Giving new purpose to excess stock
By Sharmila Ganapathy August 8, 2018
- Hopes to raise RM1.8 million in seed funding via a campaign on pitchIN
- Aims to build partnerships to open concept stores in Semenyih, Nilai, Seremban, Melaka
AT FIRST glance, the fresh-faced Pennie Lim doesn’t look at all like the tough-as-nails chief executive officer you’d expect to find working in the male-dominated building materials industry.
It is only once we started the interview, that I sensed the quiet grit and determination that Lim has working in her favour.
The 34-year old began by relating how she started Homa Sdn Bhd, the company behind HOMA2U, an offline to online marketplace for overstocked building materials, which also offers renovation and home repair services.
“I was in the building materials industry for 10 years before starting Homa. In 2016, I took over my dad’s company to supply building materials to construction sites. However, the market had slowed down due to the 2015 goods and services tax implementation and many big companies started slashing prices to secure projects. As a result, smaller players in the market weren’t able to compete.”
Solving a problem
At that point, Lim started mulling over ways to transform that type of traditional business into something else. Then one of her clients contacted her, saying that she had building materials excess of close to 40 pallets of stock valued at about RM100,000. This actually sparked the idea that her client’s situation wasn’t an isolated one and that most construction companies would also have the same problem.
Lim also observed that while contractors had previously been recording wastage of building materials of around 3%, the amount of wastage had increased to as much as 15%.
“For example, if they usually order 1,000 cartons, because of customer complaints they’ve had to increase the wastage by seven, 10 or even 15%. So what happens to the excess inventory after the project is done or handed over? Companies move them to the junkyard or sell them to dealers or give them to their staff, or donate them.”
She notes that most of these materials are non-biodegradable and difficult to dispose of. And as the cost of disposal is very high, many companies just rent a piece of land in the outskirts such as Ijok or Batang Berjuntai and dump their excess stock there.
Lim hit upon the idea of creating an online platform that would allow these contractors to cash out on excess stock and thus prevent wastage. “Being in the building materials industry, I know how to mix and match these excess stock to upcycle them. With a good interior designer, tiles of different colours for instance, can be mixed to create a new bathroom at an affordable price. The end user also pays a lower price for these tiles which are of good quality,” she explains.
In 2016, she met her mentor Michael Tio of PKT Logistics Group Sdn Bhd. Tio suggested that she create a branded outlet that offers overstocked tiles and other materials.
In September last year, Lim founded Homa Sdn Bhd. According to her, since setting up the company nine months ago, they have successfully repurposed close to RM4.5 million of overstocked products for approximately 1,000 renovation projects.
In July this year, Homa launched its online marketplace HOMA2U, which allows end users to actually buy overstocked tiles and other materials online, as well as engage the services of renovation and repair companies.
According to Lim, the company’s revenue model entails commissions from the different contractors and companies listed on the platform, apart from advertising revenue from these parties.
Finding what works
Lim has observed that in Malaysia, people still like to touch and feel tiles and other building materials themselves.
“In order to overcome that challenge, we emulated the IKEA model. Our website displays by concept. For example, if you want to renovate your bathroom with a white theme, you can browse the idea book online and there’s a tagging function so you can see the individual products that make up the bathroom. Besides the tagging function there are also suggested related products available.
“This idea book will eventually be accessible to interior designers and architects to showcase their profiles and products.”
Customers also have the option to walk into the HOMA showroom in Klang, to look at the variety of tiles and other materials they have on display. Or they can just chose to buy everything online at HOMA2U.com
“You can buy products, engage renovation and repair services. If we just sold products, we would not be able to complete the whole ecosystem and supply chain within the building materials industry,” she adds.
Interestingly, despite being a woman entrepreneur, her main mentors are male, namely Michael Tio, and Calvin Khiu of MK Curtain. She adds that much of her inspiration for the business has come from these mentors, whom she says manage their companies with a modern management style. Their advice? “To not focus on money, but on society and customers,” she says.
Lim shares that Homa was initially self-funded. A few contractor clients of hers also gave RM500,000 worth of overstock to her to start the online platform. She eventually raised just under RM1 million from three angel investors.
She adds that the company has applied for seed funding to pitchIN, a local equity crowdfunding platform, where she hopes to raise as much as RM1.8 million.
The funds will be used to open more physical outlets, as well as expand the platform overseas. “The next one year, we are looking to build partnerships with investors to open more concept stores. We are targeting Semenyih, Nilai, Seremban and Melaka,” she says.
Lim shares that Homa has received enquiries from Indonesia, Cambodia and Vietnam. The near-term plan is to make the online platform available in Cambodia and Vietnam. She believes that the One Belt, One Road initiative is key to expansion in these two countries as it will provide the connectivity.
What has she learned to date from being an entrepreneur? Lim shares that she has learned financial management and people management skills, because she realised that many companies don’t know how to manage their funds and people.
She adds that she has attended courses and learned to focus on her people, and that good communication skills is the key to good relationships with employees. She now treats her employees like family, she says.
To other women entrepreneurs, Lim says: “Dare to dream and dare to be different! It’s also important to always remain humble, especially when you’re starting out.”