It is no secret that digital technologies have shaken up the entire retail industry since the pandemic, and retailers have had to scramble to adapt to these changing trends. In this episode of The Future Of Retail Asia Podcast, we invited Keith Chen, General Manager of Fave Singapore (and undoubtedly an expert on the topic of digital!) on the show to talk about the technologies that have penetrated the retail ecosystem. Keith shares his knowledge and experience of both running an offline business and also understanding retail O2O strategies and shares how merchants can rightly leverage on them to achieve sustainable growth in the new normal.
Episode 16: “Building The Digital Bridge In Brick And Mortar” with Keith Chen
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IMRAN: Welcome back to another episode of The Future of Retail Asia, one of the top 50 retail podcasts in the world! I am Imran.
JUN: And I’m Jun. Today, we have Keith Chen from Fave Singapore! Welcome to the show!
KEITH: Thank you for having me!
IMRAN: Keith started off as a catering supervisor, a senior business consultant at Fuji, and then assumed the role General Manager of Xi Yan Singapore, a chain of Chinese restaurants. Moving on to the e-commerce sector, he joined Groupon Singapore, progressing in roles before they were acquired by Fave. Where, he was the Head of Business Development and then the Head of Sales, before coming to where he is today, the General Manager of Fave Singapore. What a journey! You can definitely see that he has the knowledge and experience of both running an offline business and also understanding the O2O strategies.
JUN: Very very cool. Can you share with us, what made you decide to move from offline to online, from Fuji, to Groupon and Fave?
KEITH: That’s a very good question. I have to thank my friend, my army buddy back then. As Imran was sharing, I was from the F&B industry, spent so many years in there. There was this one day my friend talked to me and said, hey do you want to try Groupon? You’re in the F&B industry, you seem to know the concept pretty well, do you want to join us? We’re hiring! I said okay, it is a new industry, I don’t know what this is, but I go on, and everything is set into history, because that led me to where I am today.
IMRAN: And I think we see that this online-to-offline and offline-to-online is really important in today’s context, especially in the context of COVID and all that, the merchants suffering, I’m sure we’ve all heard many many stories over the last 1.5 years. We know that merchants want to go digital, and people and the ecosystem are looking for the opportunity to do so. But how do they start? What does Fave do, and how do you help the merchants go digital?
KEITH: I think that question is really relevant today. Even as we are speaking, we are still going through internal change, the uncertainties of Covid, with Omicron and the new variants. Before all these viruses, merchants have already actually wanted to go digital. However, coming from a retail and offline background myself, they always have the challenge of going digital because they know how to run their own business, but they never know where to market digitally - Facebook ads, etc, but how do I get the customers to come back again? That’s where especially in the retail scene, we see a lot of companies invest heavily into CRMs. It’s a broken set of systems, together with their POS, everything is isolated. That’s where we decided to create a solution called FavePay, which I hope both of you are already using, haha! That’s where we try to reduce the inefficiencies of these individual systems by putting loyalty, deals, promotions, gift cards into it, so that merchants can run their business as usual using our platform to manage the digital part of their business. That’s how we see it.
IMRAN: From a merchant’s POV, I’ve talked to many merchants before. They always say hey, I’ve got to manage this system, that terminal, this platform, that app - does it get very overwhelmed at points? How does Fave see your position in really helping the companies grow digitally? You talk about FavePay, additional platforms, but for this transition, how do you guys feel that you are in need in this space?
KEITH: Great question! Even today as we are speaking, the merchants are still feeling the strains. There’s delivery platforms, there are payment platforms, and there are multiple of each of them.
KEITH: Exactly, right. So what we’re trying to do is to consolidate multiple parts of marketing technology together with payments. For example, when we talk about payments per se and when we run retention. On Fave, we actually accept Visa, Master, AMEX, Grab. On top of that, we also launched something called the Fave Loyalty Program, FLP, where we have DBS, UOB, Singtel Dash, Google Pay. They can scan the Fave QR, and merchants can issue cashback to retain customers through whichever payment mode they are paying with. And they manage the transaction through one backend - FaveBiz. So that helps them to alleviate the pressure of needing to manage different payment modes, and talking to different customers using different platforms. For example, you are using Google Pay, and you are using DBS Paylah!, and I’m using Fave. Merchants don’t need to talk to each of them to say hey, do you want to be my member, and staff become very overwhelmed. So what we’re trying to do is to consolidate that retention piece into payments. And when customers buy with Fave QR, they automatically become the merchants “member”, and they can receive the merchants cashback. On top of that, the marketing guys can run deals, vouchers, and e-card campaigns, to attract customers to come into their store using one single platform.
