Humbly located in the southern-most city of Peninsular Malaysia, Bandar Medini Iskandar Malaysia, SGshop Ecommerce Sdn Bhd is a cross-border e-commerce company founded in 2015. Since the launch of its online shopping site - www.sgshop.com.my - it has been gaining support from its users and achieving remarkable milestones continuously.
Recognising online shopping as not only a trend, but also a need for consumers in Malaysia, SGshop has tapped into this fast growing industry, to build trust and relationship with its users by delivering professional and reliable services over its first 3 years of operations. With great efforts, SGshop has obtained more than 70,000 users and kept them happy with its services.
Now, SGshop wants to be the first cross-border e-commerce company in Johor to raise funds through ECF. While 11/11 and 12/12 sale being the most happening online shopping sale, we wish to utilise part of funds raised to create an impactful marketing campaign on 11 November and 12 December this year. The rest of the funds will be allocated to kickstart our 3-year growth plan to enhance our presence in Malaysia.
What We Do
It’s not uncommon to see product exchanges and returns requested by online shoppers for many reasons. The return policy has been leveraged by brands as a marketing strategy to gain market share.
According to studies, exchange and return rates in e-commerce are getting higher, as high as 30% for certain product categories. The high return handling cost has now become significant for most e-commerce and logistics providers. In cross border e-commerce, exchanges and returns are not favourable for both sellers and buyers, as the international shipping fees incurred might even cost more than the product itself. Therefore, online shoppers often do not see returns as an attractive option, choosing to either make do with the faulty product or purchase something else altogether. Either way, this leads to an unpleasant online shopping experience.
To solve these issues, SGshop conducts basic inspection on every order as they come into our warehouse in China. This is to ensure the products received by our users are exactly as they ordered. In the case of problematic order during inspection, we provide our users with the option to exchange or return the product. Carrying out the inspection before the product even leaves the warehouse saves our users the hassle and extra charges associated with product exchange and return.
This process allows us to discover over 95% of problematic orders before they are shipped out from China. For the remaining 5% that is missed out, we often utilise our refund policy to cover full or part compensation according to situation.
Why Are We Different
Global shopping made local
There are many ways to get a product locally, either from brick-and-mortar stores or through local e-commerce sites. However, the limited products available locally are still a big gap in the market. SGshop's cross-border online shopping service is the most effective way to fill the gap and bring value to the market. Traditionally, cross-border shopping involves tedious processes from placement of order, foreign exchange, cross-border logistics, custom clearance to local delivery. However, our users do not need to go through all the unpleasantry as we have refined the process to be systematic and localised - saving time, money and making the shopping experience totally hassle-free.
We continuously strive towards providing a satisfactory shopping experience to our users, making sure the products they order can be shipped into Malaysia safely and are fully compliant with Customs Laws. Additionally, we provide several shipping options for users to choose according to their needs: express air shipping for urgent need, economy air shipping for small parcel with affordable shipping fee, special air shipping for dangerous goods, and sea shipping for bulky item with low shipping fee. We also provide extra care during the shipping process to ensure our users’ purchases are fully protected. For instance, users can opt for SG-care insurance to cover shipments up to RM2,500 and our Speed Guarantee policy to make sure they receive their parcel before ETA (Estimated Time of Arrival).
In cases where our users need support, our Customer Care Team can be reached through several channels such as Live Chat, Hotline, FB Messenger and email - 6 days a week, from 9.30am to 6.00pm. We take pride in the swift response time of our Customer Care Team to live chat enquiries, responding within 5 minutes during operation hours, which is a rarity for e-commerce services in Malaysia.
Our Revenue Model
We build trust with transparent pricing
What Our Users Pay
When our users pay for a product from China and have it shipped to Malaysia, they pay to SGshop in Malaysian Ringgit, and SGshop will handle the rest of the process.
The total payment comprises of product selling price and SGshop's logistics fees. Product price is paid to seller by SGshop on behalf of our users, to purchase product and deliver to our warehouse in China. Whilst logistics fee is charged by SGshop as revenue, to perform fulfilment process including order inspection, warehousing, parcel consolidation, international shipping, custom clearance and the last-mile delivery to our users in Malaysia.
Logistics fees covers International Shipping Fee, Service Fee and Custom Clearance Fee. With the continuous increase in shipment quantity, we can lower the logistics cost in the long run and are offering an affordable rate to our users - from as low as RM2 per 500 gram for door-to-door delivery from China to our users in Malaysia.
Service fee is charged at 8% of (product price + international shipping fee) to compensate the cost of warehouse rental and overheads.
Custom clearance fee is fixed at RM0.98 per parcel.
While our users pay us in Malaysian Ringgit, we pay to sellers in Chinese Yuan. Hence, our operations involve weekly foreign exchange from MYR to CNY. However, we do not want to expose our customers to currency fluctuation. Therefore, we absorb the forex risk and maintain a rather conservative and stable exchange rate to our users for better shopping experience. In the long term, with appropriate management, we are able to secure significant gains from foreign exchange.
