Tailor-fitting retail stores to catch up on the digitisation race

RETAIL INSIGHT: DIGITAL RETAIL Tailor-fitting retail stores to catch up on the digitisation race

Retailers would need over 200 hours to manually digitise their inventories, but tech startup Fairmart claims this could be trimmed down to zero.

Retail stores in Southeast Asia could have earned $4.5b more in sales if only consumers could find their products online. Now, these stores, whose operations are mainly physical, are at risk of losing another $4.5b, should they fail to digitise their inventory, tech startup Fairmart said.

As an example Fairmart CEO and Co-founder Jan Gasparic shared that he would often search online for new pet food or toy for his dog. But whilst there are three pet stores within the two-kilometre radius from his home, his online searches lead him to marketplaces elsewhere, sometimes even those from overseas.

“I would look through the results and I'd see a lot of online listings. Then I would go into the map section and try to find which one of my local stores actually carries this product. But because the stores don't digitise their inventory, they essentially just do not come up in the search results at all. Now, then I'll keep on scrolling,” he said.

“The reason this problem exists is [that] current solutions are essentially made for e-commerce, and they’re a poor fit for the way physical retailers work,” the Fairmart CEO said.

He shared that physical retailers have a high number of stockkeeping units with some stores storing more than 2,000 items, making it difficult for retailers to manually digitise their products.

Putting local stores on the map

This is where the tech startup comes in as Fairmart enables

Current solutions are essentially made for e-commerce, and they’re a poor fit for the way physical retailers work

small businesses to increase foot traffic to retailers by installing an IoT device that allows businesses to digitise products available in their stores. Retail stores then get a real-time feed of the barcodes that are being scanned and, with Fairmart’s software, the stores can automatically generate a list of its products online.

“In order for them to manually digitise all their products, they would need over 200 hours of manual data entry each month and we bring that number essentially down to zero,” he said.

Gasparic raised that whilst shoppers have gone “irreversibly digital,” it is important that retailers digitise operations as 95% of transactions are expected to happen offline.

He also said that consumers

Whilst shoppers have gone “irreversibly digital,” retailers must digitise operations as 95% of transactions are expected to happen offline

Our role as a company is to help physical retailers unlock the potential of capturing local searches and drive people to their store

Fairmart has uplifted performance of local stores that have now digitised their inventories

are now inclined to do “near me” searches, wherein they look at buying the products at physical stores even as their purchasing process started online.

“Essentially, that's equivalent to what window shopping is in the physical world. It's just the start stage. Now our role as a company is to help physical retailers to unlock the potential of capturing these local searches and drive people to their store,” he said.

Making sense of the data

Fairmart’s digitisation strategy benefits retailers in two ways, that is through automation and data, Gasparic said. For instance, he shared that one of their merchant partners had believed that the customers that visit their store are after the frozen food products they sell. It was not until a month after using Fairmart’s software that the merchant found that most of their customers, particularly new ones, frequent their store for the specific product offered only at their store – sambal sauce.

“All these kinds of things that typically you would need right before your meal if you're cooking for the night and you don't know where to buy. But with this kind of data, we're able to empower the retailer to make better decisions in terms of the kinds of products that we're actually getting people into their store,” he said.

Gasparic said Fairmart has seen its software uplift the performance of local stores that have now digitised their inventories. And, generally, retailers have reported between an 8% to 10% increase in organic leads in their store, largely because customers now find specific products they carry in online searches. He added this essentially allows merchants to capture new customers in an organic way as it is based on specific and unique products offered by the store.

Singapore and beyond

Just recently, Fairmart raised $1.5m worth of funds in an oversubscribed seed round, co-led by Quest Ventures and Entrepreneur First. The funding has been earmarked for the expansion of the Fairmart team, as well as the startup's infrastructure, amongst others.

Fairmart has a presence in New Zealand and Hong Kong, but since relocating in 2020, it has focused largely on Singapore and it plans to keep its eye on the market in the next year.

