Taking online – offline

Managers of franchising associations from around the world attended the Franchise Expo 2016 opening day to debate the sector’s development trends for the Internet generation and how to explore business opportunities by transferring franchise businesses that only exist online to the real world.
Franchising associations from Japan, Portugal, Brazil, Mainland China, Taiwan, Singapore, Hong Kong and Macau were present.
“Franchising online has been a hot area for the international economy and young startups, so there are great opportunities for Macau businesses,” said Macau Trade and Investment Promotion Institute (IPIM) President Jackson Chang.
Lei Iam Leng, CEO of MacaoFood Ltd., a local business, noted that e-commerce in the territory – trading in products or services online – is still in its “infancy” and that more attention has to be given to developing online payments and offline-to-online business.
“Most transactions happen in mobile apps and most people access the Internet through smartphones, so the phone is more important than the wallet,” notes the businessman. “The number of mobile phones in Macau is 300,000, so can we try to encourage local people to look at Internet consumption as a habit to adopt? Online consumption is very low but we need to do it, it’s our responsibility to take Macau brands outside of Macau,” Lei stated.
Generation Z
A recurring topic at the expo was how the franchise businesses can cater to the new online generation and how data can be collected online to accumulate valuable customer information.
“Generation Z has time for Netflix, Facebook and Snapchat but doesn’t have time to go to stores, their mindset is completely different from other generations,” notes Gustavo Orlandini Schifino, President of the Ethics Commission of the Brazilian Franchising Association.
“They focus on pleasure, not on work or property and they like conscious consumption and sharing services,” stated Schifino.
The Brazilian representative argued that younger generations spend most of their time online and that they will represent 70 per cent of the world franchise businesses revenue in the next six years. He notes that any company planning their future franchise strategy without taking them into consideration “will be in trouble.”
Amelia Wang, a Member of the Franchise Committee of the China Chain Store and Franchise Association commented that in regard to the franchise business in China “the Internet is already a way of thinking” and most franchises have an online presence, however a lot of businesses don’t know how to capitalize on that presence and are “even losing money by being online”.
“The Internet is all about size and branding. China is doing well because the market is very competitive and those who do well online have the right way of thinking. I believe that the next 20 years will be the golden era of the franchising business, thanks to online developments,” stated Wang.
The China representative also considered that although the Macau market wasn’t “as scalable as other markets,” it offers other opportunities in online franchising.
Ana Correia, founder of the MORE group from Portugal – specializing in marketing and digital communication, advised that any franchise looking to expand its brand, or buy the rights to a foreign franchise brand, should study the online ecosystem carefully. Correia gave the example of how one of her companies “tried to enter the Brazil market using social media that wasn’t yet used in the country at the time.” Precious customer data
A message from the Chairman of the Franchise Committee in Japan Small and Medium Enterprise Management Consultants Association, Kyo Ito, to expo attendees called attention to how often businesses can forget how easy it is to gather valuable customer information.
The Japan representative stated how, unlike many Asian countries, Japan’s population declines yearly but franchises and store numbers have increased, thanks to innovation and data use.
“Japan’s convenience stores are very revolutionary. They provide a lot of services with customers’ purchase information being stored – minor data that is collected about the shopper and that is sent to the head office. All this can really provide valuable data and your business needs to use the Internet in the same way,” Kyo stated.
From online to reality
Another topic of discussion at the expo was the online-to-offline (O2O) sector – drawing potential customers from online channels to physical stores – with Amelia Wang stating that in the future: “ all online businesses will have an offline presence too.”
Amazon opening its first offline store in Seattle, was given as an example of how O2O is becoming important. This comes in the wake of groups such as Groupon already mass-selling wellness and beauty services online in 2008, which customers could then redeem at physical stores.
Albert Kong, Committee Member of the Franchising and Licensing Association Singapore drew a parallel between the Macau and Singapore markets due to their small environment for online businesses but suggested that the MSAR could use innovation to create more O2O opportunities.
“In Singapore the government motivates shoppers to use robots and decreases shop size. Recently we’ve had self ordering kiosks in McDonald’s, shops with systems to create your own Udon noodles or even nursing home rooms that use apps for families to keep track of elder relatives,” Kong stated.
Ana Correia noted that Portugal is also a small market, with a lot of opportunities for development in the O2O market, highlighting some interesting marketing ideas.
“Telepizza is a Portuguese pizza delivery business with an online ordering system. On Wednesdays 80 per cent discounts are available if you go to their physical shop with the idea in order to try to sell extra drinks and side dishes to the people attracted by the discounts,” Correia stated.
The expo ended yesterday.