A telco CEO once told this writer that the telecoms game was all about volume. Putting aside the killing that telcos make on international roaming, he was right, of course.
The original volume game, however, was in groceries, which explains why giant retailers can come in and offer better prices than most mom and pop stores, including the medicine halls and emporiums which had decade-long relationships with suppliers.
The volume the giant retailers order on a weekly basis buries whatever relationship advantages the suppliers may have had with their one-time key customers.
So, if this is a business where volume matters, what chance does Datuk Ragavan Nair have in starting an online grocery service? What made him invest millions of his hard-earned cash — RM5.8 million in the first year – to set up www.doorstep.com.my?
Ragavan already has 50 employees and a management team that has more than 34 years of experience in retail and customer management locally and internationally.
“We hired one guy who was with Tesco UK handling their online service. Through him, we learn and apply the best of what worked for Tesco when they offered groceries online and we avoid their mistakes,” he says.
Ragavan hired a strong logistic team as well because he wanted absolute control over delivery; his customers had to receive their groceries at the promised time. He shrewdly recognised that the lackadaisical Malaysian approach of “it will get there when it does” would kill his fledging business faster than any undercutting competitor. Handling everything inhouse gives him the added advantage of a quicker turnaround when it comes to dealing with customers.
Still, what made Ragavan think he could spend RM2.5 million on start-up costs and see a return on that amount? Was he a young man fresh out of the Silicon Valley who was caught up in the hype that everything we do in the physical world will move online?
Actually, Ragavan is a middle-aged entrepreneur who simply feels that the timing is right, with the online culture taking hold in Malaysia. “Internet penetration is up, people are demanding faster broadband services, fixed or wireless, and many urbanites are paying their bills online. So, why not buy groceries online too?” he asks.
Ragavan feels most people would not want to go through the hassle of driving to a mall, finding parking space, shopping and then lugging back the groceries. Plus, people tend to buy unnecessary things when they are out shopping. He believes letting one’s fingers do the “walking” will be a whole lot more pleasant.” After all, we tend to buy almost the same brands of particular products when we shop. What will you miss by doing this online?” Fair point.
There is another reason that compelled Ragavan to offer groceries online – his parents ran a mini-market in Seremban and he says the experience has left a lasting mark on him.
“Don’t forget, groceries is a RM60 billion market,” he remarks. “And it is relevant to all households in the country. We started with non-perishables and once we gained the confidence of the market, quickly moved into perishables too.”
He started out with pantry supplies to the corporate sector and found a surprisingly receptive market. For instance, his company has been doing cold calling and find success. Microsoft, says Ragavan, was an early customer.
“Corporations like the convenience of getting their pantries stocked up quickly, with a system that allows them to easily track what they have been buying.”
Ragavan’s long-term goal is to offer products at low prices but for now, convenience is the key value-add of his service.
While his target is the corporate market, Ragavan finds the eagerness with which consumers have taken to the services encouraging.
“I initially thought this service would be ideal for the elderly, the physically challenged and the expat community but I am finding quite a few Malaysians already using it to do their grocery shopping.”
There have even been Malaysians living abroad buying groceries for their parents in Kuala Lumpur. The number is small, but Ragavan is confident that once doorstep.com.my establishes a reputation for quality and service, the retail market will be larger. Already, he offers retails shopper within the Klang Valley same day delivery from 10am to 10pm, although not every part of the valley is covered. He aims to offer the service to Johor Baru, Penang and Ipoh too but wants to focus on getting it right in the Klang Valley first.
Security on the site is very tight and while retail customers can pay online, they also have the option of paying cash on delivery with a minimum RM50 order. “We work with approved payment gateway providers and we do not hold customers’ credit card data,” says Ragavan.
He is reluctant to give an estimate of his revenue target, but says the goal is to become cash-flow positive from the third year. The corporate grocery site has had close to 330,000 requests since it was launched in January last year while the retail site has 2,700 friends on its Facebook page.
So, what’s next for doorstep.com.my? Lifestyle supplies for homes, says Ragavan as he has been approached by various suppliers and SMEs to carry their products on his site. He says he is going to explore the avenue.
Having once supplied smart cards and now supplying power transmission equipment and tools to Tenaga Nasional Bhd, Ragavan says 95% of his time is now taken up by doorstep.com.my. “My biggest challenge,” says the entrepreneur, “is to get more consumers to change their minds about buying groceries online.”
by Karamjit Singh, The Edge Malaysia