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How a 40-year-old offline retailer stepped into ecommerce

Established in 1978, CMG Retail is a well-known women’s fashion brand in the Philippines. While its products – most notably shoes from brands such as Celine, Staccato, and Dr. Martens – are available in its physical shops across the country, it barely had a digital footprint.

Established in 1978, CMG Retail is a well-known women’s fashion brand in the Philippines. While its products – most notably shoes from brands such as Celine, Staccato, and Dr. Martens – are available in its physical shops across the country, it barely had a digital footprint.

“Our company had pretty much been selling at brick-and-mortar stores for 40 years. And for maybe two or three years, we were also selling on online marketplaces such as Zalora and Lazada,” says CMG ecommerce director Joseph Chan.

However, the company realized that it was missing out on “thousands of customers” who lived in areas where CMG lacked a physical presence. To reach other shoppers across the country’s 7,000+ islands, the retailer began exploring the possibility of selling its goods through its own online store in 2015.

According to Chan, this move couldn’t have been more well-timed.

The need for change

Back then, only a handful of companies in the Philippines were venturing into ecommerce. Shopping in the country was still a largely offline activity, and Filipinos preferred going to a brick-and-mortar shop to purchase goods. Because of this, ecommerce sales only had approximately a 0.5 percent share of the market’s total retail sales.

Despite these issues, Chan contends that CMG was driven by the “curiosity to enter a new market” as well as the successes of industry giants like Alibaba and Amazon. At that time, e-tailers Zalora and Lazada had “already been operating for a few years” in the country, which he says proved ecommerce’s potential in the Philippine market.

We wanted to enter the space sooner so that we could give ourselves the time to learn about digital marketing and ecommerce logistics.

It would seem that Chan was right. The ecommerce sector in the Philippines has been on a steady rise, and it’s set to grow further in the coming years. According to estimates, the local industry will be worth US$1.38 billion by 2023, with a 46.7 percent market penetration. That’s an expected value growth of a little over 8.5 percent in just four years.

“We wanted to enter the space sooner so that we could give ourselves the time to learn about digital marketing and ecommerce logistics,” says Chan.

Challenges of going digital

As it was digitizing its operations, CMG was faced with a number of challenges. Because the company mostly conducted sales at its physical stores, it had to contend with the learning curve that came with implementing new digital protocols to its logistics processes.

“Going online and adopting the digital logistics process was completely new to us,” Chan explains. “The fulfilment team realized that one of the biggest challenges was going to be after-sales support. We also had to develop processes for handling and monitoring sales deliveries, return items, and customer exchange requests, which are a bit more common since our products are shoes.”

In CMG’s first year of ecommerce operations, it learned “a tough lesson” on safeguarding its finances when working with third parties. At that time, a courier failed to remit “around a month’s worth of cash-on-delivery payments” to CMG, Chan recalls. The finance team then had to “take on new processes” to ensure that invoices were reconciled properly from expected payments in the future.

Improved efficiency

In many ways, going digital solved several issues that CMG faced as a traditional retailer. Previously, a large amount of manpower was required to fill order requests and create waybills, which detail the goods that a delivery vehicle is carrying. And because customers’ addresses and requested payment options had to be manually inputted, the potential for human error was never too far behind. According to Chan, digitizing logistics processes significantly reduced these errors while also saving time.

“When filling up waybills by hand, uploading 100 orders would take a whole morning,” he says.

However, CMG couldn’t digitize its operations on its own. So the retailer tapped QuadX when it decided to shift to a digital logistics infrastructure. QuadX’s experience with ecommerce businesses in the Philippines was crucial because it was able to deal with logistics issues specific to local merchants.

“It was really straightforward to work with QuadX’s platform because it’s designed for ecommerce merchants,” Chan says. “We just needed to connect our team with their team to handle payments and billings. I think within the first few days, we were processing dozens of orders pretty easily without any hiccups.”

Once CMG’s digital processes were up and running, it was able to “generate hundreds of waybills” in five minutes – and the move didn’t go unnoticed among shoppers. Many of them even left positive reviews on CMG’s website, praising its improved efficiency.

“We’re always pleased to read reviews from happy customers who found the perfect pair of shoes for their graduation day or Christmas party,” Chan shares. “Many enjoy the convenience of browsing our collections from home or the office, and our Metro Manila customers are often pleasantly surprised when their delivery arrives the next day.”

He also points out that ecommerce increased CMG’s exposure in the country, which in turn boosted its brand recall.

“The convenience and experience we deliver keep us top-of-mind with our customers whenever they’re looking for their next pair of shoes,” Chan explains. “Rather than cannibalizing our stores, our ecommerce channel actually drives more traffic to them, since many customers prefer to browse online and complete their purchases in person.”

CMG’s digital future

Chan shares that efforts to further digitize CMG’s processes are underway as it strives to become a more efficient ecommerce player.

“We’re slowly digitizing different parts of the company,” he says. “For example, when dispatching items to different stores in the brick-and-mortar segment of the businesses, we’re adopting fleet management software to make sure routes are optimized for all the deliveries.”

CMG has also adopted a digital process for inventory management. It uses analytical software, which minimizes inventory wastage by “pushing the best sellers” and “liquidating the non-movers.”

For logistics, Chan emphasizes the importance of picking a good logistics partner from the get-go – a crucial lesson he learned from CMG’s journey into ecommerce. “Find a partner who has a good track record to work with to ensure that your customers really get the best experience.”

As the Philippines’ first customer-centric digital logistics company, QuadX is dedicated to helping Filipino entrepreneurs by providing simple and seamless commerce solutions.

Visit QuadX’s website to learn more about integrating digital logistics and payment processes into your ecommerce business.