Whilst that is the case, the startup is looking at expanding outside of Singapore, particularly in Thailand and the Philippines. He explained in particular that an “enormous” opportunity lies in the Philippine market as retailers have larger distances to cover which makes it harder to straddle through retail logistics.

“The local search problem where people want to understand does this mall have this product or does this store have this product? You want to know what's available in [the Philippine] communities and that information needs to be surfaced,” he said.

Beyond expanding into new markets, Fairmart will also zero in on developing the data they have to enable local retailers to better understand their customers.

“On the data side, we see that our customers really just lack good data to make business decisions off of and that's going to be a key vector for us to be able to productise the data that we have and make it accessible and understandable in a way that allows our customers to make business decisions,” he said.

Fairmart enables small businesses to increase foot traffic to retailers and allows them to digitise products available in their stores

Singapore consumers envision the new era of e-commerce of no passwords or pin authorisation

5 advanced payment methods to adopt in 2022

Consumers increasingly want to do away with the cards and passwords and just pay with a wave of a hand, study shows.

Imagine paying for fuel, meals, and other necessities by simply showing a hand and not having convenience and security,” Lam told Retail Asia, adding that biometric authentication through fingerprint or to remember passwords and pins to authorise online payments. This is how Singapore consumers envision the new era of e-commerce—and they might not need to wait for long for this future to arrive given that 94% of businesses are planning to adopt a new payment method in 2022, according to a report by Visa.

But with several payment methods available in the ecosystem, which exactly should businesses adopt?

Based on the FIS Generation Pay 2021, there are five methods of paying which are gaining ground amongst Singaporean consumers: biometric authentication (71%), smart commands (47%), in-car integration (52%), cryptocurrencies (37%), and a hand-implanted microchip (25%).

Amongst these options, Kelvin Lam, regional general manager of a fintech firm, YouTrip, said the best payment method to adopt in terms of cost, convenience, and safety would be biometric authentication.

“[It is a] tried-and-tested payment method that promises both facial verification is “inherently more secure than passwords and [two-factor authentication] methods.” This was echoed by fintech company Zwipe’s VP for Sales and Business Development, Claus Hansen, saying that the use of biometrics in the payment authentication process has the highest form of security available today. “Unlike a PIN code, a fingerprint securely stored in the EMV chip as a template cannot be stolen,” Hansen told Retail Asia. “Matching the fingerprint with the image already stored on the card, keeps the privacy of the cardholder intact and the safety and health of the consumer addressed whilst maintaining the convenience of contactless payment,” Hansen added. It’s not only experts who are backing the safety of biometric authentication, even consumers are saying so with nine in 10 already wanting their payment cards to be biometric in 2022, Zwipe’s study revealed. The only concern of consumers

(80%) about biometric payments is the risk of infection when paying in-store or touching POS machines.

Crypto for cross-border commerce

For businesses that serve not only the local market but across borders, as well, cryptocurrency would be a good option to consider, especially by small and medium enterprises. Lam told Retail Asia that cryptocurrencies are “set to bring about faster and cheaper” crossborder transactions which he said are “expected to go up as companies increasingly operate in a distributed and borderless manner.” “Just like B2C payments, companies will also expect to pay in the fastest and cheapest manner. Advancements in payment technologies such as blockchain is a step towards helping businesses save time and cost on crossborder payments,” Lam added. In 2022, professional services company EY Global said it expects global cross-border payment flows to reach US$156t or $209.75t (1 SGD = 0.74 USD); of which $201.66t or US$150t will be from B2B payment transactions. Whilst crypto will hugely benefit B2B transactions, Lam cautioned that this type of payment is still “a volatile space that requires a more sustainable framework and more consumer Kelvin Lam protections before it can be rolled out to the masses.”