Revenue Growth 140% each year on average
In 2017, the total transaction amount that went through our site is RM5.2 mil, with RM1.9 mil being our revenue. This is a significant increase from our 2016 figures - RM3.3 mil in transactions and RM1 mil revenue; and 2015 figures - RM1 mil in transaction and RM0.3 mil in revenue.
Our Market Opportunity
First, Malaysia; Next, Southeast Asia.
Currently, SGshop is targeting Malaysia e-commerce market (first-hand goods only), which is estimated to hit USD1.38 bil in 2018 and is expected to grow to USD2.64 bil in 2022 with a CAGR of 17.6% (2018-2022).
There are 20 mil active online shoppers in Malaysia in 2018. In its first three years of operations, SGshop has obtained 70,000 registered users in Malaysia, which translates into less than 1% of the total potential users in Malaysia. With the funds raised through this ECF campaign, we will strengthen our marketing efforts to gain more market share in Malaysia, to obtain 500,000 users by 2020, which is 2.5% of total potential users.
Our goal does not just stop there. We are also eyeing the whole Southeast Asia e-commerce market, which is almost 10x larger than the Malaysian market.
According to a survey jointly led by Google and Temasek, the e-commerce market size in Southeast Asia (SEA) is expected to grow from USD10.9 bil in 2017 to USD88.1 bil in 2025, with a 23% CAGR (2015-2025).
Today, SGshop offers a one-way distribution channel for goods from China into Malaysia. Next, we will be working towards establishing multiple distribution channels across SEA countries, unlocking the potential of our business model and empower SGshop to reach a much larger market.
At the core of SGshop is the concept of SIR – Service, Integrity and Reliability. These core values form the basis of our strategies.
1. Transparent Policy. SGshop's terms of service are made fully available to our users on our website.
2. Communication Strategy. Engaging potential users and online shoppers
SGshop focuses on providing quality services, as opposed to pushing volume of sales. SGshop provides multiple channels for potential and existing users to communicate - encouraging engagement and interaction between the SGshop team and our users.
For instant communication, users can chat with us through these channels - Facebook Messenger, Live Chat, Website Ticket, and via our Hotline 1700 818 315. For after-sales support, users may contact us at [email protected]
3. Engagement Strategy – enhancing interactions through greater user engagement via social media
At SGshop, we remain active on social media to enhance engagement of internet users and online consumers. We recommend useful consumer products at least five times per week through Facebook. When our Facebook followers are keen to know more about the product details, they can directly talk to our customer care team through Facebook. Additional, they can opt to use live chat, calling hotline, or email to reach SGshop customer care team. Besides, we carry out at least four activities (or promotions) to existing users every month to attend to their needs.
Moreover, we find that crowdfunding is the perfect place for us to promote our service and penetrate the market. The ideal crowdfunding users are typically internet users. They are SGshop’s target audience as well.
4. User Retention Strategy
Each registered user is eligible to enjoy this programme. When they consume more, they can save more when shopping online.
Kindly refer to: www.sgshop.com.my/help?help=9
This is another benefit to registered user on top of membership programme. Users can gain points after completing one purchase cycle. Points can be used to redeem e-coupons.
Kindly refer to: www.sgshop.com.my/help?help=27
User Referral Programme
SGshop loyal users can invite more friends to join SGshop members, hence receive more benefits.
5. Product Value Assurance Strategy
SGshop prioritises users’ interest. We strive to ensure our users’ products are delivered in good condition, providing basic inspection for every order.
In addition to the basic inspection, we offer SGcare for higher value products to users in protecting their interest.
Kindly refer to: www.sgshop.com.my/help?help=40
6. Delivery Speed Assurance Strategy
Besides product quality, SGshop wants to ensure that users receive their parcels on time. Therefore, we provide speed guarantee to the users. Speed guarantee ensure parcels are delivered before ETA date. If not, users may seek compensation through our customer service channel.
Kindly refer to: www.sgshop.com.my/help?help=24
7. User Feedback Strategy
SGshop pays close attention to user feedback. After each purchase, SGshop users can click on “confirm received” button to confirm receipt of purchased products. Upon confirmation, they can rate and leave reviews on their shopping experience. The rating is done on the following four areas:
- purchasing speed
- logistic speed
- basic inspection
- customer service
For comment function, users can provide comments on any aspect of their purchase. With the feedback provided by our users, SGshop gathers information on our strengths as well as areas that require improvement.
8. Youth Empowerment Strategy – corporate social responsibility
SGshop believes strongly in corporate social responsibility and giving back to society. There are many ways to achieve this. At SGshop, we believe that the youths are the bright future of the society. Hence, we allocate considerable resources to support students’ activities. Since 2015, SGshop supports many university students’ activities.
