Building an e-commerce business from the ground-up

Building an e-commerce business from the ground-up | Shopkeeper Stories

Building an e-commerce business from the ground-up

I had a wonderful opportunity to chat over coffee with Abel Neoh and explore the nuts-and-bolts of his electronics business that started in 2010. The interview was rich, textured, and brimming with insights. His insights came in handy for my PhD research about small businesses, so I decided to capture the key points in this article so that you can also trace the twists & turns of how a business starts from nothing and becomes… something awesome!

How to start a business without a loan

Three friends started a business on a whim with $3,000, and raised it into a healthy, sustainable enterprise. We trace the journey of how this happened. It began by throwing around a bunch of ideas.

“We were saying, “What can we do in Singapore? Everything is almost taken up!” So the only thing is to hit the market with something new.”

A friend introduced them to a supplier of mobile phones and accessories, so they created a free and simple e-commerce website on Yahoo Sitebuilder and launched their business selling iPhone battery packs and other gadgets in 2010.

“In Singapore everybody goes for low price, so you got to cut on something right? So we cut the retail cost. So we did e-commerce.”

Use e-commerce websites to market your brand

Six months into their adventure, e-commerce websites (such as starting popping up in quick sequence. These “deals” websites catapulted their products to a wider audience.

“Just nice! Before they came into the picture, I was looking through the… everyday we look online for new ways to market. Because if we market ourselves it’s gonna be costly. Online there’s pay-per-click and stuff like that, so we tried to go through sites that do not charge, so that we can use their marketing strategy to boost our web presence. Because to gain a web presence really takes years.”

In the early days, the aggregating platforms were themselves eager to establish their presence, so they put in significant effort to convince the first batch of merchants (like Abel) to sell on their platform.

“The account manager was very friendly. They even helped us to do up the shop in Gmarket. They had the strategy of buying in the phones from us at a high price, and selling it on their site at a low price to attract customers, cos we were the first few merchants on their site. So we saved a lot on marketing costs. So, through them we gained quite a web presence.”

Abel Neoh from Mainzsq in Singapore running a small business that sells electronic gadgets through ecommerce in an interview with Shopkeeper Stories - photo of Arab Street in Singapore

On average, rent for retail trade comes to 32% of total costs for small & medium enterprises in Singapore (Economic Survey of Singapore 2013)

Save costs with Just-In-Time orders

With a hollow bank account, they could not hold much stock. So they adopted a Just-In-Time strategy: whenever someone bought an item online, Abel would personally walk over to the warehouse and pick up the item from the supplier.

Most suppliers demand a minimum order of hundreds or thousands, but they struck a win-win relationship with the wholesaler to avoid the massive bulk expenditure.

“When people order online and make the purchase, we would collect the money and go to the supplier. Our office was very near our suppliers. Regardless of how many we took, be it 1, or be it 10, be it 100, we got the wholesale price. So that was quite a good pull. Because we guaranteed them the sales.”

You cannot escape the slog work

In a style familiar to many small business owners, Abel spent a lot of personal time packing and delivering goods. Their sales rocketed online using the “deals” sites, but it demanded laborious time and effort.

“When the e-commerce sites came in, our profit dropped, and then our effort and overall workload went up. Let’s say there was the deal and we sold the iPhone button, 800+ items per week. And that is talking about an individual, so 1 person buys one. Or maybe some buy 2 or 3.

“So we had to pack 800 over pieces. You have to pack one by one, bubble wrap the thing, put it in the envelope, then paste double-sided tape, write all the addresses, then put stamps and stuff like that. And sometimes send the stuff at night.

“I mean, the tedious thing is that the profit margin is so low, but the work is… really, really tedious ah. I mean, although sales is high, you got to mail it yourself and all. Answer phone calls, everything like that. Accessories was, I mean it’s really hard-earned money.”

Why didn’t they hire workers? Today, Abel has a smart team of interns helping him out, but in the early days of the business, he did not want to compromise the reputation of the company with mishaps based on unreliable temps who defaulted on their responsibilities. So he handled the packing and deliveries personally until the business stabilized. Once the routine could be better segmented, he began to delegate more efficiently.

