DFI and Tencent Cloud Go for “Omnichannel Omnipresence” in Retail. My Interview with Wee Lee Loh, CDO of DFI.

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At the Tencent Global Digital Ecosystem Summit in Shenzhen, I sat down with Wee Lee Loh. Mr. Loh is Group Chief Digital and yuu Rewards Officer of DFI, a leading pan-Asia retailer with over 7,500 outlets.

This includes:

  • Health and beauty stores (e.g., Mannings, Guardian)
  • Convenience stores (e.g., 7-Eleven)
  • Food retail (e.g., Wellcome, Market Place)
  • Home furnishings (e.g., IKEA)
  • Restaurants (e.g., Maxim’s).

These stores operate across 12 countries and regions, including Mainland China, Hong Kong, Macau, Taiwan, Singapore, Malaysia, Cambodia, etc.

And Mr. Loh was previously CEO of Lazada Singapore, which was an early market for Lazada. Lazada entered Singapore in 2014, shortly after its founding in 2012. Today, Lazada Singapore is fairly a mature ecommerce site, with offers of same day and next-day service.

Finally, Mr. Loh also currently oversees yuu Rewards, the largest membership program in Hong Kong and Macau (over 5M members).

Overall, this was a great opportunity to talk digital strategy with someone who has had leading roles in both the digital and physical sides of leading Asia retail.

You can watch the interview here.

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This article has my main take aways.

Take Away 1: Always Go Back to the Customer (i.e., to First Principles)

Multiple times during our conversation Mr. Loh answered my questions by going back to the customer. And to what he said were first principles.

  • What do customers want?
  • Where are they spending their time and attention?
  • How do they shop?

And I think this drives a lot of his tech and ecommerce thinking.

  • When I asked about data, he mentioned that data is useless unless it is put into action.
  • When I asked what tech trends matter, he says it depends on what customers really want.

He said:

“I think first and foremost as a retailer and even in my whole journey in commerce, it’s actually about customer, right? Who’s the customer? What do they want? How do they shop? I think that’s the very fundamentals. And even with the advent of technology, the first principles don’t change. It’s just that through this whole journey; we find better tools that can help us answer many of these questions.”

The starting point is a deep understanding of local consumer behavior. Which he said is shaped by the dominant retailers available in a location and by social media.

“I think fundamentally customers are shaped by social media as well as by the predominant shopping channels available in their local markets. I think you go back to first principles.”

Take-Away 2: Be Omnipresent in the Omnichannel

Mr. Low also had a good comment about the need to mirror your retail media to where the customer traffic is. That used to be social media. And over time it shifted more towards ecommerce. Today, it is shifting towards physical stores.

He said you need to “omnipresent in the omnichannel”.

That is a pretty good phrase to remember. You need to be present and relevant in the ecosystem.

He said:

“Retail media actually mirrors where traffic is.. Meta and Google had online traffic. So that’s how you advertise. And then the second wave of retail media evolved with e commerce. Amazon and Alibaba and so forth. But now actually is the third way for retailers…Retail media wave actually reflects more on the in-store traffic because most retailers, unless your online penetration exceeds 50%, most of your traffic is actually in store. And then how do you make a meaningful engagement of customers in store.”

Take-Away 3: Omnichannel Retail Begins with Customer Information and Insights

I asked about how his experiences online at Lazada and now more offline at DFI have differed.

He said Lazada is a technology company doing retail and DFI is a retail company using technology. But the playbook is the same. You start with the customers. And how you serve them. But with physical retail you are more focused on leveraging the physical store traffic into omnichannel.

And he stressed the need to a have a differentiated value proposition. Retailers need to speak to the differentiated needs of the same customers. That starts with knowing the customer deeply.

“If your longer-term vision is to become an omnichannel retailer…there are two natural touch points. One touch point is loyalty and one touch point is…digital shopping commerce which…can be your own web or perhaps a third-party website…these two…enables you to know your customer deeper.”

Take-Away 4: Innovation in Asia Logistics Is Increasing Choices. And Likely Decreasing Costs.

On the logistics side, digital means innovation and experimentation is happening more rapidly. He mentioned that there are just a lot more trials and experiments now. The cost and time required to experiment is much less now.

But which pilots will scale and deploy depends on commercial viability and regulations.
I think Asia is particularly interesting in terms of logistics and supply chain. Most of the world’s factories are in Asia. And most of consumers live in high density cities. That means lots of interesting dynamics in connecting production to consumption. Unsurprisingly, Asia has long been an innovation leader in logistics. Think food delivery, 12-hour delivery, insta shopping, etc. Logistics innovation in places like Indonesia and China is resulting in good models for much of the developing world.

Mr. Loh said he expected logistics will have better visibility in the near future. There will just be more transparency. With a more traceable system. Customers will have more choices and the delivery window will be sharper. It is also likely that the unit economics will also improve with scale (i.e., get cheaper).

“I think logistics will continue to evolve and there’s a chance that there will be better visibility and traceability there, to the potentially will narrow the window and have more certainty of experience because your delivery window can be sharper. “

Take-Away 5: Ecommerce Innovation Is Advancing Particularly Fast. Which is a Challenge for Retailers.

