Nestle to grow e-commerce biz

PETALING JAYA: Nestle (Malaysia) Bhd, which unveiled its first e-commerce flagship stores yesterday, expects 10% of its total turnover to come from e-commerce in five years’ time.
Managing director Alois Hofbauer said the group embarked on e-commerce about two years ago by establishing a Digital Acceleration Centre and started to enter the e-commerce space in a big way since early this year.
From a turnover of RM100,000 to RM200,000 per month, the turnover from e-commerce almost quadrupled within six to eight months and has reached RM1 million today.
“In the old days, e-commerce would only have been on electronics, gadgets and others but now you can see e-commerce has also gone into groceries and fresh products. So we have seen that e-commerce has been developing very fast. In China today, if you think about our product range, depending on the different categories, at least 10% of our business already goes through e-commerce. So that’s huge and when you talk about businesses like pet food or infant nutrition, we’re talking about 30%, 60% that goes through this channel,” he told SunBiz in an interview.
Hofbauer said the group relies on the platform of online retailers like 11street and Lazada to handle the back-end (delivery and logistics) of its e-commerce business and although it handles certain products on its own, such as Nespresso, there are no plans to take over the back-end services.
“I don’t think we will invest into this massive set up because that’s a huge investment and a big challenge. It is a big challenge that retailers face to make it work, to make it efficient and cost efficient,” he said, adding that the online retailers are better equipped to handle back-end services.
Hofbauer said the group’s investment into the entire digital space has increased massively over the last three years.
“Not too long ago, we had a small portion of our branding and advertising business going into Facebook, Google and so on. Today, more than 40% of our investment is already in this area. So it is a huge difference because specifically, Generation X, Y and Z are no longer on traditional media; they are in social media, they are in the digital space and that is natural,” he said.
Hofbauer said by going into the digital space, the group will be able to offer more than just products to its consumers. For example, it can offer recipes and nutritional information as well as cross-sell its products to consumers.
“The personalised experience is a lot more enriched. That is something which I believe, as a consumer, you really can benefit. It gives you a much more comprehensive package,” he added.
Hofbauer said it will also use e-commerce to expand its new KitKat Chocolatory store in Mid Valley, by combining e-commerce and product customisation to cater to the Malaysian taste bud.
The shop will be open in the next two weeks.
“The Chocolatory combines the best of both worlds. On one side, we are offering very limited edition KitKat specifically for Malaysian taste buds, for example, nasi lemak and durian.”
“On the other side, and this is where – in the future – e-commerce will come in. You can create your own KitKat with different packaging varieties, chocolates and ingredients. It gives you in principle 10,000 varieties,” he said.
He said the KitKat Chocolatory is the first within the Nestle world and there is interest from Nestle UK to replicate it.