Engaging youths is crucial in sustaining SGshop's future as they serve as both potential customers as well as employees. Therefore, we adopt our Youth Empowerment Strategy, nurturing both potential users and potential employees, as well as market to the future middle or higher income group in the long run. In fact, SGshop is seeking more talented undergraduate and graduate students to join our team.
9. Investor Relations Strategy
We believe that a major aspect of SGshop’s service is our community relations. Each member of our community serves as a potential user, as well as a potential investor in our business. Therefore, we are leveraging on our equity crowdfunding campaign as a tool to engage with the public. We see Ata Plus as the perfect platform to achieve this two-way communication. Through this ECF campaign, SGshop and public investors are connected, establishing a two-way communication.
10. Public Relations Strategy
SGshop works on maintaining a strong brand and positive relationship with the media. Both Mr. Lua Cheong Hong and Mr. Lua Cheong Rui (Ray) are active in Johor and Iskandar communities.
Sustainable Development Strategy – continuously enhancing SGshop ecosystem
Transparent Policy Strategy ensures fair treatment of our users. Communication Strategy provides different channels to users to communicate with us. Engagement Strategy engages more potential users to be part of our community. User Retention Strategy enhances users’ loyalty. Product Value Assurance Strategy and Delivery Speed Assurance Strategy protect users’ interest and enhance shopping experience.
User Feedback Strategy encourage users to share with us their shopping experience, comment and provide feedback on SGshop service. With all the feedback shared by users, the management team will know SGshop’s strength and weakness very well. Hence, actions will be taken in enhancing the strength and attending to weakness. Youth Empowerment Strategy do branding among the young people, which ensure that more young and capable people may become SGshop users or employees. Investor Relations Strategy engage the public and potential investors. Public Relations Strategy maintains good relationships with the public and media.
With all the strategies implemented, SGshop’s ecosystem can be sustainably developed and enhanced.
High Performance Over First Three Years
Featured by Major Media in 3 languages
In year 2016, SGshop was included as one of the Leading Cross Border Ecommerce in Malaysia by ecommerceIQ in its “Malaysia’s Ecommerce Landscape”
In year 2017, SGshop was featured by 8 media channels on its future growth plan:
Indicative Usage of Funds
Enhancing Technology Infrastructure
Recruit more talents to further optimise the user experience on our website and mobile apps. New technologies like Big data, AI and blockchain will be introduced into our system progressively to create user-centred experience, allowing our users to enjoy personalised shopping freely under secured environment.
Upscaling Logistics Capabilities
To maintain good service quality with number of orders increased, it is essential to improve logistics efficiency. Our warehouse will be upgraded with new hardware and equipment, and all of them will be connected to our cloud system, as it will further simplify the in-and-out process, as well as minimise human errors.
Expanding Product Source
More unique products and logistics channels from other countries will be made available to our users, accessing a wider variety of products. For instance, beauty products from South Korea, home products from Japan, health products from Australia, etc.
Increasing Market Share
Intensify marketing effort to increase brand awareness within Malaysia and accelerate user acquisition to obtain 500,000 users by year 2020. Customer retention strategy will be optimised to keep our users active with SGshop.
The SGshop Philosophy
The management team aims to build SGshop as a company that belongs to the public, creates value to the public and gains support from the public. Because they believe in an ecosystem where the customers can be investors; and the investors can be customers. When customer/investor spends money in SGshop, they will enjoy the value-added services from SGshop and in turn, help SGshop make profit. The profit will then flow back to them as dividends, giving them more money to spend at SGshop. The ecosystem can allow the loop of cash flowing through customers, investors and SGshop to generate infinite value along the process.
Lua Cheong Hong
Co-Founder & Managing Director
Lua obtained a Bachelor’s Degree in Electrical and Electronic Engineering from Nanyang Technological University in Singapore, majoring in information communication with a minor in entrepreneurship. Previously worked at Khind Singapore as a sales engineer. In 2015, with assistance from Ray, Lua incorporated SGshop Ecommerce Sdn Bhd (SGshop Malaysia), which is under Sanli Group (SGshop) umbrella. In the same year, together with Ray, Lua founded Kelab Duta Muafakat Johor, with support from Johor State Exco. The club promotes harmony, “muafakat” in Malay, in collaboration with the Johor State Government.
In 2016, Lua was appointed as advisor in e-commerce by Sunway College Johor Bahru.
In 2017, Lua stepped down as Founding President of Kelab Duta Muafakat Johor. In the same year, SGshop Malaysia was relocated to Iskandar Malaysia economic region, became GBS Iskandar member and emerged into the first cross-border online shopping site in Johor.
Co-Founder & Head of Operations
Ray obtained a Diploma in Real Estate Business from Ngee Ann Polytechnic in Singapore. In 2010, Lua and Ray took part in Lee Kuan Yew Global Business Plan Competition and won the finalist award.