Night at Arab Street in Singapore

No time for play when starting a business. “The tedious thing is that the profit margin is so low, but the work is… really, really tedious ah. I mean, although sales is high, you got to mail it yourself and all. Answer phone calls, everything like that. Accessories was, I mean it’s really hard-earned money.”

Stay close to market trends

Not only was Abel physically packing the goods, he was constantly researching new strategies online and approaching new collaborators:

“Every day we had to do research online. We’re practically in front of the computer 24/7, I mean almost 24/7. So, everyday we’ll research. Before the e-commerce sites entered the market — as in, when they just hit the markets in Singapore — I went to approach them.”

They were constantly hunting for cool accessories that might appeal to people, such as the green button for the iPhone.

“We were the first to bring it up online. We sold it for $5 and sold about 862 pieces. I always believe that in the market you have to bring in something new.

“One thing about gadgets is that you have to keep researching new ideas. Coz you see, once you put it up online, another person will put it up also. Very fast.”

In the early years of building the business, it was laborious and exhausting work.

“So, every day the brain is thinking. I cannot sleep in peace also. So, there’s a lot we need to learn — a lot of things. I think I would sleep once in two days.”

How to start a business without massive upfront capital

They started their business with very little cash, so they sought opportunities that required the least upfront capital: just-in-time sales instead of holding stock (despite the tedious labour involved), selling on e-commerce sites (even though they had to slash their prices for the exposure), and piggybacking on a local supplier to get their goods.

However, after getting a foot in the market, they carefully and boldly steered the business into new directions.

Adapt quickly

E-commerce platforms – the wings that brought their business to flight – took a sharp plunge when one of the companies went bankrupt. The fad of “deals” sites started to die off, and Abel was forced to explore other marketing strategies. He explains the situation:

“There was this website – I can’t remember the name, quite a strong company but eventually this was the company that spoilt the whole market. They declared bankrupt, went into liquidation, and lost all the money, because it’s an e-commerce business.

“So everybody started to lose confidence again. For online selling, it’s already really hard to build up confidence in the site. Then now, cos of the company, everybody’s confidence got shaken again.

“So we had to depend on what we had built up in the past 2 years. So we went to Google, and then started to use pay-per-click and everything like that.”

Abel Neoh from Mainzsq in Singapore running a small business that sells electronic gadgets through ecommerce in an interview with Shopkeeper Stories

“One thing about this gadget thing is that, you have to always keep researching new ideas. Cos you see, once you put it up online, another person will put it up also. Very fast.”

Collaborate with businesses that have a wider marketing reach than yourself

Besides using paid marketing such as Google Ads, they collaborated with other business players to access a broader customer pool.

“By then our website presence was quite strong already so we linked up with this company called Big Fish. We try to keep finding companies that are online that are monopolising, as we wanted to reduce costs.

“We decided to sponsor their monthly gift on the agreement that they will boost up our Facebook likes. So it worked. Our Facebook likes went up to about… it took me 1 year to get 500+ likes, after I linked up with them, it took me one month to get another 1000+ likes.”

These marketing affiliations are useful and you can read about how it has also worked for a small cosmetics company in Singapore.

Collaborate with other retailers for ground exposure

Besides marketing alliances, Abel also linked up with established retail shops around the city so that customers could redeem their online purchases, saving him time from packing and mailing hundreds of phones and accessories.

This meant that the business would have to transition away from the Just-In-Time model.

“Initially it was quite a hassle. Just-In-Time is good because it’s secure – only when somebody orders, then we buy the phone. But after some time, when things got a little busy, it’s quite troublesome. Every time, say a person orders one cover, then we have to go down to the supplier and take it. So eventually we decided to hold some stock.”

This was a win-win situation since the little shops gained additional traffic when his customers walked in to redeem their online purchases, while Abel saved on the costs of renting a retail store.

“So, we were still thinking, how do we actually gain a retail presence? At zero cost. So when we came up with the idea, we always think about how to gain exposure by reducing cost you see. So this was one of the ideas.

“So we decided to go on a consignment basis. So we approached a few shops. One was a bookshop, then one more at a foot reflex place.

