OfficeMate Plc (OFM) is a distributor of office supplies that uses an omni-channel model and an e-commerce company managing the OfficeMate.co.th, Central.co.th and Robinson.co.th websites. OFM listed on the Market for Alternative Investment in 2010 and joined the SET in January 2013 after Central Retail Corporation (CRC) acquired a major stake in the business. Chief executive Worawoot Ounjai discusses the company’s strategy and outlook.
Mr Worawoot expects OfficeMate to operate in six Asean countries by 2019.
What is OFM’s business model?
OFM has three businesses. First is OfficeMate, which is a B2B (business-to-business) operation supplying tools for work via an omni-channel model that includes the retail store, catalogue, call centre and online. B2S is an “edutainment” business, as it combines education and entertainment via books and stationery. The final business involves the Central.co.th and Robinson.co.th websites.
Central Group has only begun to sell online. Operating a physical store and an online store are not the same, and because OfficeMate grew from a non-store we understand this business model very well. The aim will be for every store of Robinson, Power Buy and Supersports, which are all online, to be merged into these two websites. We are completing a dedicated warehouse for this and specific business units for each website.
Ten million Thai people walk through a Central or a Robinson store every year. They have the experience and trust with the Central brand already, and thus transferring this trust to the online portal will be easier because the brand name is there. This is why we believe Central Online can be successful.
How is the merger of the Central Retail Group operations into those of OFM going?
The first seven to eight months were difficult because we had to combine and integrate two databases, warehouses, inventory systems and cultures. Our facilities experienced overcapacity, with SKUs (stock-keeping units) doubling to more than 20,000. Our performance suffered as a result, with service levels dropping to 88% from a range of 98-99%. We also had to write off our previous expansions with TrendyDay and redo the B2S stores.
However, every merger has a difficult period in the beginning, and we have now passed this stage. As of the third quarter of 2013, our service levels returned to previous levels, the warehouse, stores and catalogue systems are again in sync, and we are looking forward to growing further with this stronger base.
What synergies does OFM gain from Central Group?
There are several, among them increased buying power, increased cash flow and instant brand recognition; the Central brand name has a 60-year reputation that Thai people trust. Also with Central Group, we have the One Card with its active database of 4 million users that can be utilised online. The One Card offers points that can be redeemed online, used for discounts and so forth. We know that we have to improve the quality of the websites, improve the after-sales service and product availability. We are not satisfied yet with where we are and there is room for improvement.
How does OFM manage its inventory so well?
We started with zero and never had the money to buy the expensive logistics software that would have cost more than a year’s worth of revenue for us at the time. The most important elements in inventory management are process, software and people. Our aim is to manage inventory to the level where it is just enough for what the customer needs. Our software is able to detect which products are fast-moving and slow-moving so that we can adjust the order process accordingly. All of these elements were built into our own system over the years through brainstorming within all the divisions in the company.
What are the biggest risks facing your business?
The question we ask ourselves constantly is whether our ability, our company, our people are ready to be part of the number one online company in Thailand. We realise that we are competing against the world in this industry, so we are investing in training and human resources to adjust the mindset and improve our skill sets further so that we can effectively compete in this global marketplace.
What impact will the Asean Economic Community have on your business?
It is a huge opportunity and as a Thai company we are wonderfully placed to benefit from it. Over the next few years, we have a clear business plan to expand to Malaysia, Vietnam and Indonesia. The backing of Central Group ensures we have the necessary larger scale, stronger buying power that will allow us to compete with global firms.
Where do you expect to see OFM in five years from now?
OFM should be operating in five to six countries throughout Asean with a total of 200 to 300 stores and online sales at more than 10 billion baht a year. Specifically within the group, B2S will be transformed to a download and content centre that will be a hub of entertainment and education.
OfficeMate today represents only 15% of the office supplies market in Thailand, whereas in developed countries online office supplies sales are 50% of the total. The online shopping market in Thailand is still very young. Today Central Group sells about 200 billion baht a year and could potentially grow to 500 billion over the next decade, and we aim [for online channels] to represent 10-15% of those total sales.
The Executive Q&A Series is presented by ShareInvestor, Asia’s leading financial internet media and technology company and the largest investor relations network in the region, with more than 500 listed clients. This interview was conducted by ShareInvestor. For more information, e-mail admin.th@shareinvestor.com or visit www.shareinvestorthailand.com