IMRAN: I see.
JUN: Very interesting! You mentioned about the entire offline industry and ecosystem being super fragmented, with POS system, CRM system, payments system, and there are even different payment terminals on cashiers’ counters. I think one thing that people who work with SMEs, F&Bs, retail would know is how difficult and challenging it is for a company to support them. Merchants already know they want to go digital, but due to the fragmented systems, it caused merchants to always face this challenge. So just curious, for Fave, which part of this whole thing is the most important? Is it the onboarding process, or is it in designing the product such that it is very easy for merchants to understand? How do you view this?
KEITH: Great question! We are a part of Heartlands Go Digital, we’ve onboarded a lot of heartlands merchants. There are two parts like you’ve mentioned. The onboarding process is super important, and it’s not just someone calling you on the phone and giving you a guide through email. We have to handhold them, and teach them how to use the system, how to recognise a payment, how to cancel the transaction. The other part is, we realise there is a need to share with merchants how to run a promotion,and advise them on what works. Because they are good at for example, making their nasi lemak! But they don’t know how to market, so that’s where we come in. On top of that, the system we’ve created, FaveBiz, it’s all one touch. It’s all mobile friendly and can be used on laptop. So merchants can use their phones to check the transactions. That also reduces their need to really be super ultra savvy and know how to use a 20-step process - we try to minimise it into a 3-step process. How to check your transactions, how to cancel. We try to simplify the process.
IMRAN: Right, so it is about helping the merchants understand what that process is, simplifying it for them. I think I’ve encountered many merchants in the past where they say, okay, I’ll go into e-commerce and run campaigns, but they just don’t understand the depth of technicalities and different systems involved. How could merchants better prepare themselves to digitise? Typically, there is a lot more time and resources are needed than just getting an executive to go figure it out. What would be your advice to merchants thinking about this?
KEITH: If there’s one thing I can advice or share about this is that you must understand what goals you are looking for, and what’s the impact you are looking at. Because once you have mapped that, then you find a system that is easy to use. It’s something as simple as this. I’ve come across business owners that say there are too many queries coming in that they don’t want to answer. That’s why for Fave, for merchants, there are no queries coming in for them. Either you buy your voucher, or you don’t buy. The decision is on Fave. We try to minimise the pre-purchase enquiries so that merchants just focus on running their business. Coming back to the point on how merchants can make their decision, it’s just based on what they want, and how to get to your goal in the most simple way. Actually Imran you shared something just now, actually not many mom and pop shops or SMEs have a marketing executive.
IMRAN: The manpower, right?
KEITH: Exactly. The business owner is the manpower! They have to cook their nasi lemak, or they have to sell their products, etc.
IMRAN: I don’t know how many of these mom and pop shops have told us, for instance, when we want to do something, “okay you go talk to my son”. It’s very common, right!
KEITH: Yes, exactly! And then the son goes like “okay, another one, let me listen to how it works!”
JUN: Actually we talk to a lot of guests, a lot of people from the F&B and retail industry. They always mention a very good point you brought up, which is to start from a very simple process, let the SMEs see the results first, then they will be more willing to invest more. Because a lot of them feel like a 20 step process is too long. Another point is, I’m actually a Fave user myself. When I use Fave for payment, I saw that during Covid, you launched a card where I can pay $90 to get $100 in the card, and there can be many variations and use cases for covid and for when merchants onboard with you. How can you start from a very simple method, and then start value-adding through the entire journey? Maybe you can share some use cases with us.
