As Malaysia goes deeper into MCO 3.0, the impact of the SME and retail industry in the country is significant. We’ve covered this before and will keep on reviewing the impact of the pandemic in Malaysia, as it goes through its ups and downs. So, we’re always on the lookout for signs of recovery and potential ways to overcome the challenges in the market.

That’s why we were keen to speak to the team from Giftee Malaysia, about what they are doing to help boost retail sales during this period. Right now 16 brands in Malaysia including Secret Recipe, Grab and Tealive, have started using eGift service, which allows businesses to operate eGift sales on their own websites. An eGift is an electronic ticket that can be exchanged for a product or service at a restaurant, café or other retail outlets.

Each eGift has its own unique URL. As soon as the payment is processed, there is an instant collection of data, such as the date and time of the visit to the store, the visited outlet, the type of eGift and whether or not other purchases are made at the same time. This information can then be used to conduct a quantitative analysis of eGift usage, as a useful CRM tool.

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We spoke to Ryo Okubo, Director of Giftee Malaysia, about how eGifting is growing in Malaysia and also their brand new partnership with Secret Recipe. Find out what he had to share.

Could you share how e-gifting works for our readers?

The recipient simply presents the received eGift ticket at the appropriate retail outlet to exchange it. The ticket is considered redeemed the instant it is processed at the retail outlet, which prevents the reuse of the ticket. 

Giftee Malaysia aids in the digital transformation of businesses in the nation, which is one of the economy’s main goals at the moment. We do this by providing an end-to-end platform that simplifies all technical aspects of implementing eGifting, while catering to the business’s specific needs. While eGifts are a substitute for physical gift cards, they come with greater advantages, as illustrated below.

Customers can redeem eGifts at the store if necessary

Currently, Giftee Malaysia has launched two out of the four available solutions in Japan: eGift System service (for retailers) and giftee for Business service (for companies). 

Our eGift System service enables retailers to generate and distribute gift tickets that can be exchanged for goods at their stores and sell these gift tickets on their own website. Presently, 16 brands including companies such as Secret Recipe, Tealive, Starbucks, Family Mart Malaysia and Baskin Robbins have implemented this service. 

Advantages of eGift System

  • Our platform has high distribution volume and a large number of distribution partners. Using this platform enables restaurants, cafés, distributors, retailers, etc. to develop demand for their gift products.
  • Boosting of operations efficiency
    • giftee offers one-stop handling of all steps from eGift issuance to distribution and retailers no longer have to rely on a tedious practice of using paper distribution
  • The use of the standardised ticket requires minimal staff training and is fuss-free for both consumers and retailers 

Our giftee for Business service enables companies to send eGifts to customers, as campaign gifts or as a reward for completing a survey.  We currently work with more than 100 companies, across banking, consumer electronics, insurance and internet industries, such as Maybank, Prudential, Samsung and Lazada, to help with their marketing and promotion activities with our e-vouchers and promotion solutions. 

Advantages of giftee for Business

  • Reduction in promotional campaign costs
    • No inventory management is required and shipping and personnel costs are reduced. 
  • The number of winners in giveaway promotions can be maximized with no increase in cost
    • Small incentives as little as RM10 can be offered to enhance participation in promotions
  • Phased promotions become possible to improve participant’s motivation to hit certain milestones such as online sign ups, or completing a survey.

How has e-gifting been accepted by Malaysian consumers?

The physical gift card industry in Malaysia has been greatly impacted by the pandemic, despite growing steadily by almost 20% from 2015-2019. However, the decline of physical gift cards has led to an accelerated adoption of eGifts, and it is expected to increase significantly well into 2022. Besides individual consumers, corporate eGifting is also becoming a trendy tool used by companies to reward and express appreciation to their workers.

eGifts are also an increasingly popular option among Malaysian consumers and companies. Gift giving is as simple as sending a URL to the recipient. For companies, this translates to campaign cost reduction (see response from Q1). Additionally, the fact that there’s no physical products to transport which contributes to reduced CO2 emissions from logistics services as well as reduction in packaging waste are appealing factors to the increasingly environmentally conscious Malaysian consumers.

How has the MCO impacted the industry? Are you seeing more activity?

The onset of the pandemic, as well as the extended MCO, has made consumers, retailers and companies realise the value of digital gifts and digitalising businesses. 

Giftee was founded in Japan and is currently moving into ASEAN through Malaysia. 

Based on our recently published Q1 FY2021 results, giftee Inc achieved high growth in both net sales and profits due to continued strong performance, facilitated by companies shifting business activities from offline to online, and we hit a quarterly record high in Q1 distribution volume.

