Traditional businesses finally embrace digital, but still face limits
Businesses once resistance to digital transformation have had to change their mindset to address challenges brought about by the COVID-19 pandemic. They will, however, still need to grasp how digital tools should be applied and realise there are limits to how much they can gain from doing so.
This first piece in a two-part feature looks at how these companies are coping, while a followup article explores how the global pandemic has impacted the way products are showcased and brands engage consumers.
Food hawkers in Singapore, for instance, are some of the most traditional businesses and notoriously stubborn about sticking to their old ways.
For one, it's a cash-only business, according to Peter Seow, co-founder of HawkerFoodDelivery.com, which was set up to help these food storeowners tap online platforms. The local startup features a selected list of popular local hawker centres and food stalls, and provides the ordering and delivering services that help get food orders picked up and sent to customers' homes.
Trying to "digitise the hawker mindset" was a major challenge HawkerFoodDelivery.com faced, Seow told ZDNet in a phone interview. Unlike restaurants, which typically had a proper infrastructure in place such as a POS (points-of-sale) system and wait staff, hawkers often ran their business alone.
"The hawker is expected to be the chef, order taker, cashier, and [now have to] manage online orders...that's a huge challenge for anyone," he said. Pointing to the numerous websites that had popped up, as a result of the pandemic, to help promote sales for hawkers, he noted that these small business owners also needed help to cope with any surge in demand.
Seow said: "The hawkers need to be able to accept orders digitally, whether it's in Chinese through an app such as WhatsApp or an Android printer [device]. Whatever the technology you equip them with, they need to be ready and able to adapt. Being a one-man show, how much can you expect them to do? They need to respond to online queries from customers, while ensuring the delivery driver picks up the order. It's not easy.
"Can they turn off the online component if they have a long queue to deal with on-site? There are questions like these that no one has addressed," he said.
The pandemic's impact and disruptions on businesses also uncovered gaps that needed to be plugged.
With more traditional sectors such as F&B, often, businesses leaned towards less sophisticated applications, said Arrif Ziaudeen, CEO of restaurant booking and management platform, Chope. He noted that a large number of restaurants would fulfil orders and deliveries only via social networks and messaging apps.
The COVID-19 outbreak also exposed the challenges of having to balance the needs of merchants and logistics services providers, Ziaudeen said in an email interview. It underscored the need for platforms such as Chope to step up and help manage this relationship.
He said the introduction of strict safe distancing measures in Singapore, for instance, pushed Chope to quickly pivot and offer delivery services for restaurants on its platform. It currently supports more than 1,700 F&B outlets in the city-state.
To cope with any surge in demand, his team initially had many manual components that they eventually improved by building and integrating technology tools. These, for instance, enabled them optimise routes for orders to minimise waste, he added.
Chope also accepted orders in advance, of up to seven days, which provided the company more time to source and secure alternative delivery options to cope with spikes in demand.
Not all bricks operate the same
While the global pandemic had helped accelerate the journey towards digital adoption, Seow stressed the need to go beyond simply deploying the technology.
"It's also really about understanding how to apply it, the person you want to apply [the technology to], being realistic about their needs, and whether they're capable of managing this digital transformation," he said, adding that the processes for some trades would prove more challenging than others.
"A hawker business is purely bricks, from day one, and has never changed. But things changed when COVID-19 came and now everyone needs to think about [adding] delivering services to plug the revenue hole," Seow said.
Seow co-founded HawkerFoodDelivery.com alongside two other partners, including his brother, and as a spinoff to another business they operated that offered a management app for condominiums, called iPlusLiving. Currently servicing some 50,000 households across 160 condominiums, the app enables residents to control their smart home appliances, book facilities within their estate, and tap wine and grocery delivery services, amongst others, that now include hawker food delivery.
As demand continued to grow, Seow and his partners in late-2019 opened up the food delivery service to other condominiums that were not on iPlusLiving and expanded the number of hawkers. HawkerFoodDelivery.com is integrated with the iPlusLiving app.
The food delivery app does not charge hawkers any commission or service fees. Instead, it charges a one-time delivery fee of between SG$12 and SG$14, depending on the distance to the hawker centre, and customers are able to order different dishes from multiple stalls within the same order.
To cope with the logistics and obtain economies of scale, HawkerFoodDelivery.com only accepts orders during lunch from noon to 2.30pm and dinner from 6pm to 8pm. It runs a fleet of about 12 vans and eight motorcycles, and currently covers 12 hawker centres, encompassing some 300 stores, and not all are available daily. A team also is on ground at the various hawker centres to collect and repack food orders for delivery.
According to Seow, the iPlusLiving app clocks some 500 orders a day, while HawkerFoodDelivery.com handles about 50 orders daily.
Ziaudeen added that some traditional businesses also were reluctant to digitise due to budget concerns, including having to cope with narrow margins and an unwillingness to pay a commission to online platforms.
And, as Seow highlighted, while delivery platforms could offer logistics support, many restaurants struggled to fulfil delivery orders at scale, he said.
He urged F&B businesses against applying the same rules to resolve different aspects of their business. Delivery, for instance, should be looked up from the ground up and include tweaking menus, rather than simply availing dine-in options for home orders. Various factors needed to be considered such as what kinds of food travelled best, how should orders be packaged, what components and items could be packed together and what needed to be separated.
Post-pandemic, it remains to be seen if businesses would retreat from their digitalisation efforts and return to how they used to run their operations.
To encourage them to stay the course, Seow underscored the need to digitise their mindsets and really understand how online tools should be applied to specific business segments to ensure they were sustainable and help hawkers overcome their hesitation.
"Before the pandemic, a lot of hawkers were not mentally interested in online. It may provide some extra profit for them, but it also brings about problems such as long queues, uncertain opening hours, and responding to online messages," he said. "Online previously wasn't the main source of income for them, but with COVID-19 and continued social distancing, the propensity is for hawkers to stick to [their online adoption]. It remains to be seen, though, how much of a role food delivery will be for hawkers."
Ziaudeen also pointed to the need to overcome the "mental barrier" that technology was difficult and unwieldy, especially for older staff. He noted that most digital tools today were intuitive and easier to manage than having to handle multiple chats on WhatsApp.
He further urged the industry to learn from the mistakes made during this pandemic, so it could better prepare for similar crises in future.
"Businesses would be more prepared and agile to 'flipping the switch' to cater to social distancing or lockdown measures. Quick diversion of resources, marketing costs, and reallocation of job roles, should be covered in business continuity plans," he said. "Logistics service providers should prepare access to an emergency workforce to minimise downtime or loss of income of those whose jobs are affected."
And with consumers expected to opt to stay home in the short to medium term during this pandemic, he stressed the need for the delivery ecosystem to continue to develop and meet ongoing demand. For example, taxi and private hire drivers should be allowed to continue supplementing their income with delivery jobs, he suggested.
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