIS partners are able to do it themselves online by using the e-Product List platform developed by Senheng.
Digitalizing the product uploading process has resulted in a 50 percent increase in efficiency, and the availability of such international brands has increased traffic on its website, which further strengthens Senheng’s reputation as an online store. The company has a content team responsible for optimizing the visuals in the e-catalogue so as to captivate and convince the customer to make a purchase.
Senheng regularly holds Seamless Day events where buyers pay a 10 percent down payment online and choose a shop of their choice to inspect the product before finalizing the purchase. Consumers were so captivated by this online-tooffline convenience that the company managed to sell some 3,000 Galaxy Note 8 smart phones during a 6-day promotion held in early September 2017.
Unlike most retailers who have different pricing structures for Peninsula Malaysia and Sabah and Sarawak, Senheng’s prices are fixed nationwide, whether through online or offline channels.
The company’s merchandizing team uses an Online Market Survey Solution to conduct a daily price SENHENG Going Seamless Boosts Customer Traffic 5 competitiveness ranking across the market and negotiate with suppliers to ensure the best price for its customers.
Work is in progress to introduce a price comparison solution that would enable customers to compare item prices across the industry for quick decision making via the Senheng website.
In managing the inventory of its online and offline stores, Senheng adapts to a centralized system for optimum order fulfilment.
It applies the 80-20 long-tail concept for its stock inventory whereby 80% of the inventory comprises popular, high-demand products while the less popular online models make up the 20% balance.
The long-tail concept makes for an efficient demand-based inventory management. The company also ensures that there are 2 units of the less popular models it sells on hand at all times and implements a 6-day stock safety level to prevent stock-outs for the high-demand products.
In SEAMLESS business model, another key milestone would be the launch of Centralize Delivery Management (CDM). CDM is a Supply Chain Management (SCM) solution where all the supplies are centralized and operated based on a single window for business partner to replenish order on a daily basis.
Senheng aspires to attain three goals by unlocking the CDM. By using CDM, it will reduce extra inventory floating at each logistics center and at the same time maximizing the stock at the Central Distribution Centre (CDC). Replenishment from CDC to every warehouse will be done daily, enabling online and offline orders to be fulfill within 48 hours.
All these while, Senheng’s suppliers have to deliver the goods to the 11 logistics located nationwide, based on a daily replenishment format. The company now makes use of its own 11 logistics to distribute the products throughout Malaysia with a comprehensive tracking platform built to facilitate tracking process, thus regional delivery management are supported by different regional logistic for optimum efficiency.
CDC will support all the online order delivery and pick up for West Malaysia, while East Malaysia will be supported by BDC1 and BDC2. The company targets to achieve 95% fulfillment within 48 hours after receiving the online and offline orders.
Mode Senheng ensures that its online buyers enjoy the same varied mode of payment as in-store buyers. Online buyers also have the priviliges to pay for their items with installment financing plans, credit card payment options, redemption facility etc.
It also plans to introduce the mobile point of sale (mPOS) payment to both cash-on-delivery (COD) and credit-card-delivery (CCD) buyers.
6. Repair & Service
After-sales service is a critical element in the successful marketing of any products. Senheng has developed an application called the Senheng App where customers can use the App to track the progress of their service request. They can also use the QuickChat module modeled after the Uber concept that comes with the Senheng App, to make any inquiry anywhere, anytime, and the nearest store manager will respond within 15 minutes.
7. Loyalty Program for PlusOne member
In 2002, Senheng introduced its PlusOne Loyalty Program in appreciation of its steady customers. The company’s 2.3 million PlusOne cardholders currently contribute 95 percent of the business
The Senheng PlusOne Loyalty Program is now cardless. The membership is programmed into the customer’s mobile phone via the Senheng App. PlusOne members who purchase products online or offline enjoy an extra one-year Senheng warranty on top of the manufacturer’s warranty.
Such standardization has not only streamlined the PlusOne membership benefits across channels, it also helps boost customer loyalty and return rate.
The company is working towards incorporating its PlusOne Loyalty Program at online market places like 11Street, Lazada and Shopee. This will facilitate member recruitment at online marketplaces and complements its in-store membership registration.
Senheng has streamlined its branding and promotion by offering the same benefits and entitlements to offline and online customers. Such streamlining has eliminated any confusion and ambiguity arising from human error which inevitably occurs where a company runs different promotion programs online and in-store.
Senheng is also collaborating with Google and Facebook to track its online and offline customer history, including to monetize its Big Data. By doing this, the company is able to analyze its customers’ behaviour. The collaboration will enable the company to track offline conversion through their various online promotion activities.
9. Sales Partner Benefits
Senheng has a cross-channel sale commission sharing scheme whereby when a sale is transacted online and the customer chooses to collect the product at the nearest store, both the online lead and the store service staff gets to share the sales commission equally.
This cross-channel commission sharing initiative is one of the contributory factors that have resulted in better customer experience and helped the company achieve a target of 30% store pick-up for on-line purchases.
Mastering The Latest Technology
Senheng invested some RM5 million to build the information technology infrastructure and human capacity development that is a prerequisite for seamless retail. The company targets to go totally seamless and paperless by mid-2018, and is ready to invest another RM4 million to materialize the vision.
Although Senheng is only 65 percent seamless thus far in 2018, the company has recorded an average 16 percent increase in turnover for the first quater of 2018.
In a world where online and brick-and-mortar shops have merged to into a seamless customer experience, consumers increasingly expect to be able to use different services, or even a succession of various channels, like click and collect, and get the same information on products, prices and support, whether they are using an e-commerce platform, speaking on the phone to an agent, or communicating via email or online chat.
The Senheng story is about transforming the business and adapting to ever-changing market situations. It is about how industry players must innovate rapidly in tandem with the speed of changes in the market.
Not one to rest on his laurels, Lim & his team recently attended a 9-day study trip to Shanghai & Hangzhou, specifically one on monetizing Big Data at the AliBaba Academy. The Senheng co- founder firmly believes that by mastering the latest technology, Senheng will be able to join the rank of SEAMLESS retail giants like Amazon, AliBaba and Lazada.