“So everything that’s being sold, we give the company a cut. So we put the shelf down there, and sell things there.”

Create a complementary network with other small businesses

Abel linked up with small mobile phone shops to handle their warranties, even though he sold mobile phones as well.

“We are linking up with this shop to do our warranties. They are actually a repair shop, but they sell mobile phones to gain exposure. So what we did is when we sold the mobile phones, we allowed the reaction to hype, to occur at their shop. So the exposure is gained at their shop because for us we are not doing retail so we don’t really need the retail exposure, so we offer whatever we can in exchange for their help in certain things.”

As a small business with limited capital, there are myriads of little ways you can substitute financial capital with social capital.

“So more or less we try not to incur any financial expenses. Instead, we exchange opportunities and gains with other companies so that both benefit in a winning situation: no money involved, but we all earn money together.”

A fashion business owner in Baltimore expressed a similar outlook on competition:

“As a small business, we’re all trying to grow together. It’s easy to feel threatened. Here we are, rubbing our few pennies together, and it’s easy to think, here’s another business trying to take away one of my pennies. But, we need to remember that every small business has someone who has put their heart and their passion into it. Instead of feeling threatened, we can all pursue our passion together, and grow together.”

Abel Neoh from Mainzsq in Singapore running a small business that sells electronic gadgets through ecommerce in an interview with Shopkeeper Stories - Chinatown

After discovering the market for corporate customers, the next big question was: “How are we going to win the big corporate players?” Their response: flexibility and customization.

Growing from B2C to B2B to increase sales

B2C = Businesses selling to retail customers; B2B = Businesses selling to other businesses

Two years into the business, Abel was on the lookout for new rivers of customers outside the sphere of e-commerce sites, especially since the online market was getting more competitive.

“So we decided to plug-in new ideas, and decided to go to corporate sales. We think that corporate is where the money is. You know every time there’s a contract we go “boom boom” one shot.”

This is not to say that using the “deals” sites was a bad idea. It helped them get started, and their first big corporate client emerged unexpectedly when a customer bought their iPad cover online, and invited Abel to tender for a gig at Singapore Airlines to supply tablets. It was a serendipitous encounter and illuminating insight that pivoted the business to a whole new angle.

“When we started selling our iPad casing on deals sites, we started to meet a lot of corporate people.”

Abel observes the key difference between B2C and B2B:

“For deals sites, we always have to fight with other businesses for the lowest price. But for corporate clients, it’s more about the service: how you service them and everything like that, as they are more particular about services.

“So when we did Yamaha Motors, we realized that’s where the money is. They’re not people who bargain with you. You don’t have to cut down your prices to rock bottom. And you get to actually sell in bulk, so in one shot, 50, 100 pieces “boom”, one shot you get a lot of money.

“Whereas for deals sites and all these, it’s really hard work. You have to self-deliver, pack the items…”

How to stand out to your customers

After discovering the desirable draw of corporate customers, the next big question was:

“How are we gonna win the big corporate players?”

Their response: flexibility and customization.

Corporate clients usually order gadgets/accessories for their staff or to distribute as gifts. Abel gave them the option to order any quantity they wanted.

“Because, if we offer a high NOQ (new order quantity), we cannot compete with the big players. So we offer as low as 20. You can just order 20 pieces, and we’ll still do it.”

This way, their business could serve a niche market that was under-served.

“And what more, we give you a variety of choices. Because, for mobile phones right, I mean, my supplier monopolizes the market. You don’t have to order 100 of the same iPad covers. You can order 20 iPad, 20 Samsung Tab, 20 Tab… and stuff like that. As long as it’s the same category.

“Let’s say it’s all jelly cases. You can choose your own choice of colours. You don’t have to order 100 all same colours. So there’s something I have not seen in the market yet la. I’ve not seen anybody offering this in the market.”

Of course, building a credible track record, one at a time, was absolutely paramount. It enhanced their brand reputation on fulfilling the promises they made.

“A small company like this, how are you going to trust the company? So, we give clients a track record of contracts like these, like these big companies you see. So, they tend to be more assured.”