KEITH: Great question. Let me share what we thought of before the rollout. With Covid, what was the main problem for businesses? Cashflow. Everybody was thinking about how to get more cashflow, governments are extending grants, which Singapore was doing very well. But then how does the merchant be self-sustainable? With that thought, we started e-gift cards, or we call it e-cards on Fave. What it does is that they allow customers to pre-purchase. Let’s say Keith runs a fried chicken store, Keith’s Fried Chicken. You can buy my gift cards at $90 for $100. Fave will pay the merchant upfront. So Keith will receive $90 upfrom, less off any other fees and transaction fees. After this, this cash goes to me, but the customer has not visited me yet. So as the customer visits me, they will then slowly draw down on the credit. So this way, the merchant gets the cashflow, the merchant gets to guarantee the customer is coming in. At the same time, they also don’t need to pay a hefty cost. The best example is Starbucks. They have the Starbucks card, which we are were or are users of. We top up $50, $100, and they give you stars. But did you know that Starbucks invests hundreds of millions of dollars to set up plus market the system. How many of our local, even larger SMEs will have the system to create and market their system that way? So at Fave we thought, we have the users, we have the platform, we just create this value added service to help merchants to run this. And they dont need to pay a hefty cost to get a system like this, and get the cash flow as well.
IMRAN: But at the heart of this, it’s really value-adding to the end-customer, right. I remember right at the beginning of the Fave journey, you guys started out with deals, and, discoveries, to FavePay, to cashback, to e-cards and even now, the Buy Now Pay Later. How are you guys thinking about this whole customer experience? I think one of the biggest things we see in retail today is people saying, hey, we must make customers have a unified experience. So what do you guys see from Fave’s POV is that future of customer experience? (13:20)
KEITH: From a customer experience standpoint and what we see, we realise that for customers, other than just the experience while they are using the app, a single unified usage, there is also one thing they want to have - they want a super app. They want multiple functions within a single app. They don’t want to download one app for deals, one app for payments, one app for gift cards. That’s a common thing we hear. For those watching this podcast, check your phone. How many apps do you have? I have like 300, i think, and I only use maybe 20. That is a problem that we’re seeing, and that’s why we’ve created all these different products. We keep thinking about what the consumer want, what value they get. Perhaps the consumer experience for the different products might be a bit different, but as long as it serves consumer needs, we’re okay.
JUN: As we were discussing previously about how Buy Now Pay Later (BNPL) is going to be a big thing for the next year. Maybe you can share with us how data plays an important role in BNPL?
KEITH: That’s a good question. For BNPL, it’s really about getting consumers to spend higher amounts - that is from a merchant’s POV. For example in buying a TV, choosing between a $1,500 and a $2,500 TV. You might opt for the $1,500 if you are paying in a single payment. But if you are giving an instalment option of 3, you are only paying about $750 per payment. So that’s when I might go for the better TV, because I can stretch it into 3 payments, instead of all at once. So that’s the data we collect and give merchants, and help them make better decisions. When we know what customers are activated by, and are they able to generate more AOV when they adopt the BNPL option. If I were to cover a bit more of the BNPL point - it is a product whereby the merchant has to pay some fees to take up that service. How do you justify the fees? It is when they AOV increases, they make more money out of that increase AOV that can cover the cost of that service.
JUN: I see. AOV here actually refers to Average Order Value, right?
KEITH: Yes, yes.
IMRAN: Or basket size.
KEITH: Yes, yes. There are so many different translations of this terminology!
IMRAN: When we talk about players like Fave, when we talk about merchants, about customers, they are all part of this larger ecosystem. I think one of the things we’ve seen that is very consistent with guests coming in is that it’s really an ecosystem, as much as we think that they operating in a very competitive landscape. It is actually about many players working together to make it work, otherwise you can’t. It requires integration with different providers, merchants, platforms, and a lot of partnership. How do you work with different players in the industry? Who are the players that you think about, and are very important to you guys, that you think about building strategic partnerships with?
