MDCC Newsletter (29th January 2021)
A conversation with Dato' Bruce Lim, Founder and Managing Director of JDMas Commerce’s Malaysia flagship store for JD Worldwide.
When Malaysia went into movement control order (MCO 1.0) in March 2020, China had already gotten past their lockdown a few weeks earlier at the end of February of the same year. We saw how China’s eCommerce, particularly JD.com are reaping the benefits of increasing number of consumers shopping online. There was an increase of almost 30% in terms of eCommerce sales in just the first quarter of March 2020. This is fueled by JD’s usage of autonomous technology for its warehouse and logistics which enable same or next day delivery to continue to take place in 99% of China, even in the height of the pandemic in that country. JD has the ecosystem ripe for phenomenal growth in China with eCommerce supported by logistics, payment systems and omnichannel intelligence.
This presents a golden opportunity for Malaysian brands and producers, who are faced with lockdowns in their own country to explore the markets beyond their shores. Cross border eCommerce provides Malaysian brands, particularly the SMEs to earn in RMB or USD, with the ringgit under pressure at home by accessing international markets without the risks and high investments traditionally associated with export and import business.
SME brands can start with B2C cross border commerce via JDMas Commerce’s Malaysia flagship store, do not risk having to go through multiple middle-men and import-export agents and distributors by selling direct to consumers in China via JD’s platform. They also avoid trade mark registration in China, as well as pay heavy tariffs and taxes since goods are destinated for JD’s bonded warehouses located across China, and there’s less risk of bulk goods being held up at port by customs. There is also comparative speed to market in under 3 months compared to traditional exports that can take up to one year.
Since the lockdown is in the place again, what actions that you take to run your business remotely?
When the MCO 1.0 was in place, our team conducted multiple onboarding and engagement sessions with potential merchants over a course of over 2 months. We met with hundreds of potential brands online to explain the opportunities and benefits of coming onboard our Malaysia flagship store on JD Worldwide, the cross border platform of JD.com.
They saw the opportunities in tapping into JD’s over 400 million strong registered consumers, which represent 13 times the population of Malaysia. The merchants also realised the potential of coming together under a Malaysia Flagship Store, that showcase unique brands and products, unparralled in any other countries. This gives us the privilege of not having to compete on price factor. One of the hallmarks of JD.com’s policy is the strict insistence on authentic goods and this bodes well for our country pavilion.
We were fortunate to be able to onboard more than 63 merchants with more than 100 brands, and to launch our store with almost 500 SKUs in a short period of half a year.
eCommerce is also listed by Ministry of International Trade & Industry as an essential service, and therefore logistics and delivery to our warehouse and to the port were unaffected. We did, however face risks of potential delays due to port congestion due at the end of 2020 and beginning of this year.
We appreciate the tremendous support given by the government ministries and agencies in supporting our cross border eCommerce. Encouragement and promotion of our engagement sessions were organised by Malaysia Digital Economy Corporation (MDeC), Malaysia Productivity Corporation (MPC), Malaysia External Trade Development Corporation (Matrade) and Malaysia China Business Council (MCBC), amongst others.
We also held multiple engagement sessions on the developments in online and offline China market with our technical partner, Yihao eCommerce led by our Mr. Jason Zhang, which is based in Shanghai, as well as with JD.com’s team on onboarding, listing and promotion. This presents the opportunity for merchants and potential merchants to understand the road ahead in our journey. It’s not just about promotion, selling and delivery of our products but to truly understand the trends, patterns and insights using technology, artificial intelligence and making data driven decisions based on tools available on JD and affiliate platforms.
How do you manage your Human Resource resources during this MCO 2.0?
Being a start-up of less than a year of operations, we begun small. I called upon an old friend, Martin Ang who is Director of Julie’s Biscuit whom he was acquainted with whilst undergoing Matrade’s Mid-Tier Development Programme. Julie’s had taken the cross border path almost 15 years ago, and has an impressive sales of RMB100 million per year based on GMV. Martin came onboard as advisor and then a shareholder and director of JDMas Commerce.
We then were able to have a showcase or success story in which to draw experience and expertise from for our comparatively newer brands and products. The company also tapped on brand and marketing managers such as JDMas Advisor, Khoo Kar Khoon who roped in large brands such as Nestle’s Milo, Maggi, Nescafe, as well as F&N with popular drinks such as 100Plus.
