Exclusive Interaction - Kumar Vembu, Founder & CEO, GoFrugal

Online ordering, contact-less delivery and stock-pick mobile-applications are the order of the day in retail business today. GoFrugal is an Indian company that has expanded across the country and has also spread abroad. Kumar Vembu, Founder & CEO, GoFrugal speaks about digitising the retail sector.

How do you see digital adoption among retailers in the Asia-Pacific region?

Kumar Vembu - There is a huge change across different regions in Asia- Pacific. Mature markets like in China, Singapore, Japan, and Australia have already transitioned to be omnichannel. Some of the new trends were shopping from mobile, QR code-based menu/catalogue applications and of course contactless ordering, delivery, digital payments.

Markets like India have seen huge technology adoption with small and medium businesses. It was the neighborhood groceries and the small stores that played a key role in keeping the supply going during the lockdown. Besides transitioning to omnichannel, there will be an increase in the adoption of mobile for store operations. Smart-phones and the internet have empowered the consumer and has redefined the service expectations of consumers. Mobiles will be used for automating store operations like stock-counting/audit, goods inward, and stock-pick for online orders.

How has the retail changed in recent times?

Kumar Vembu - Consumer’s exposure to multiple channels has driven the need for seamless connectivity between the physical and digital worlds. Retailers have realised that creating physical and online experiences will truly be a differentiator for them to succeed and create a delightful shopping experience. The pandemic has created an opportunity for retailers to upgrade their capability to create an omnichannel experience.

We have also seen them collaborate with marketplaces to create new distribution channels reaching new geographies or regions with minimal investments. Finally, minimising contact with contactless ordering, delivery, and payment. Businesses had adopted to provide all service options from a completely self-service shopping experience to a complete full-service shopping experience.

We are seeing a good growth and adoption of omni-channels in markets like Australia, Singapore, Thailand, Cambodia, Malaysia, Pakistan, Dubai, Bangladesh, Srilanka and of course some rural markets in India post-pandemic. 

Why are many retailers not willing to prefer digital payments?

Kumar Vembu - Lack of awareness and benefits of digitised payments, lack of proper infrastructure and resources like swipe-card machines, internet availability are some of the major reasons for retailers who are not willing to prefer digital payments. Delay in approval of digital transactions would result in anxiety to both the consumers and retailers. With margins for retailers being a low, there will be definite resistance to use digital transactions that are charged for a percentage fee. 

Security is the major concern in cashless payments. How should a retailer be equipped enough to avoid security-based issues?

Kumar Vembu - Retailers should understand that when consumers can pay contactless with NFC, RFID cards or mobile apps, it is the retailers responsibility to provide a safe and secure environment. It starts with the IT infrastructure security where the right access control and password management policies are implemented and the best practice to ensure the latest security patches of the vendors are installed.

As far as POS application and payment processing, it is important to have point-to-point encryption (P2PE) of POS data. This means that all payment data that is stored in the POS must be encrypted so that even when hackers get access to the POS system, they cannot access any payment-related data. Using a POS system that has PCS DSS certification is the way to go.

What are the next retail tech disruptions to happen in the Asia-Pacific?

Kumar Vembu - There will be a need for a smart collaborative platform with integrations to different marketplaces, e-commerce, loyalty providers, mobile ordering portals, business intelligence systems and other aggregators like digital wallets, suppliers, service providers, banks, and even regulatory authorities. A comprehensive ERP will hence pave the way for such connected retail solutions. The ERP will focus on digital transformations to all stakeholders like consumers, suppliers, employees, and other partners. Going forward, Retail will move from ‘Buy Stock Sell’ to ‘Sell Source Supply’ model. Customer experience will be the key differentiator to be successful, the rules of omni-channel will evolve and retailers need to provide seamless shopping experience to consumers across all channels.

In terms of technology advancement, how do you compare Asian retailers to other markets like Europe, West Asia and the US?

Kumar Vembu - Asia Pacific will continue to be the retail industry’s growth engine because of the accelerated adoption of technology. According to a recent report by Bain & company, AP is generating about three-quarters of global retail growth and about two-thirds of online growth. Online sales nearly doubled compared to the rest of the world. They have been successfully collaborative with market-places, social apps like WeChat, Paytm and setting up their own digital ordering platform trying out new experiments.

Asia is home to about 60% of the global population. The countries in Asia are benefiting from the demographic dividend and are the economic growth leaders. They have higher GDP growth compared to the countries in other regions. The demographic profile and the GDP growth leads to significant consumption growth and high growth retail business. Retail is also a lot more competitive in Asia compared to other regions. Retailers look up to technology solutions to differentiate their service experience and service levels in the Asia Pacific. Technology will pay an increasingly strategic role in retail business in Asia.

As told to B Swaminathan