KEITH: That’s a great question. We never look at it from Fave POV, but we always take the lens of our merchants and consumers. First things first, from a consumer’s point, what platforms are they using that will deliver more value to them if we were to go into a partnership? Number two, for merchants, which partners do we work with to bring more value to the merchants? Some of the partners that we’ve worked with so far, if you notice from a payments perspective, we are working with UOB, DBS, Singtel Dash, Google Pay, even Grab, because we notice merchants have a problem retaining customers across different platforms. For customers, now they can earn cashback throughout different payment platforms. It’s a win-win-win situation. We also work with players like malls, like Lendlease. We have an agreement with them to run marketing partnerships, and that actually creates a lot of value for the tenants in the malls. Businesses are not great at the moment, and that’s when we can value add a lot to them.
IMRAN: Yes, and you’ve seen a lot. Especially in the recent times where a lot of mall providers, or retail ecosystem providers, are tying up with apps and merchants, and creating a lot of joint promotions.
KEITH. Exactly. And it’s no longer a one plus one equals two. When we have one plus one, like a mall plus us, it becomes like a five, ten. Because we multiply on the budget, on the marketing reach that we can get to the merchants.
JUN: Interesting. I think I still want to go back to the question about data. You mentioned you work with malls, and different parties. Is the transaction data important for Fave? If Fave is able to get transaction data, how important is transaction data, and how can Fave benefit? Or is this not an aspect that Fave is looking at?
KEITH: Great question. Data is important to us, but not because Fave requires that data, but because we can help merchants make better decisions on their marketing. Because we have a system called FaveBiz, that’s a backend tool. It’s not just to cancel or check transactions. We also provide FaveBiz insights, where we help them to analyse the customers coming in, how many are new, how many are existing, how much they are spending. We also give a gender breakdown, what their age group is. With this data, we help to empower the merchants to make better decisions in creating marketing actions towards their group of customers. And hopefully in the future, with our reach and the customers who have already transacted through Fave, we can help them to reach the customers. Instead of using Whatsapp for one channel, Facebook for one channel, SMS for another channel. That’s what we want to do, to empower the merchants.
JUN: Very interesting for this part, because actually in this case, the merchant has one platform where they are able to reach out to customers. Instead of reaching out to customers through Grab, Singtel, UOB, now I can use Fave. A lot of merchants, actually, when we talk to them, and share about this, merchants always have the concern of whether we are getting their data and trying to sell their data to others? But I think what we’re seeing from here is actually the benefit that we can bring back to the merchant. If the merchant is sharing data, Fave is able to help the merchant do more precise marketing, for example. If you want to run any campaign, which product do you need to select? If you want to run BNPL, what kind of things do you need to do? I think it’s very interesting that we always talk about data, but maybe we need to look at the use cases - what is the benefit? I think that is the mindset.
KEITH: Exactly. We also always believe in customers first, merchants second, and Fave third. If we serve by that order, then a platform like us can see success. Because eventually we don’t own anything. Like Grab doesn’t own cars, they help to facilitate transport. Fave doesn’t own customers, we are just facilitating the customers to the merchants. What do we do in between to drive more customers, or to drive the same customers to come back more frequently?
IMRAN: It’s a two-sided, three sided platform.
KEITH: Yes, exactly.
IMRAN: Thanks for sharing that with us. We’re coming to the closing section. We always ask a few questions at the end, which is standard. If you have a mall operator in front of you, and a retailer in front of you, what would be your one piece of advice to each of them right now, today?
KEITH: That’s a good question! If you ask me, it is to collaborate. And why I say that is, like what I was sharing earlier, it’s no longer about standing alone. One plus one equal to multiples. When you stand alone, even if it’s a mall, your marketing budget is only limited. As a REIT, you need to make a profit. Merchants themselves also have limited resources. How do we work together to amplify the effects of our resources together. Today, most merchants are more open to collaborating. Why do I say collaborate? Fave doesn't’ charge any upfront fees most of the time, unless it is a merchant that really wants a lot of exposure, we might adjust some advertising revenue, but that’s not our main model. It’s the percentage of sales that comes through us - we charge transaction fee. If no customers come in, you are not charged, there is no cost. Sometimes, they also worry about staff, whether they can manage. Don’t worry, because actually by taking on more platforms, especially the ones commonly used, you are actually helping your staff upskill. If they don’t learn at your business, they are going to have to learn somewhere else. I mean, no staff stays with a business forever, right?
IMRAN: Or when Covid hits and suddenly all your transactions are cashless.