With business hit by Covid-19, Supplybunny turns on a pin to chart rapid growth
By Kiran Kaur Sidhu May 27, 2020
- Built consumer driven wholesale grocery website in 24 hours, persuaded suppliers
- 70k retail food businesses in Kuala Lumpur with no leader serving their needs
Unlike the resistance of traditional businesses to go digital just a year ago, many have now come to accept it as natural progression, observes Supplybunny’s founder and chief executive officer, Tham Keng Yew.
Being in the business of bridging suppliers to consumers via its online platform since 2016, Tham shares some insight: “No supplier will dare to say that the internet is not relevant to their business today. It used to be that we had to convince 80% of them, now 100% of them are willing to go digital. That is how impressed I am – it is not even a question anymore.”
As a matter of fact, before Covid-19 hit with the ensuing business implications, Supplybunny’s month-on-month rate of growth was at 20% in terms of gross merchandise value (GMV), a marked hike from “between zero to five percent” just a year prior.
And just like for many businesses out there, the pandemic had a profound impact on Supplybunny but it was Tham’s response that has been the defining feature.
Up till mid-March Supplybunny served over 2,000 restaurants in the Klang Valley, most of which suffered greatly when the Movement Control Order (MCO) started. “As a result, we suffered around a 60% drop in sales.” But not willing to stand down in the face of a challenge, Tham, a seasoned entrepreneur, took it in his stride and literally changed direction in a day.
“The team got together to build a consumer driven wholesale grocery website in 24 hours. We persuaded and educated our suppliers on how to deliver to condominiums and houses and hired our own drivers,” he proudly shared. “Grocery sales shot up. People were trying to save and they don’t mind buying in bulk to save.”
Most of his suppliers are now comfortable with this new business segment, and have even started to create packages and bundles to suit consumer requirements.
For Tham, Supplybunny is his third entrepreneurial foray after his ticketing business and last startup. At the tail-end of his previous startup which involved building large-scale procurement systems for export and import clients, he identified a gap. “I remember getting a glimpse of these very sophisticated systems and thinking I liked how it made things very procedural, but I didn’t like how complex it was.”
After talking to his friends at Offpeak.my, an online restaurant booking platform, he took notice of a pain point afflicting many restaurants that were going bankrupt. He explained: “If a restaurant earns RM50,000 a month, they tend to spend roughly 15% to 20% on supplies, which is a significant amount for small medium enterprises.”
The issue is that these restaurants were purchasing supplies from supermarkets at retail price. Reflecting back to when Supplybunny first started, Tham said: “We were going through a period where Kuala Lumpur had a lot of cafes popping up. These business owners were youngsters who came back from studying overseas and were not familiar with the back-end of acquiring supplies.”
Closing a market gap
With the means to address this issue, Supplybunny started with the vision “to reduce the number of tollgate middlemen” that markup the price of products without adding any value to the supply chain.
Initially, Supplybunny started with the restaurant and café market in mind which closely overlapped with Offpeak.my, whom it currently shares an office with. But soon enough, Tham was caught by surprise when he found that many orders for supplies were coming from home addresses. “These were home bakers. More home bakers than we ever thought – amounting to the hundreds.”
Fast forward today, retail store businesses make up 40% of Supplybunny’s consumer base, while another 40% consist of home businesses, with the remainder 20% being central kitchens which are those “fairly experienced in F&B but are not big enough to have dedicated procurement.”
Overall, Supplybunny now has 200 suppliers and 11,000 stock keeping units (SKUs) on the platform. Although Tham declined to share the total number restaurants it serves currently, he acknowledges that Supplybunny has yet to capture 10% of the 70,000-large Klang Valley market base.
On supplier numbers, Supplybunny claims it could have grown more but focused on aspects of quality, timeliness and price to curate the best experience for consumers. Due to the nature of repeated business on its platform, a scoring system was implemented for behavioural scores of suppliers and customers on Supplybunny. “We have not yet disclosed the score publicly but it is based on your behaviour and interaction. There is also a scoring to rate products.”
The platform works by aggregating orders to meet the minimum order quantity set by suppliers and giving consumers better prices for goods which are then delivered within a 60 kilometre radius in the Klang Valley.
Untapped market potential and entrepreneurial lessons
As far as competition goes, while there are about ten other players in the business, the untapped market provides huge potential for growth. “There are a total of 70,000 retail small and medium enterprise food businesses in Kuala Lumpur with no leader and no monopoly in the market as of now.”
Tham is candid when asked how Supplybunny is different from its competitors. “I don’t think any of us are different at this point. I tell my team to make sure we are doing a better job. We are better off trying to improve ourselves instead of saying someone else took our business.”
Three years into Supplybunny, and more than a decade as an entrepreneur, Tham has a lot to reflect upon. “The lessons are more valuable when they come from my failures.” In his first startup selling tickets online, he barely knew how to be a competent CEO, lead a team, raise funds and build valuable relationships.
“My lead developer today was an intern at my first startup. My investors that were there to back me from that first venture, they continue to back me. It may sound like I did this overnight, but its years of a lot of mistakes, lessons learnt and relationships built,” he shared.
As for Supplybunny’s recent new angle as a result of Covid-19, Tham looks to China where there is 60% retention of online grocery post-pandemic and believes the trend here to stay similarly in other markets. “We have made the decision to pivot towards wholesale groceries business catering to B2C and B2B,” he said, aspiring to achieve breakeven in the Klang Valley by year end and become profitable in the first quarter of 2021.
Expansion plans all depend on its funding since significant funds are required to enter new markets. But Tham admits it is not a top priority in light of the current situation. Supplybunny’s current aspiration is to gain a more dominant position by capturing about 20% of the Klang Valley market as well as “securing a small foothold in either Vietnam, Thailand or Cambodia” by fundraising within the next 12 months.