Challenger to transform itself with e-commerce

Challenger to transform itself with e-commerce

Local tech retailer Challenger is ready to open its online store hachi.tech on April 8 - and says the new portal will deliver 50 per cent of revenue in just three to five years.

It set up a unit - Challenge Ventures - six months ago with a budget of $20 million to invest in online companies and enable the firm to expand its e-commerce strategy.

So far, Challenge Ventures has already invested $10 million in several start-ups, including mobile wallet firm Xfers and on-demand delivery service Zyllem.

But another $100 million in cash and banking facilities is available for use to expand the firm's e-commerce strategy.

Chief marketing officer Loo Pei Fen said: "Every investment that we make today, every thing we do now, is related to our e-commerce strategy."

Investments in online start-ups let Challenger learn more about e-commerce in areas such as customer support and fulfilment - key for a successful online store.

Challenger also plans to open buying offices in South Korea, Japan and the United States in the next three to five years. It has a buying office in Shenzhen, which is being expanded to include a warehouse.

These offices will source for products for its house brand Valore for sale on hachi.tech.

Challenger's e-commerce strategy took on a greater urgency last year when Funan DigitaLife Mall announced it will shutter its doors finally on June 30.

Mr Loo Leong Thye, Challenger's chief executive who started the business in 1982, had considered e-commerce about six years ago when news first broke that the mall - where Challenger has its 50,000 sq ft flagship store - will make way for another building.

In recent years, changing consumer buying behaviour, coupled with manpower challenges and high rental costs, convinced Mr Loo that e-commerce is the right way forward.

Said Ms Loo Pei Fen: "Our Funan store stocks about 10,000 different products. But there's no way a physical outlet can carry more inventory than an online store. Customers are already going online to check for products and do price comparisons. We can't burrow our head in the sand and do the same things we've always been doing."

E-commerce is a great initiative to enable Challenger to transform itself, added Ms Loo, who is Mr Loo's daughter.

"In the next three to five years, we expect 50 per cent of Challenger's revenue to come from hachi.tech," she added.

In fiscal year 2014, Challenger's revenue hit about $355 million.

Ms Loo stressed that Challenger will retain its physical stores because some customers find it more convenient to buy from a store.

Customers who choose to buy online can collect their purchases at the store or have them delivered. Online buying can also be done at the stores.

"This frees up space at the stores because we won't need cashier stands. We don't need as many staff and more space is freed up for us to sell more products," she added.

Hachi.tech aims to be an online tech and lifestyle marketplace. In addition to tech products, it may also list others such as electric sewing machines and yoga mats.

It also wants to sell services like network installation and software downloads. This differentiates it from Challenger, with about 50 outlets, which will continue to be a tech retail store. Its current online store, challenger.com, will become a repository of product information when hachi.tech goes live next month. Challenger customers can also access this website to check their loyalty points.

Being a "physical" retailer for more than 20 years, the Challenger management had to learn what makes an online store tick.

Mr Loo went online shopping.

He bought groceries from Singapore e-grocer Redmart and used Uber car service.

Ms Loo, who has been buying online for many years including clothes for her children, checked out the best practices in various areas, like customer support, on different online companies.

"E-commerce is not an easy business. It takes my team just seven days to open a new outlet but an online store has many more elements to deal with," explained Ms Loo.

The portal, she said, must be easy to use and filled with the right content, yet must not be cluttered with too much information. Promotions and discounts must also be included in a way that is not intrusive to how people surf the portal.

"What I've learnt is that no website is ever complete. Websites need to evolve every few months to keep it fresh and to keep up with customer buying patterns."

Mr Loo, Challenger's chief executive, selected the name "hachi" as it means "eight" in Japanese. In Chinese, "eight" sounds like prosperity.

To attract online customers, hachi will give more loyalty points - between five times and 30 times more. For every 1,000 points collected, $10 can be used to offset the next purchase.

Customers can also buy online and pick up at its six stores located in Sun Plaza, Jem, VivoCity, Nex and Tampines One. Customers can also collect at Challenger in Funan until the store closes on June 30.

In preparation for clearing out its stocks from Funan, Challenger will be holding sales from next month. Customers can expect discounts of between 10 and 80 per cent.


This article was first published on March 24, 2016.
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