8/2016 – Caring for our entrepreneurs
by Tan Thiam Hock
Saturday, 18 June 2016
JUST as I am planning to attend my second son’s convocation in Canterbury next month, I was just thinking how lucky my children have been in their education journey from young.
Getting to study in private schools and getting to study what they want to and where they want to.
I never had such privileges. I was streamed into a Science class from Form Four and had no interest in Science subjects. Luckily I managed to get an A in Malay Language in my SPM to scrape into Form 6 Arts in my alma mater of 13 years, La Salle PJ.
Refusing to study History and Geography, I took Maths, Economics and both Malay and English Literature in my STPM. Again luck was on my side and an A in English Literature and a B in Economics was sufficient to get me an offer from University Malaya – Economics and National University of Singapore – Business Studies.
This was in 1980 when The Singapore government was heavily recruiting top Malaysian students into their education system. If I am not mistaken, half the top civil servants in Singapore are ex-Malaysians of my age group, fast tracked and offered Singapore citizenships after a few years of service.
I was never one to work for any civil service. My dream was to run my own business even though the word entrepreneur was rarely used at that time.
This memory was sparked after a meeting with the owners of Caring Pharmacy Group. An amazing story of five pharmacy students and friends in University Sains Malaysia (USM) dreaming of starting their own pharmacy retail stores.
If you look at our local university’s quota intake by race, there are very limited places for non-bumiputras in our medical doctor course. So if your family is not able to finance an overseas education, you take the next best alternative. Pharmacy was a popular choice and USM ran a very good four-year course then.
So these five friends scrape together equal share of savings and they opened one store a year, so one by one they came out of employment (hospital pharmacies) and in six years they managed to open six Caring Pharmacy stores with the aim of delivering professional services to the community their store serves. They work minimum six-day weeks, morning to night as long as their store stays open.
Knowing that pharmacies require pharmacists to be in the stores for long hours, their expansion business model was simple. Encourage the young pharmacists working with them to open new stores in another location and allow them to participate in equity of 30%-49% of the store business. This entrepreneurial hybrid model worked so well for Caring that they were able to scale up many store openings without sacrificing the personal touch of the pharmacist who is always present in the store for long hours.
So after 19 years of fast expansion to about 100 stores, Caring Pharmacy Group was listed on Bursa Malaysia in 2013, effectively becoming our local champion in pharmacy business. Guardian Pharmacy, which has four times more stores, was bought by Dairy Farm Group, Hong Kong many years ago and effectively is considered an MNC company within the Giant/Dairy Farm group.
The three sectors of finance, insurance and healthcare are ripe for digital disruption and pharmacies brick and mortar model are under threat from e-commerce sites.
Caring Pharmacy, like other pharmacy or retail chain stores, will have to adopt a hybrid model of physical stores integrated with a supply chain formatted to an e-commerce site with mobile applications to serve a wider and younger community of customers.
It will be a massive shift of emphasis from their entrepreneurial approach of opening new stores. But as long as pharmacists are required by law to dispense medicines, the role of the pharmacist will never be diminished. Just predicting that pharmacists will have to learn to serve customers both offline and online in the future.
Back in 2013, I was standing in for Malek Ali as a judge in Alliance Bank’s Biz Smart Competition and the winner was a young entrepreneur who had started an online business of making bespoke high heel shoes.
After graduation, Christy Ng was employed as a pharmaceutical rep in Novartis selling drugs and medicines to doctors and pharmacies. After two years, she quit to pursue her passion of being an entrepreneur in July 2012.
Within a year, she was gaining a reputation with orders coming in from North America, Singapore and, of course, from the local young ladies for wedding shoes and what nots.
To date, she ships her shoes to over 30 countries which contributes 40% of her sales. Such is the power of e-commerce transcending border lines making it possible for small entrepreneurs to reach so many markets out of her small office cum store cum showroom. Bootstrapping all the way.
Then she contacted me and asked for my opinion on whether she should open a physical store in a shopping mall, selling ready made and bespoke shoes.
Her main argument was she was going O2O, another jargon for online to offline and she need a physical presence for branding purposes. She must have been inspired after meeting her idol, Datuk Jimmy Choo in an event.
I was sceptical at first, why commit yourself to a 365-day, 10am to 10pm retail operations most likely on an unbreakable tenancy of three years? In addition, store renovations and stock holdings will tie up quite a sizable chunk of cash flow.
Then she made her final point that the physical store will help her online sales. Okay. Suddenly it makes sense.
Just imagine a potential customer 10,000 km away staring at a picture of Christy Ng Boutique shop on her computer screen. Christy Ng is now a legitimate shoe designer. Christy Ng is now a brand. The customer has the confidence now to order and prepay online US$100 (no GST) for a pair of shoes from christyng.com.
O2O is a convergence of offline 2 online or online 2 offline. For certain businesses, this hybrid strategy of leveraging physical stores with digital technology will help your organisation increase your market geography in terms of depth and reach.
We should be proud of our entrepreneurs for being our local champions taking on the world brands.
From Petronas to AirAsia to Axiata to British India to Grab and to, of course, my beloved Silkygirl, there is tremendous potential among our local entrepreneurs to look beyond our shores and either become regional or international champion brands.
I am certainly looking forward to the day when Malaysia Airlines soars high and far again. They just have to watch out for the unpredictable turbulences of competition along their flight path. Malaysia Boleh.