Many retail pioneers may have heard of the term “New Retail”.
Coined by Jack Ma and often used in describing Alibaba’s New Retail Revolution, Senheng’s founder and Managing Director Lim Kim Heng describes “New Retail” as “A holistic shopping experience where customers have the power to decide”.
Otherwise put: a customer-centric business model.
In the second chapter of New Retail + New Platform, we take a look at the nine pillars to this seamless, customer-centric business model that has placed Senheng at the forefront of new retail in Malaysia.
The 9 Pillars of Senheng’s Seamless Business Model.
- Product Placement Strategy
- Pricing Strategy
- Inventory Planning
- Logistics Planning
- Payment Gateway
- Maintenance & Services
- Commission Distribution
- Loyalty Program
- Promotional Strategy
Pillar 1: Product Placement Strategy.
A core tenet of the new retail concept is the unification of online and offline commerce. While this may be the norm today, being able to carry it out efficiently isn’t as easy as it may seem.
With Senheng, there have been three methods in aligning both offline and online product placement:
- Strengthening the Senheng online e-commerce platform.
- Displaying as many SKU (Stock Keeping Unit) as possible online.
- Expanding the “Shop-in-Shop” concept.
Furthermore, all products displayed on the e-commerce platform are stored at the Senheng Central Logistic Center (CDC) (see pillar 3), where they can be immediately shipped out to customers upon confirmation.
As tremendous a task it may seem, individual brands can manage their own e-catalog and products within the “Shop-in-Shop” concept, thereby distributing the weight off Senheng’s shoulders.
Senheng also regularly holds “Seamless Day” events. Here, buyers pay a 10% deposit online and are able to inspect the product at their nearest outlet before finalizing the purchase.
Pillar 2: Pricing Strategy.
Surely, no retailer can claim its business model to be seamless if offline product prices differ from the prices stated online?
In Chapter 1 (Transformation), we touched on the Fixed Price Policy which played a drastic role in reviving the business.
With product prices now fixed across all outlets, the next stepping stone meant unifying offline and online prices to communicate transparency to all customers.
An online survey solution is also leveraged to conduct daily market price surveys, allowing Senheng to always be in the loop as to where they stand in regards to price competitiveness.
Pillar 3: Inventory Planning.
Ramping up efforts on the e-commerce end in turn calls for a more comprehensive inventory plan to support the surge in sales.
This is where the Senheng Centralised Distribution Center (CDC) comes in, to support the Central Distribution Management System (CDM) (see pillar 4 below).
A tried-and-true inventory management concept is also employed - the Long Tail Inventory Concept.
The concept calls for an 80-20 ratio whereby 80% of inventory consists of high-demand products, with slow-moving SKUs making up the remaining 20%.
Pillar 4: Logistics Planning.
Senheng’s objectives for seamless logistics planning are threefold:
- Maximising inventory efficiency
- Strengthening turnover rate
- Minimising unnecessary overstock
The Central Distribution Management System (CDM) is a supply chain management solution which plays a key role in propelling the company towards all three of these milestones.
Through the CDM, suppliers must replenish their goods every day at the dedicated CDC. From there, the CDC replenishes onwards to the ten regional logistics centers daily, and the regional logistics centers serve as the final station before the goods are delivered to their new homes.
By serving as a central window for the business to oversee all suppliers’ goods at a glance, Senheng is able to realise same-day shipping within 24 hours of an order being placed.
Pillar 5: Payment Gateway.
As Malaysia inches its way forward to a cashless ecosystem, what was once merely a payment method has become a competitive differentiator too.
Senheng customers can choose from a variety of ways to make their payment, including via credit/debit card, instalment payment plan (IPP), easy repayment plan (such as AEON
Credit), and bank points redemption.
Pillar 6: Maintenance & Services.
If you’ve downloaded the Senheng app yourself, you may have noticed the QuickChat feature.
What you may not know is the rigorous SOP that goes behind it. When a QuickChat enquiry is made, the nearest store manager is obliged to respond within 15 minutes. If no response is received, the enquiry will be transferred to the next available store manager to respond. Should there be still no response, the incident will be escalated to the management for inquiry.
This feature allows the company to offer unparalleled after-sales service, which is reflected in Senheng’s Facebook review rating today of a whopping 4.8 out of 5.
Pillar 7: Commission Distribution.
One challenge in aligning offline and online retail is customer service.
Senheng was posed with this challenge when distributing commission for orders made online, but picked up in person at a physical store.
Who was to receive the commission? The online salesperson...or the in-store staff?
The answer was simple: Both.
To ensure customers received equally positive service both online and offline, a commission sharing strategy was put in place, whereby the final commission is split equally between both parties.
Pillar 8: Loyalty Program.
Most loyal customers of Senheng are no stranger to the infamous PlusOne membership program.
The loyalty program was paramount in boosting customer loyalty despite the drastic change that came with the Fixed Price Policy.
In fact, 93% of Senheng sales have been shown to come from PlusOne members, while the number of members stands at 2.4 million today - and counting.
The PlusOne is a cardless membership program that utilises the Senheng app, with a string of
rewards including additional one-year warranty.
Pillar 9: Promotional Strategy.
Senheng’s promotion strategies have all been carried out with one overarching fundamental element - to “make customers happy”.
As underwhelming as it may seem, there simply isn’t a marketing tool that can beat the effectiveness of a happy customer.
By standardising promotions and membership benefits across both offline and online channels, as well as utilising Facebook and Google to obtain valuable insights on customer shopping behaviors, Senheng managed to chart the best sales performance in its 29 years of business in 2018.
What Does “New Retail” Mean to You?
Senheng was successful in encapsulating what “New Retail” meant to the business specifically, and the results can be seen even today.
In 2019, Senheng was awarded an astounding total of eight awards at the SOBA 2018 Awards Ceremony, setting the record of most awards won at the SOBA Awards.
The awards included:
- Best in Marketing Award
- Best Brand Award
- Best in CSR Award
- Best Employer Award
- Best Innovation Award
- Best Use of Technology Award
- Malaysian Business of the Year Award
- Entrepreneur of the Year Award