He had some interesting comments about the pace of ecommerce innovation in Asia.

“(the) interesting part of this ecosystem is the fast-evolving innovation, right? From rack shopping to in-house shopping to, you know, there will be new emerging forms of shopper-tainment and all.”

“And I would say, then as an omnichannel retailer, we’ll need to leverage as well as to find our… go-to-market spot as well.…I think we’ve got a lot of the innovations and some sustain and some go, which is where we will need to be quite open to confront the fact that some work better than others…So as an omnichannel retailer, we are ready to embrace all the different new emerging shopping innovation.”

On Working with Tencent Cloud

I also asked about DFI’s work with Tencent cloud. How it got started. What was the key goal.

He said that DFI had a mix of SaaS solutions that had built up over the years. A lot of which centered around the yuu Rewards program, which has 70% of Hong Kong residents.

He said the initial goal was to redo the tech stack and have an end-to-end system, especially around customer related capabilities. Ideally, you want one end-to-end system and one source of customer data. In theory, that should result in increased scalability, better capabilities and increased efficiency.

He said:

“When we were looking for a system that could combine breadth, depth, and flexibility, we chose Tencent, because it helps us simplify the market complexity for our business. The more complex the business, the greater the need for a simple system.”

They put out an RFP to consolidate all the customer related capabilities. Think CRM, rewards, sales information and operational touchpoints. They ended up working with Tencent cloud.

“Starting at the start of this year, I took over the leadership of the yuu Rewards membership, which is the leading membership program in Hong Kong, which covers 70% of the population…I give great credit to the founders and the leaders who have stood up this membership for the last five years. But as we grew, we had a constellation of different SaaS solutions..which then have three implications on, I guess, efficiency, cost, and then so on scalability.”

“We look for an opportunity to revamp the entire SaaS stack, technology stack to be just one end-to-end similar system…And I also wanted to mention that it’s part of strategy involves the greater Bay Area, the GBA, which means we need a solution that can concurrently be made available within China and also outside of China. So that was also one of the circumstances of our solution that needs to be able to connect our customers while, of course, respecting the data governance where they need to be.”

I asked about the key outcome metrics for the project. And he had a really interesting reply.

He basically outlined a 3-phase plan for digital transformation and increasing customer value. Here’s how I heard it (i.e., my impression):

  1. Ingest all the customer related data. Consolidate the information and tech stack. And then be able to engage with customers in all the channels at the right moment. And in a way that reinforces their differentiation.
  2. Build out new GenAI and other tools with the new integrated stack. Once information and tools are consolidated, start to investigate new use cases.
  3. Create expanded experiences for customers. And probably starting with the loyalty program.
    Here are his comments:

“We want to know our customers better, the ability to inject all the data into the customer data platform and to be able to use it in the right customer scenarios…will be manifestly important in achieving that differentiator…The ability to engage them in the different channels. …So, I think that’s the first.”

“I think the second is, we think that there are a lot of opportunities to build new AI tools within this integrated set. So, we are open to the ability to deploy AI capabilities within that in order to improve the whole efficiency, as well as also to develop new use case scenarios as part of this deployment.”

“I think on the third, in terms of then providing customers with an expanded experience…Say a loyalty program, where you can actually use it across the entire Greater Bay Area. That is an expanded capability and service that we want for the customers.

…we do need this new transformed system to allow us to delight our customers with new shopping experiences or new loyalty experiences. “

Within this, the loyalty program appears to be a big focus. It is a powerful tool for expanding experiences and increasing customer value.

“In the ecosystem transactions, ecommerce transactions are typically dilutive relative to the offline margins, and which means you do need loyalty as well as retail media to compensate for some of the margin dilution.”

My Summary of His Approach to Retail

Here is my overly-simplistic summary of his approach:

  1. Always focus on the customer. Who are they? What do they want? How can you serve them?
  2. Decide upon a differentiated way to serve your customers.
    1. This requires both data and the ability to act on it.
    2. This means being where customers are and having their mindshare. You need to be “omnipresent in omnichannel” with your differentiated value proposition.
  3. Build the right foundational capabilities for customer-related information and engagement.
  4. Hunt for new use cases and new tools to add value. Loyalty programs are a powerful tool in this regard.
  5. Focus on expanding experiences. This can be personalization. It can be new services and geographies.

Last Question: What Would You Do If You Were Just Starting Out?

This is my standard last question. If you were just starting out today as a young man, where would you focus? What would you do?

“I think the digital tech space is a very exciting one. And, but at the same time, I think the most important advice I got myself is to keep an open mind. And that’s a bit of the attitude they should have towards what they’re doing or what they’re even trying as their first job. Because their first job may not be their last job. so just to keep an open mind and just have the openness to learn.”

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That’s it.

Cheers, Jeff

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Related articles:

From the Concept Library, concepts for this article are:

  • Digital Transformation
  • Cloud Services
  • Retail

From the Company Library, companies for this article are:

  • Tencent Cloud
  • DFI Retail

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