Lifestyle products/accessories linked to the IT/digital space have 2 important characteristics -
(1) such products will keep on evolving/changing over time by absorbing the latest technologies, designs, materials, and even colours, etc.
(2) entirely new products usually based on new technologies will emerge over time, while existing or older products become obsolete (driven by the emergence of newer/better technologies, or changes in consumer needs) or reach their end-of-life.
To succeed in such lifestyle products/accessories, it is key to be strong and up-to-date in merchandising - i.e. bringing forth the 'right' products in terms of having the latest technologies, designs, materials, and even colours, etc. that are in demand now by consumers - and the products are of good-enough quality (including their packaging) and offered at affordable retail selling prices together with a proper warranty.
I believe the Challenger management headed by CEO Loo understands merchandising in the IT/digital space very well. The fact that the group now has a trading/procurement subsidiary based in Shenzhen and has committed to having of full-team of people there means that Challenger wants to fully exploit the advantages which the huge supply base in Shenzhen are able to offer in product sourcing, and to ensure product quality through using the better components and engaging the right suppliers and contract manufacturers. This is a well-conceived growth strategy, and it should work given enough time.
I see the move having 2 benefits.
1. Closer contact to source. This will enable them to monitor the manufacturing process and monitor the quality of products. They may also provide inputs to the supplier to develop new products to meet the future demands.
2. Cutting down on middleman. This move will save them some cost and improve the profit margin, as long as the volume can justify the cost. Challenger must have grow big enough for them to take this step. Many other companies are doing so too.
Dunno if serial systems felt threatened by this announcement.
(05-06-2013, 09:24 PM)mosi Wrote: [ -> ]NTUC, Giant and Coldstorage sell house brands of products that never go out of fashion, with little or no obsolescence threat. Would the tissue paper be "out of season" next month? Would cereal be incompatible with the version 5 Lightning adapter?
Seriously, would you have paid even $5 for the speaker-in-a-can (which I think was given to shareholders at the AGM)?
Challenger has little or no experience in producing lifestyle products/accessories and whatever margin that they might possibly get, I fear that it will be offset by future write-offs. Even if it's OEMed, it's still a different set of consideration (and hence different set of risk) that has allowed them to be successful.
If they pull it off, kudos.
But with the move, Challenger in 2013 is no longer the same as Challenger in 2010/11/12.
Don't look down on the can speaker. Although no one will buy it, it's used as a free gift for new and renewal of membership which is 30dollars pure profit less gst n the little cost of their home brand. Valore give a choice to cheaper products for their customers like the portable chargers which come in all forms of sizes and designs now. This 30percent discount attracts new membership, and also give people choices of a value product with a one year warranty from challenger. Better than you buying other more expensive chargers. Walk in to any challenger store and look at the range of galore products. Cheers
(06-06-2013, 08:33 AM)pianist Wrote: [ -> ]Dunno if serial systems felt threatened by this announcement.
May I know why?
(08-06-2013, 09:47 AM)Penguin Papa Wrote: [ -> ] (06-06-2013, 08:33 AM)pianist Wrote: [ -> ]Dunno if serial systems felt threatened by this announcement.
May I know why?
just a gut feel at CEO goh.
Article from asiaone -
Free Shipping Sparks Frenzy
Amazon, an e-commerce retailer, has entered Singapore's shores. I think IT retailers in Singapore like Challenger are likely to face tough challenges ahead as prices of electronics stuff on Amazon are much cheaper when compared local stores!
Can the local IT retailer compete on pricing with Amazon in the face of sky-high rentals in Singapore? Not as if they have huge margins to undercut Amazon in the first place.
Just for example, Amazon is selling
Western Digital My Passport 2 TB at USD 139, 175 when converted to SGD. Fuwell, an IT store in Sim Lim Square is retailing the same product at 209 SGD. I will expect Challenger to price the product a wee-bit higher than Fuwell.
There is no doubt who the consumers will choose to purchase the product from!
if you think amazon is a big threat to challenger, then amazon must be a big threat to all sorts of retailers in singapore
because amazon sells everything!
I do believe amazon's move will have an impact to smaller retailers, which lack branding and economies of scale.
Go look at NTUC, are their goods the cheapest? probably not, but how come aunties still go down to NTUC weekly to buy their stuffs? Its because they have customer loyalty and a good NTUC points rewards system.
I think challenger has done a great job building a strong and loyal customer base of over 400,000 members.
(20-06-2013, 11:58 AM)felixleong Wrote: [ -> ]if you think amazon is a big threat to challenger, then amazon must be a big threat to all sorts of retailers in singapore
because amazon sells everything!
I do believe amazon's move will have an impact to smaller retailers, which lack branding and economies of scale.
Go look at NTUC, are their goods the cheapest? probably not, but how come aunties still go down to NTUC weekly to buy their stuffs? Its because they have customer loyalty and a good NTUC points rewards system.
I think challenger has done a great job building a strong and loyal customer base of over 400,000 members.
I think what Challenger is selling is totally different from NTUC. NTUC is selling FMCG, ie. groceries items. Consumers have to replace them when they have finished their groceries.
However, i do agree with you that smaller retailers which lack branding and EoS will be affected.
Let's observe Challenger coming Qs reports in order to see if she will be impacted by the entrance of Amazon.
in the past few investors believed in challenger, they all say sim lim sells cheaper and challenger will have no business
now investors are saying online shopping is cheaper and way the to go, they still think challenger will lose their business
we shall see ^^