Partner with the producers

Abel was able to customize small numbers of electronics and accessories for his customers because of a deal he struck with a printing company. The owner agreed to do all the customized oil printing on the iPad covers and other accessories – any number that Abel wanted – as long as Abel covered the basic cost of creating the mould.

“We linked up with him for our small-scale customization. Nobody else will actually do it for us. Because the problem is too little. That’s why everybody does it in China, but when you do it in China you need to have a minimum 500 to 1,000 pieces.”

Abel has an ingenious and brilliant ability to strike strategic alliances with other small businesses, and the beautiful part is that these relationships yield mutual advantages to each party involved.

Shipping port in Singapore | Abel Neoh from Mainzsq in Singapore running a small business that sells electronic gadgets through ecommerce in an interview with Shopkeeper Stories

Every 2-3 minutes, a ship arrives or leaves Singapore, and at any one time, there are about 1,000 vessels in the Singapore port. Source: Maritime Authority of Singapore

Creating a brand for your product

We live in a ruthless Darwinian world demanding that we adapt or die out as a species. Each of us, and every business, must constantly design their own story of evolution to survive and thrive.

Abel started his business as a traditional middleman: his supplier did wholesaling to retail stores, while Abel introduced the gadgets to online consumers.

“He doesn’t touch the online market, I don’t touch the retail market.”

The momentum of intense energy that goes into making a business survive – manual slog work, ceaseless thinking, and relentless experimentation with the slippery unknown – seems to give rise to a burning furnace of molten ideas that are constantly bubbling to the surface.

It is impossible to be still when the ground beneath our feet is shaking. In business – as in life – the terrain is always in motion. We would be deluded to imagine otherwise and allow ourselves to be complacent.

Abel made 3 key moves that propelled his business to be independent from his local supplier with new directions of growth. Besides reframing their customer target from B2C to B2B, they are constantly improving their value proposition.

First, they branded their own line of tablets which they manufacture and import from China.

“We used Alibaba, but we cannot just trust… you know, like online and stuff. So there’s this fair that is held in Hong Kong every year. This fair is where all the suppliers in China will attend. We went down personally and then we linked up with the suppliers over there.”

Second, he won the rights to distribute Mercury accessories from Korea. This expanded their role from an online retailer into a wholesale supplier.

“This is our first official distributorship right of a brand.”

Third, he was given exclusive rights to distribute the SOS Senior phone for the elderly.

“First we sold it on “deals” sites to see the response. Apparently Singaporeans like their mothers more than their fathers. On Mother’s Day we sold about 50+, on Father’s Day we sold about half the number.

“Let’s say something happens to an elderly, you just have to press a button and it will automatically call 4 numbers straight. So you might put in your son, your daughter, your daughter-in-law or anything. So you press a button, and the phone will automatically call the number. If nobody answers, it will call the next number, and call up to 4 numbers.”

Finally, it was time to sharpen the focus. With a few years of experience packed under their belts, they could look back and evaluate what works and what doesn’t, and have more clarity on how to move forward.

“If there’s too much diversification, we cannot handle it. We will be Jack of all trades, master of none. Initially we did so many things because we tried to gain exposure…

“We are trying to narrow down into things that we find practical, useful and worth selling, and then go into branding and all.

“When we go into branding we cannot possibly keep on selling China things already. We got to brand the products, provide warranties and come up with our own service center.”

Never staying still

The adventure of driving the business stays in “manual gear” as Abel and his team attentively observe what gadgets people are seeking to be happy, and find ways to fulfil these desires in the churn of our city.

The upcoming two posts in this series will highlight key insights and reflections that Abel distilled through his 5-year journey in business. If you liked this post, feel free to share it, and I’m sure you’ll enjoy the other posts, too!

On a personal note: Thank you for the interview, Abel! When we met, you were incredibly busy, sleep-deprived, and intellectually consumed, yet you warmly agreed to share your experiences for my research over a few hours. You are an incredible personality with great ideas, and I wish you and your partners all the best with Mainz Empire !

Shopkeeper Stories is a photographic documentary of small business owners with their trades around the world, sharing their views on business and life. You can catch all the posts on Facebook and Instagram @ShopkeeperStories. Enjoy!