It’s uncertain what specific roles the Honestbee and Growsari platforms will play in JG’s e-commerce business. However, both have the potential of centralising the group’s inventory and logistics capacities—whether their own or that of third parties—to fulfil orders efficiently.
“Having an e-commerce tech platform is so valuable,” says Paul Srivorakul, co-founder and CEO of aCommerce, a startup that’s enabling enterprise brands to build omnichannel businesses. “It creates an endless virtual aisle of goods—it doesn’t matter whether your inventory sits in your physical stores or your warehouses. You can source and fulfill from anywhere, and choose the fastest way to deliver a product from point A to B.”
Also equally valuable is the massive data the platform will collect—something that marketplaces like Lazada don’t really offer, says Srivorakul. This data can provide shopper demographics and purchasing behaviour, and spot best-selling products and categories by location. The conglomerate may also fuse this data with that of other services such as payments and rewards. This will paint a unified view of the consumer for JG and its partner brands to improve merchandising and ad targeting.
JG is not alone in seeing the opportunity in Southeast Asia’s online-offline space. In Indonesia, conglomerate Lippo Group earlier rolled out its e-commerce platform MatahariMall. In Thailand, family-owned Central Group of Companies formed a $500-million online venture with China’s JD.com.
There’s another force driving the trend.
In the US, the shift to online shops from brick-and-mortar stores has become so apparent that analysts have begun to predict a retail apocalypse. The same cannot be said of the Philippines or Southeast Asia yet, but analysts have noticed a change in the mix of rental income for local malls.
“It used to be 20% food and entertainment, 80% retail. Now it’s 50% food and entertainment. People go to the malls for other things, rather than shop,” said Luis Limlingan, business development head at research analyst firm Regina Capital, which closely follows the performance of JG’s and Robinsons’ stocks.
The omnichannel imperative
While it makes perfect sense for traditional retailers to future-proof their business, launching and running a whole e-commerce operation presents a gargantuan task.
Take the case of Lippo. The biggest problem for the Indonesian group was funding, an e-commerce analyst told us. “Retailers are typically not big-market spenders. They spend a lot on their physical infrastructure like malls because that’s where they get the foot traffic and rent. But when you think about online, it’s about acquiring customers. You need to keep subsidising to compete with the likes of Lazada and Indonesian marketplace Tokopedia.”
Retailers would usually try to offset the cash burn by introducing exclusive private labels that offer higher margins, as well as upselling other services to customers. JG already has manufacturing units like Universal Robina Corporation (URC), which produces its own brands of snacks and drinks. URC maintains factories in China, Thailand, Malaysia, Vietnam and Indonesia, where its ‘Jack ’n Jill’ brand is widely available.