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.
What is OFM’s business model?
OFM has three business, Office Mate which is B2B and supplies tools for work via a omni-channel model which includes , the retail store, catalog call center and online. We have B2S which is an “edutertainment” business, as it combines education and entertainment via books and stationary. The final business is Central.co.th and Robinson.co.th, Central Group has only begun to sell online and the operations of 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, Powerbuy, Supersport which are all online, to be merged them into these two websites. We are completing a dedicated warehouse for this, specific business units for each website. Ten million Thai people walk through a Central or a Robinson’s 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, and this is why we believe Central Online can be successful.
How is the progress of the merger of the Chirativat Group into OFM?
The first seven to eight months of the merger was a difficult period because we had to combined and integrate two databases, warehouses, inventory systems, and cultures. Our facilities were overcapacity with SKU’s doubling to over 20,000, our performance suffered as a result with the service levels dropping from 98-99% to 88% and we also had to writeoff our previous expansions with TrendyDay and redo the B2S stores. However I am certain that every merger has a difficult period in the beginning, and we have now passed this stage because as of the third quarter 2013 our service levels have returned to previous levels, the warehouse, stores and catalog 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 synergies, increased buying power, increased cash flow and instant brand recognition, the Central brand name has 60 years of reputation that Thai people trust. Also with Central Group we have the One Card, an active database of 4 million users that can be utilised online, the One Card has points that can be redeemed online, used as a discount and so forth. We know ourselves that we have to improve the quality of the websites, improve the after sales service, 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 which 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 and our software is able to detect which products are fast moving, slow moving so that we can adjust the order process accordingly. All of these elements were built into our own system over the years with 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, human resources, to adjust the mindset and improve our skillset further so that we can effectively compete in this global marketplace.
What impact will the AEC have upon your business?
It is a huge opportunity and as a Thai company we are wonderfully placed to benefit from this. Over the next few years we have a clear business plan to expand to Malaysia, Vietnam and Indonesia, this will be achieved with the backing of Central Group that 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 number of 200-300 stores and online sales at more than THB 10 billion a year. Specifically within the group, B2S will transform to a download and content center that will be a hub of entertainment and education. Office mate today represents only 15% of the office supplies market in Thailand whereas in developed countries its 50%, and the online shopping market in Thailand is still very young, today Central Group sells about THB 200 billion a year and could potentially grow to THB 500 billion over the next decade, and we aim to represent 10-15% of total sales.
Source: Bangkok Post