ATOZ, from distribution to retail and e-commerce
There are so many entrepreneurs with diverse or even zero background prior to their e-commerce ventures. Vincent Goh, CEO of Atoz2u.com who is a veteran business man in distribution prior to retail, shares his e-commerce journey and commitment with us.
You might be wondering, from distribution to retail / e-commerce? Yes, read on as Vincent shares his thoughts, challenges and experience on this particular transition.
Since when did you start your distribution business?
I started office furniture distribution since year 1987, and the market was getting saturated so I moved on to electric typewriter and components in the 90s.
It was also in the 90s when printers and fax machine were gaining momentum (sunrise industry) thus naturally I shifted focus to distribution of printer supplies (toners, inks) which is still our core until today.
Similar with any other distribution business, we work on volume and being appointed by some major brands like HP, Canon, Lexmark etc. as official distributor since then.
As a distributor, why did you venture into retail?
Distribution for printer supplies is also getting saturated, and the overlapping of channels is becoming serious. We think that retail enables us to bridge the gap with the end consumers and understand their needs better.
So in year 2008, we started venturing into retail under the brand of Atoz, at one point we had five retail presence in shopping malls like Plaza Lowyat, 1 Utama, Digital Mall etc.
Why did you close the retail outlets then?
We started closing the retail since 2011, resource issue and high mall rental were definitely one of the factors but most importantly the data we tracked shows footfall to our outlets is dropping.
It was really like a bottleneck scenario we were facing on our retail business back then, so we ended up closing all of them by year 2014.
One of the things we have done right during that time was to start collecting customer base, which proves to be helpful for our e-commerce venture later.
On why and how we collect database? Printer supplies are replenishable items so we send our customers scheduled reminders on when to replace their toner or ink.
During that time, we have already setup toll-free number and customers can call in anytime between 10am to 10pm, 7 days a week, and get their items delivered within 2 hours (selected Klang Valley areas).
Did you start e-commerce while closing down the physical retail?
Yes, we started Atozcomputermedia.com in year 2010, and it was then rebranded to Atoz2u.com which also represents my long term dream - offer A to Z of office supplies.
As mentioned earlier above, we mainly leverage on our customer database to drive our online store. We were also encouraging our retail customers to buy online.
For example, customers sometimes have difficulties looking for car park surrounding Digital Mall so we educated them to buy online. The price is the same but online we offer perks like voucher, plus our customers can save petrol, parking / toll fees, and most importantly time by shopping online.
Back then, we have also started hiring talents in e-commerce, marketing and programming. Right now, we have 3 in-house programmers who continuously work on our online store and system.
As a distributor, did you face resistance from your dealers and channels?
Yes, some of them brought this matter to our principals (brand owners) and our justification is, there is no such players providing A to Z of office supplies and we are the first one to do this in the market. If there are already existing players probably they can question us by creating unhealthy competition.
Furthermore, we don't compete with our channels on pricing. In most cases we follow recommended retail price and sometimes our channels are even selling cheaper than us.
It is about being truthful with the partners, and we believe the market is becoming flatter, as typical distribution business will face huge challenges with consumers adaption of Internet and e-commerce.
What are the key advantages of distributor like you doing e-commerce?
For a start, as a distributor we have good product knowledge hence able to provide good customer service, on pre-sales and post-sales. Since we have done retail before, we are able to convert some customers from offline to online too.
It is very critical to carry full (wide) range of products, basically from A to Z on office and printing supplies. This is the easiest thing to be said but also the hardest to be done. How to make 10,000 SKUs with stock availability is a big challenge for most e-commerce players.
We invest significant resources to serve at least 90% stock availability, by optimizing the process, infrastructure, API sync to suppliers etc.
E-commerce is all about trust (again, easier said than done) so it is fundamental to fulfill your promise with speed, starting from day one and accumulating from there. Imagine if a customer overcome the first trust barrier to order online from you but you have no stock to fulfill. Even if you navigate or compensate the customer in a nice manner, he or she will be disappointed without telling you so.
How do you commit same-day delivery?
Same-day delivery is available for selected areas (postcodes) on orders made latest by 11am. This is all done by our in-house delivery team. which consists of 7 lorries, 1 van, 2 motorbikes.
Delivery efficiency is crucial especially to our type of business. You will only think of restocking your printer ink when the light is blinking, and it's usually at the exact moment you need to print important documents or waiting for an important fax from overseas!
Therefore, we place high importance on delivery, to any parts of the country. We study and work with a couple of courier companies, each of them with own strength and weakness.
For example, there are some who are good in certain characteristics of product, there are some who are better at East Malaysia etc.
Any indicators to share with us on your e-commerce progress?
I am glad that we started earlier since year 2012 when we rebranded to Atoz2u.com, and we place ultimate importance in servicing and fulfilling our customer's needs from day one.
It is a good indicator that our average order volume increased from ~RM50 in early days to ~RM500 nowadays, that is 10 times increase over the years.
This proves that e-commerce is built upon repeat customers and customer lifetime value (CLV), especially true for our kind of replenishable goods business.
I think there is yet a full-range online office supplies store in the market. Throughout the years, I am seeing positive results and feedback, I believe if we continue to do what we do best, we are heading to the right direction.
What are your opinions on traditional distributor or retail going online?
I wouldn't argue that it was easier to do business during pre-Internet era, it is possible to achieve success without significant investment in terms of money, talent and system.
For traditional business, I think the most overlooked aspect is the system and infrastructure to facilitate optimum online shopping experience from shopping to receiving orders.
I have on-going communications with fellow business men and most of them understand the importance of Internet and e-commerce, the only question is whether to invest and to go, or no-go.
The easier way to go is selling via e-marketplaces but I think it is important to have your own online store in a long run, and ultimately it is about what value do you deliver to your customers?