What’s Next 2016: Brick-and-mortar world will always be around, says Vincent Tan

  • But must have an online presence, a mobile strategy, and invest in digital marketing
  • Plans to use 7-11 stores for e-commerce drop-off and pick-up
What’s Next 2016: Brick-and-mortar world will always be around, says Vincent Tan

WITH his private and public companies registering a combined annual revenue of RM32 billion (about US$8 billion), Berjaya Corp Group founder Vincent Tan is one of the leading tycoons in South-East Asia, with his hand in so many different businesses that it would be easier to call out the ones he is not in.
 
With almost all his revenue coming from brick-and-mortar companies, Tan was a perfect keynote speaker at Digital News Asia’s recent What’s Next 2016 conference, which focused on how brick-and-mortar companies are dealing with the challenge of ‘life going digital.’
 
He confidently predicted: “No matter how advanced online gets, brick-and-mortar will always be around.”
 
To bolster his argument, he pointed to how both Alibaba and Amazon have started their physical store strategy: Alibaba via the acquisition of an electronics chain in 2015 and Amazon with the opening of its first bookstore in Seattle last November.
 
Tan is not being naïve or ignorant of the power of digital to disrupt, sharing that he clearly sees the value in embracing digital, when it can add value. “We know we will be history if we do not embrace the digital world.”
 
Part of embracing the digital world is to invest in IT, and Berjaya spends over RM100 million (US25 million) on technology per year, said Tan, adding, “We have to try to keep up.”
 
And in a world increasingly going digital, Tan acknowledged that brick-and-mortar companies must have an online presence, a mobile strategy, and invest in digital marketing to reach customers. “You need an online presence because most of your younger customers are online.”
 
He said brick-and-mortar managers are spending time and money on their O2O (offline-to-online) strategy. “Our own group is investing and working closely with a lot of e-commerce companies,” he said.
 
“I think we are in a nice position,” he told the audience at What’s Next, in reference to Berjaya’s physical network of stores.
 
“We have around 5,000 physical stores, with a lot of unutilised space and many e-commerce players are talking to us because they want to use our stores to drop off their customer packages,” he said, adding that the group is open to listening to ideas from entrepreneurs.
 

What’s Next 2016: Brick-and-mortar world will always be around, says Vincent Tan

 
While last-mile logistics is commonly cited as being the biggest challenge in e-commerce, the actual handoff of goods is also a problem – with working couples not being home till late or with some customers not comfortable giving out their home address.
 
Neutral drop-off points can play a key role here. In this sense, Tan sees Berjaya’s 7-11 chain as being the first to offer these drop-off and pick-up points within the e-commerce value chain.
 
With 2,000 current stores and an ambition to hit 5,000 stores in the future, “we hope one day to have a 7-11 within a 10-minute drive of most Malaysians,” he said.
 
Noting that US and Chinese startups have done especially well in terms of scaling startups globally, Tan said he hopes that some Malaysian startups can also enjoy similar success someday.
 
Anthony Tan of Grab has done very well in terms of raising funds, while Patrick Grove of Catcha Group and Mark Chang of JobStreet have done well with their exits, he argued.
 
In his closing remarks, Tan predicted that a lot of future tycoons in Asia and Malaysia will come from Internet-based businesses and that some of them will acquire brick-and-mortar businesses that are struggling to adapt or don’t know how to adapt to digital.
 
“They will buy them over and the two worlds will co-exist,” he ventured.
 
Other What’s Next 2016 stories:
 
Tycoon Vincent Tan on his costly failures

 
A good VC is polygamous … yeah, you read that right
 
A digital strategy? You’re behind the times
 
If it ain’t broke … well, fix it anyway
 
How to make corporate-startup collaboration work
 
Focus on SEA’s basic needs, forget Silicon Valley
 
The generational clash, and sharing vs privacy
 
Digital disruption not a key concern for Valiram Group
 
The third digital disruption wave is here
 
Data, models and asking the right questions

 
 
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