The other day, I was buying an online gift for my friend and the thought of the same experience 10 years ago flashed by. You'd have to go to a shop, look for things that your friend might like, spend time deliberating what to go ahead with and finally getting something giftwrapped. I don't suppose I will remember my online transaction 10 years later, but that's how it is; gifting has been made easier and in the process, less memorable.
But when you look at gifting as a market, it's huge and why not! Users will pay for convenience; it delights them. The developed world has already adopted these options at scale. With respect to Asia, the growth curve of any industry that originated from the US lags the rest of the world by a few years. Alistair Gordon was well aware of this. After having scaled a telecom business based out of Hong Kong to 2000 employee corpus from it's inception stage, he's now back with another startup in the prepaid gifting solutions space, ValuAccess.
The company operates across Asia, including countries like Hong Kong, China, Singapore, Malaysia, UAE and India and runs gift card and loyalty programmes for retail players. They design, implement, operate and sell these sophisticated programmes. But behind this high growth startup, is an interesting story of a British army man turned startup specialist turned entrepreneur -
From army man to entrepreneur
In his early life, Alistair was a signaler with the British Army. He says that he always knew that he wouldn't stay in the army forever. He says, "Just before leaving, one piece of sound advice that I got was to join a company that is just about to grow." This company would be Hong Kong based Shell Mobile, which he joined a day after it got it's mobile license. He says, "We scaled that company from 15 people to 2000 in a few short years. It's just one of those things - you either want to build something or you like the comfortable corporate job. I am the former. Mind you, I had no specific skills and it was a lot of on the job training for me. I understood the strength of prepaid in the Asian region and thought it can be leveraged in the gifting space."
Although Alistair is from a telecom space, he believes that it has some very crucial similarities between the two sectors. He says, "It's still an addition and subtraction transaction. Furthermore, it's a lot more simple as you don't have to worry about things like roaming etc. I always had the bug of wanting to do something of my own and I gave this a shot, in early 2006."
Alistair had just come off a stint as an early employee with Hong Kong based Shell Mobile, when he began to see some trends in the Gifting in Asia. He says, "When we started this, prepaid gift cards didn't exist. It was all prepaid vouchers. This is how it was in the economies that have adopted gift cards in past. They migrated from manual to electronic transactions because it was safer and there was a lot more control over it."
Currently ValuAccess has signed up 75 brands on their gift card and loyalty platform and Alistair believes that this number will increase with more industry key category players and many more taking to the electronic medium. He says, “When these market leaders make the conversions, the next rung of guys make the change as well and it trickles down from there. This is exactly how it happened in London. When the first gift card came out 73 retailers took to it. The next two years, this number increased to only 500. However, the next year saw an exponential leap in adoption with many thousands of retailers taking to electronic gift cards. I believe we will see a similar sort of growth in Asia as well.”
Alistair shared that their Hong Kong is currently their biggest revenue earner, as the company is headquartered there. However, he believes that India presents the biggest opportunity because of it's sheer market size. He also added that markets like China would be hard to crack into owing to a mature retailer environment. He says, "The adoption that we're seeing in the gift card space is very encouraging and it's only going to grow. The mass market of customer loyalty is also growing, which is always a good sign. Generally, people are getting more smart. After all, it is a very effective way of increasing their sales."
The power of and data
Gifting and loyalty solutions have always played an important role in the organized retail sector. Alistair broke it down from a retailer's perspective - "All retailers want to increase their revenues and there are mainly 3 levers for that. You get more customers or get your customers to come more often or get your existing customers to buy more from you. Along with gifting and loyalty solution, I believe that there is a huge move towards influence by data which will contribute to these three levers."
"For example, if you have a cappuccino every day in the morning, we can suggest the owner of the cafe to provide that customer with an offer of a free doughnut for a week. This more often than not becomes a habit for that customer by the end of the offer, there's a good chance that the customer might buy a doughnut from the next week on," shares Alistair. He further shared that ValuAccess spends a lot of time engaging with their customers and employ big data analytics tools to make real time inferences from their various data sources.
Gifting is for organized retail only
When asked about the penetration of gifting into retail players in the tier 2 and tier 3 cities of India, Alistair says, "Gifting has always associated itself with brands of aspiration. Now if a there's a gift card about a brand that doesn't have an aspirational value to it, then the card has failed at it's job. We're mainly looking at partnering with large, nationwide players."
"Having said that, there are players with a large regional influence. They are interesting, but long story short, my world is organized retail."
Are you in the organized retail space? Check out ValuAccess