This article first appeared in Digital Edge, The Edge Malaysia Weekly on November 9, 2020 - November 15, 2020
Businesses in Malaysia need to take a page out of Mark Zuckerberg’s book. The meteoric rise of the billionaire founder of Facebook was only possible because of one simple fact: Zuckerberg understood the transformative power that data would have over the world.
Fundamentally, every business — regardless of the product and service — is a data company. Those who wield data to their advantage will find that exponential growth and long-term profitability are not far behind.
Data is a singularly unique commodity, says Innergia Labs Sdn Bhd co-founder and CEO Vernon Chua. “It is essentially an infinite resource, the value of which isn’t easily diluted. A sufficiently large data set can be repackaged, reanalysed and sweated many times over. It provides multiple opportunities for businesses to grow revenue and market share.”
Innergia Labs is a local two-year-old start-up that provides a cloud-based business intelligence and data analytics software suite called SYCARDA. SYCARDA is delivered using the software-as-a-service (SaaS) model, making it a subscription service.
According to Chua, who developed SYCARDA specifically with retail and food and beverage (F&B) businesses in mind, the vast majority of players in this space simply do not sweat their data like they should. This is something he hopes to change.
“Small businesses in general tend to sit on a lot of data. Over a period of years, these companies are regularly processing sales and inventory, and filing away countless records of commercial activity. These invaluable data points are almost never consolidated and reviewed for insights.”
In one instance, Chua says, Innergia Labs helped unlock millions in additional revenue for a local restaurant chain. The chain’s sales and marketing team analysed their store’s off-peak hours, taking note of average wallet spend, as well as the most popular à la carte items that customers tended to bundle together in their purchase.
Using the insights they gleaned from SYCARDA, the company then designed a set meal promotion to bring in more customers during off-peak hours. The subsequent three-month campaign increased its annual revenue by 8%, and brought in RM500,000 a month.
Another F&B operator was able to drastically improve its stock-keeping unit (SKU) efficiencies. When its bosses analysed the relative performance of its menu items, they realised that their top 10 sellers contributed 30% of the revenue, while their bottom 100 menu items contributed just 6%.
“They realised just how much wastage was taking place in their kitchens. The chain then focused on consolidating the menu. This improved its profit margins by lowering ingredient costs, in addition to making it easier to train kitchen staff,” says Chua.
In many instances, businesses already have the type and volume of data needed to develop these game-changing insights. Previously, however, these analytics capabilities were inordinately expensive, and therefore limited to a relatively small number of companies.
In recent years, various business intelligence and data analytics suites have entered the market and, in fact, are quite affordable. Examples include Microsoft Power BI, Tableau, and Qlik. Nonetheless, Chua believes he has developed a strategic advantage over these much bigger players.
“There are many data analytics suites in the market, but we have developed SYCARDA specifically to service the retail and F&B sectors, while the others tend to be one-size-fits-all.
“Our strategic advantage lies in our proprietary data capture technology. Players like Microsoft Power BI, Tableau and Qlik all require the business to transfer pristine data sets in very specific formats before these suites are able to provide business intelligence. The integration can be a very costly process,” he explains.
“Our system, meanwhile, installs an ‘agent’ into the business’ network that is able to recognise many forms of business data, and subsequently pre-packages all that data in a format that our suite can recognise and analyse.
“We periodically run quality control checks with the client, just to ensure that the data being collected is relevant and accurate; but really, these are one of just a few offline interactions that need to occur between our system and the business. Once the business confirms the accuracy of the data, the software will be able to recognise and collect similar data in the future.”
SYCARDA also provides dozens of curated template report formats with any number of different metrics and data visualisations to choose from. The company is constantly adding to its library of template reports in order to give businesses as much choice as possible.
According to Chua, SYCARDA requires little to no downtime for it to be integrated into a business’ servers. That said, it is important that business owners be very clear with Innergia Labs about the types of approved transactions, return policies, SKU master list, credit note policies and the like.
“As long as we have advance knowledge of these key policies, we will be able to take all these factors into account when sorting the data. When a business helps to ensure that the categorisation process is as well-defined as possible, that significantly increases the overall accuracy of the insight.”
Innergia Labs is a rare breed as start-ups go. Prior to Covid-19, the company had been on a path of profitability from early 2020.
“To be fair, we view ourselves as a growth company right now, so we have actually been focused on capturing market share rather than chasing profitability. But even so, we were on track to break even in early 2020. Even now, I still believe we’re on track to break even by the end of the year,” Chua says.
“I think a lot of that has to do with the SaaS delivery model. It’s endlessly scalable without us having to increase manpower. The SaaS model allows us to add clients without having to grow too large.”
Another big contributor to the company’s low-cost structure has been a decisive pivot in its customer acquisition strategy.
In the early days of Innergia Labs, the start-up reached out to individual retailers and F&B chains, of which Chua reckons there are roughly 300,000 in the market. That initial decision, according to him, was grounded in sound thinking. “We noticed that the founders of these retail and F&B chains are typically of a certain age and, therefore, not generally found on social media, so our outreach reflected the demographic.”
Even so, this was akin to reinventing the wheel, particularly when there were valuable synergies to be had with the burgeoning business-to-business (B2B), digital point-of-sales (POS) market. Eventually, Chua — whose SYCARDA software suite is brand-agnostic, and therefore capable of being bundled with any POS provider in the market — developed channel partnerships with various POS providers.
This significantly improved Innergia Lab’s reach, while drastically cutting customer acquisition costs.
At the moment, the company has roughly 1,000 retail and F&B chains on its books, split evenly between its channel partners and independent acquisitions.
“Over the next decade, we’re hoping to capture about 10% of the local market share, and prioritise acquisition via our channel partners. We are hoping to get that proportion to about 80:20 in favour of the channel partner strategy. It works out well for us because we get to maximise our reach without the need for a large sales force,” says Chua.
Over the next five years, the company is looking to expand into Asean in a much bigger way. “We already have a presence in Indonesia, Singapore and Australia, and are talking to potential partners in Thailand, the Philippines and Hong Kong,” he adds.
Save by subscribing to us for your print and/or digital copy.