JDMas then roped in Jason Zhang of Yihao eCommerce team in Shanghai as technical partner to list, promote and sell the products, and who work closely with the business development team at JD Worldwide.
On the corporate and fund raising end, Chris Daniel Wong who is MDCC President came onboard.
A few months later, at the crucial listing stage, the team hired Koay Wei Chin as CEO. Koay brings a wealth of experience in marketing and branding, and has worked in both Beijing and Shanghai.
Prior to that, JDMas also had the services of Dr. Nadhirul Hasraf as General Manager. Dr. Nad, as he is often called, was on secondment from Universiti Tun Hussein Onn under the [email protected] programme with the Ministry of Higher Education. The team then expanded with additional talents hired both on the Malaysian and China office fronts.
We started lean and still remain lean to this day.
From your opinion, what do you did right or will do to embrace digitalisation to transform your business?
First and foremost, it is important to have the right partner and platform for digitalisation and omnichannel business. We found that in JD.com, which is the 3rd largest eCommerce company in the world (after Amazon and Google’s Alphabet) in terms of eCommerce value, and largest retailer in China with revenue of USD82.9 billion.
It is unique on its insistence on listing only genuine and authentic brands and goods on its platform. Its leadership is further solidified by owning and operating a full ecosystem that includes over 800 warehouses and unparralled logistics that guarantee same or next day delivery that covers 99% of China.
The Covid-19 pandemic also provided the push factor for SME brands and merchants to digitalise. Companies that took years to embrace digitalisation were forced to seriously jump into eCommerce, and with JD’s proven and holistic system.
We also took pains to explain and ensure that the path to cross border eCommerce remains as hassle-free, fast and affordable as possible, especially for SME companies, as compared to our competitors.
There were a few key success factors. We found some solid brands with us in the beginning, such as Julie’s, Nestle, F&N, Rasa Rosz, Tanamera, Ezeefood, Sun Ta, to name a few. That provided the necessary traction to attract the others. Then, we introduced a one-off payment of RM5,000 as onboarding fee, which includes promotion, cross border freight, warehouse, last mile logistics, payment systems, reports which is lowers financial barrier to entry for SMEs. We also roped in possible co-funding, grants, training and other forms of support from agencies such as Matrade, MDEC and MPC.
How do you curate a positive customer experience post pandemic for your busines model?
Our journey of growth was fraught with risks and uncertainty since this was a journey which has never been undertaken before. JDMas Commerce was a new venture, not only for the company and store, but for many of its merchants.
There were challenges such as obtaining the sanctions and approvals in China for listing of a country flagship store. There were also issues of understanding JD’s very comprehensive but complex system that links everything from brand registration, to listing, warehousing, logistics and its vagaries with customs department, promotion modules, which are all tied together. In short, a brand cannot be listed until and unless each and every aspect of the modules in the ecosystem is completely fulfilled. The amount of administrative work can be overwhelming.
Nevertheless, JDMas is appreciative and grateful to our merchants who have been understanding. It is important to be transparent and open in this journey. We all understand that this is something that all of us as Malaysian brands undertake together, and that gives us the energy and confidence to see through this project until we went live on 11-11 last year.
It is also important to keep engaging the merchants on every aspect of their development, from ensuring their trade mark is properly registered, products are sent to China with enough shelf life, promotion is collaboratively developed, brand story understood by everyone including the China team, and sales report are accurate and prompt.
JDMas also constantly up the game and excitement with our merchants by proposing new and innovative promotions and possible new business models into B2B sales, affiliate marketing, as well as potential exploration of other international markets.
What do you hope to see for your business in this new normal?
For the year 2021, we have drawn up multiple campaigns and promotions, including the mega 618 and singles day 11-11 sales. We aim to introduce new and innovative ways of promoting our Malaysian brands and products, collectively and individually such as JD live and JD Mission’s KOL to name a few. It will be awesome to feature cross overs between China and Malaysia. We are also exploring affiliate marketing with multimedia platforms linked to JD such as Kuaishou, Douyin and wechat.
2021 also promises to be interesting as there are plans to also feature offline distribution and participation of virtual and actual trade shows in China, to strengthen our presence and brand in that country.
We will also introduce different business models to suit different merchant categories and sizes to ensure optimal growth, such as B2B channels, new complementary platforms and exploration of new international markets through Global Business Synergy (GBS), one of JDMas’ shareholder, which has presence on over 80 other countries.
In the meantime, we will go back to engage our long line of potential merchants to create another wave of Malaysian brands to emerge and grow in China.