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Why Your F&B Business Should Consider Expanding Online

By Shingo Okamoto, Head of E-Commerce (EC) for Rakuten Singapore

chef dish

Singaporeans are avid online and offline shoppers, with online shopping in particular witnessing steady growth. A recent Rakuten survey found that Singaporeans spent 45% of their shopping time online as opposed to offline, a large jump from the 20% just five years ago, and with many of those surveyed saying that they planned to spend even more time online in the future. Be it access to a wider variety of products at competitive prices or the option of home delivery, this significant boost is just the tip of the iceberg.

In the beginning, shoppers looked online mainly to purchase fashion, travel and books, but over the past few years, Singaporeans have grown to appreciate the convenience and enjoyment of buying their non-perishable grocery items online. Instead of dealing with the hassle of going to the nearest NTUC Fairprice or Cold Storage, with just a few clicks, they can easily choose from a variety of items and have them delivered straight to their door. As the online shopping phenomenon continues to flourish, Singaporeans are now more open to the idea of buying high quality, premium food and beverage items online.

We’re seeing it in the numbers already, as nearly a quarter of all Singaporeans planned to purchase food and beverage (F&B) items online in 2012, a 71 per cent increase over 2010.

“Going online has allowed us to extend our geographical reach and touch a whole new demographic of customers that are tech savvy and enjoy the ease of shopping from the comfort of their own home.” – Bruce Chapman, Providore co-founder

These developments could signal an opportunity for specialty stores and cafes to benefit from the growing online shopping community and boost their sales. Currently, revenue for F&B businesses comes mainly from in-store sales, but with high inflation and expensive property rental in Singapore, businesses can find it challenging to make a profit. Let’s take a quick glance at the numbers: 575 restaurants opened between January and November of 2013, while 435 restaurants closed in the same period, which translates into a closure rate of approximately 75%. Business owners need to find new and innovative ways to grow and maintain a loyal customer base – not an easy task especially when faced with increasingly sophisticated and demanding consumers.

Establishing an online presence is a cost effective alternative for F&B outlets to supplement their bottomline, reach new customers, and potentially reshape their business. When exploring this option, there are two main avenues to consider – setting up an independent online store with an e-commerce platform like Magento or Shopify, or joining an online marketplace where you join a community of shop owners. In fact, you can even do both!

An independent store can give you more flexibility and customisation, including storefront design, store promotions, customer accounts, and payment and delivery options. On the other hand, joining an online marketplace allows you to tap on economies of scale – marketplaces have wider reach and existing partnerships when it comes to dealing with the nitty gritty of payment and logistics, doing away with the need to build everything from scratch. If you’re a small brand that’s just starting out, the marketplace’s brand name lends credibility and you have the opportunity to work with an e-commerce consultant who can provide advice on strategy and how to grow your business.

As a local brand that adores food, Providore’s concept revolves around the pleasure of discovering, creating and sharing good food. The brand owns a variety of outlets, including an industrial warehouse with its full range of gourmet food, craft beer and bespoke gifts, a light-filled café at Mandarin Gallery, and a deli and bakery at PasarBella farmers market. However, it felt that it wanted to do more and offer its consumers the Providore experience in the comfort of their own homes, and thus ventured online with Rakuten.

“Through our partnership with Rakuten, we’ve been able to grow our online presence and offer our customers more options and flexibility in the way they shop,” says Bruce Chapman, Providore co-founder. Rakuten’s “Shopping is Entertainment” approach to e-commerce and its focus on discovery and connection has also made it easier for Providore to give its online and offline customers a more seamless experience.

Having an online business has also allowed Providore to increase revenue per capita from their walk-in customers. Those who dine at Providore’s restaurant can now purchase the same items online for home consumption, extending the experience and deepening brand loyalty. The two sales channels complement, rather than cannibalize, each other. Other ways to leverage this online-offline synergy include offering a loyalty program that allows customers to enjoy benefits wherever they shop, as long as they stay within the ecosystem.

In Singapore’s competitive F&B scene, every advantage counts. With Singaporeans spending about 75 minutes a week shopping online, this fast-growing channel offers F&B retailers a springboard to sell their products to a wider audience, and prepare their business for long-term success.

 

Rakuten - Shingo Okamoto - 08

Shingo “Oka” Okamoto is the Head of the E-Commerce (EC) business for Internet Services giant Rakuten and leads Rakuten’s expansion into Singapore, where he has been based since April 2013. Oka joined Rakuten Ichiba (the original Japanese website) back in 2006 and possesses a wealth of management experience and a deep understanding of the online B2C and B2B2C business models.

 

 

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