While retailers are struggling with rising rental and labour costs, e-commerce opens a window of opportunity for them – especially for the small and medium enterprises (SMEs). However, if you are going to step into online retailing, what are you going to sell? Let’s not forget about the intense competition in the e-commerce sector. How are you going to compete with e-commerce giants like Amazon, Ebay or Rakuten? Deguchi Tomohiro, founder of Tawaraya Rice, a Hong Kong-based online store which sells high quality Japanese rice around the world, made an e-commerce success story for SMEs. Tomohiro tells Retail in Asia how to create a successful business by spotting the opportunity and choosing the right business model.
RIA: Can you talk us through Tawaraya Rice’s business? How did it start? And why did you start it in Hong Kong?
Deguchi Tomohiro (DT): Tawaraya Rice was established due to my passion for sharing good rice with Hong Kong people. During a stay in Hong Kong, I discovered the difference in rice quality between processed rice from a supermarket in Hong Kong and freshly ground rice in Japan. I believe there is a lack of supply in fresh rice in Hong Kong and am passionate about bringing top-quality rice to the Hong Kong people. My research indicated that Hong Kong people have the biggest appetite for quality Japanese rice amongst all cities in Asia-Pacific, so I chose Hong Kong as my target city to kick off my overseas business.
RIA: Why did you start your business with an e-commerce model?
DT: I started my business with an e-commerce model since setting up a retail shop in Hong Kong is expensive. While the set-up costs for an online shop are much less. In addition the international exposure we get from the internet means we see people from different markets across the world buying our rice overseas. The e-commerce model also allows us to display various types of rice online to customers and receive orders more conveniently and systematically, especially as online shopping is very convenient and popular nowadays.
RIA: What challenges did you see in your online business? And how did you resolve them?
DT: Seeing the rising problem of internet fraud these days, I was very concerned about the security of my online business. For this reason, I adopted PayPal as the sole payment platform for my business online to ensure the security and privacy of my clients and myself. PayPal’s anti-fraud and risk models mean customers are reassured that their sensitive financial details are secure. Using PayPal also solved the headache of accepting multiple currencies. PayPal is a universal payment method which accepts major currencies under one single platform. Tawaraya customers can easily make payments no matter where they are or what currencies they want to use. This will certainly continue to be a competitive advantage as I look to expand to Singapore and Taiwan in the future.
RIA: In 2011, Tawaraya Rice successfully entered the Singaporean market and was recognised and prized as the winner of "PayPal E-Commerce Excellence Best Market Expansion Award". What were the keys for your success?
DT: Do sufficient research beforehand so as to know the market demand and develop a viable business model. These elements are critical if you want to succeed in reaching out to new markets. Most important of all though, the quality of product has to be high so as to satisfy customer demand. I have also taken rice qualification exams to build up my industry expertise and profile, to gain confidence and loyalty from customers. After all, passion for what you do is the driving factor for anyone who wants to take on the challenge of setting up their own successful business.
RIA: What are your top tips for SMEs who want to tap e-commerce for success?
DT: E-commerce relies on online payments to conduct transactions and ensure cash flow. Therefore your payment platform has to be top of mind for anyone looking to run a sustainable business online. After an e-commerce business model has been set up and is running efficiently, SMEs can enjoy benefits that are not available with traditional physical-store business models. For instance, a universal payment platform like PayPal which accepts multiple currencies means you can open up your target market to a worldwide audience, tapping into the huge global pool of people who enjoy the convenience of shopping online and buying the best products from around the world.
Deguchi Tomohiro, founder of Tawaraya Rice, a Hong Kong-based online store which sells high quality Japanese rice around the world.
CEO Talking Shop is the Retail in Asia section devoted to interviews with brand CEOs and retail industry leaders.
(Source: Retail in Asia)