Things to consider

When selecting which to adopt amongst the rising payment methods, Nagesh Devata, Regional SVP, GTM APAC at commerce technology company Payoneer, said businesses Claus Hansen should take into consideration not only their global appeal but the preferences of the local markets they operate in. “For example, Gen Z and Millennials are the digital generations and are particularly fond of mobile Gen Z and payments, and digital credit schemes, Millennials are such as Buy-Now-Pay-Later." With particularly consumers paying more attention fond of mobile to convenience, the Payoneer expert payments and said it is important to consider the digital credit complexity, cost, user experience, schemes like speed, and market reach of these BNPL innovative payments.

Businesses could invest in point of sale systems, either through a POS device or a POS terminal to receive payment

Go cashless or pay the price

1 in 3 consumers will abandon a purchase if they cannot pay for it digitally.

With more consumers planning to drop cash and go fully digital with “The former choice would require SMEs to invest in payment solutions or use third-party payment services, their payments in 2022 and in years to come, and with one in three abandoning a purchase when not given a digital payment option, small businesses really have no other way to go than shift to cashless.

Fortunately, a majority (95%) of small and medium enterprises (SMEs) are planning to accept contactless payment or some form of digital payment option in 2022, according to a report by Visa.

For the remaining 5%, they might have no choice but to hop on to the cashless movement. “It is a matter of time for the cashless transaction to further penetrate into SMEs and independent retailers,” Herbert Yum, research manager at Euromonitor International, told Retail Asia.

According to Yum, SMEs can “either develop their platforms for their product and services to list out for consumers to choose and proceed to checkout or simply list their product and services on other e-commerce platforms,” depending on the missing pieces of the SMEs' online capabilities. where the latter would reduce SMEs initial investment on such solution and result in higher cost of sales,” Euromonitor's Yum added. Amongst the digital platforms, mobile apps are the most commonly used by Hong Kong shoppers (50%), followed by a web browser on a computer (23%), and a web browser on mobile (16%), according to Visa. As for businesses that focus on offline channels, Yum said they could invest in point of sale (POS) systems, either through a POS device or using a mobile device as a POS terminal to receive payment. Yum cited HSBC’s mobile payment service, PayMe, as an example of a POS system. “Either way, the POS terminal for them to receive digital payment would be a must for them to adapt to the ongoing shift towards a cashless society. Followed by product and services listing platforms, as well as logistic capabilities for them to deliver their goods to customers,” Yum added. PwC Risk Assurance Partner, Gary Ng, for his part, said small retailers can tap a number of Store Value Facilities (SVF) service providers in Hong Kong which offer low-cost cashless payment services.

Will cash bid adieu?

With the growing demand for new modes of payment, will Hong Kong finally bid adieu to cash? Ng said it depends on what is being looked at. In terms of infrastructure and customer demand, Ng said Hong Kong is ready to shift to a fully cashless society. However, that is not the case on the merchant side because, according to Ng, cash will still be used in several transactions in Hong Kong, particularly amongst smaller merchants. This is backed by Visa’s Back to Business Study, which found that 16% of small businesses said they will never make the shift to digital payments only. One of the reasons why smaller merchants are not inclined towards shifting to cashless transactions is probably because of the fees that come along with implementing electronic payments, Ng said. “They need to pay some fees 1-5% depending on the type of payment vehicles that they're using,” he said. Ng said financial services could Herbert Yum play a part in easing the burden of merchants by offering cheaper payment acquiring services, which in turn, would benefit them since they will be able to acquire a larger pool of customers.

Checklist for going cashless

Gary Ng For those planning to change to cashless, Euromonitor International’s Yum left a checklist of what businesses should consider before adopting new payment methods. According to Yum, businesses should first have a good understanding of consumers’ preferences; their distribution model; It is a matter and the additional solutions that of time for accompany the payment solutions the cashless they will adopt. transaction As for consumer preference, Yum to further said buy now pay later (BNPL) is the penetrate latest type of cashless payment to into SMEs and gain ground in Hong Kong, as well independent as QR code payments, e-wallets, and retailers faster payment systems (FPS).