  • Distribution Volume: ¥ 4 billion (+ 76.2% YoY)  
  • Net sales :¥ 1,093 million (+ 141.9% YoY)  
  • EBITDA : ¥ 571 million (+ 301.5% YoY)

With eGift System service, the brands can utilize a C2C platform to sell their products as eGifts. As a customer sends an eGift to a first-time user, this enables the brands to reach new customers and potentially expand the market and generate more revenue. Additionally, giftee for Business Service provides a B2B platform where the brands could market the products to companies to be used as eGifts in their incentive campaigns. This would generate new distribution channels to increase revenue significantly. 

As Malaysia embarks on its Malaysian Digital Economy Blueprint to transform into the region’s digital pulse, companies in Malaysia have also begun to embark on their digital transformation roadmap. In order to meet changing consumer needs in a pandemic era, companies have been quick to adopt digitalisation initiatives. 

To use Secret Recipe as a case study, Secret Recipe is recreating the gifting experience digitally by implementing Giftee Malaysia’s eGift system in a time where distance separates loved ones. Many Secret Recipe customers purchase their cakes as gifts. However, as lockdown measures strengthen, physical exchanges are almost impossible. As such, sending an eGift with a personalised message is the new norm and this practice allows Secret Recipe to recreate that experience for their customers and keep the virtue of gifting alive in spite of the current situation. 

According to Patrick Sim, Director of Secret Recipe, he has said, “As we dive into digital solutions for Secret Recipe, we found that eGifting is viable, and almost tailored, for a large segment of our customers who buy cakes to celebrate an occasion or simply to express affection to their loved ones. Giftee Malaysia supports this newfound aspect of our digitalisation very smoothly. The eGift system is extremely convenient to use, with minimal training required for our staff members. The personalised messages in the digital cards are uplifting as well, especially during the MCO when Malaysians were focused on spreading positivity to their loved ones.”

Brands that already have their own physical gift cards would see a new avenue to expand digitally in the C2C space. However, the incentive of increased distribution volume through B2B where companies are able to utilise these eGifts in their incentive campaigns is more significant.

We noticed that, until now, digital gifting is not widely adopted in Malaysia. However, there is a lot of potential for Giftee Malaysia to enter the market with a first-mover’s advantage. For instance, the e-wallet adoption rate and frequency of use is higher in Malaysia than in Japan. In this regard, Japan is still catching up with Malaysia, and perhaps may even use Malaysia as a case study as Malaysia’s digitalisation speed is faster than Japan, and in my opinion, is the fastest nation to adapt to digitalisation in the Southeast Asian region. 

We also noted that many Malaysian companies want to digitalise their gifting services as part of their digitalisation transformation roadmap but do not know how to go about doing so. For instance, the conventional promotional campaigns use physical vouchers and manpower is required to distribute paper vouchers. It can be difficult and tedious to track paper vouchers when it comes to distribution and redemption. This is where Giftee Malaysia comes in. 

Our eGift system makes tracking easy as inventory management, printing and manpower for physical distribution are no longer required. Thus, the cost to launch a promotional campaign is lowered. 

Furthermore, our eGifts expiration dates are approximately between 3 months and 6 months, this means that the recipients can use the eGifts that they have received at the physical outlets even after the MCO. That said, there is that option to have their eGifts delivered at their convenience if the brands are listed on third-party delivery services such as GrabFood or foodpanda or if they have their own delivery service. 

Additionally, our eGift Systems allow for advance payment for the brands since they can receive earnings when the senders purchase these eGifts during MCO and would help their financial situation and tide them through during MCO. 

  1. What is the potential for e-gifting in Southeast Asia?

Back in 2012, Brian Riley, an analyst at CEBTower Group estimated that given the growing penetration of smartphones, social networks and the advancements of mobile payment technology in Asia, social gifting is reaching an inflection point in the region and will present huge opportunities for social gifting platforms. There is optimistic potential for the growth of the eGifting industry in Southeast Asia.

This is an extremely rough estimate but based on the relative GDP growth of the SEA and the size of Japan’s digital gift market (USD2.1B), the digital gift market opportunity is about USD1.38B in Southeast Asia which we expect to increase in the years ahead, especially with the acceleration of digital transformation within the region. 

The casual gifting industry represents an enormous opportunity for companies, especially F&B and retailers, not just at holiday time but throughout the rest of the year. This is even more so in Asian countries where there is a gifting culture. 

To use Malaysia as an example, the market size for the gifting industry is estimated at US$1 trillion to US$3 trillion (RM4.1 trillion to RM12.4 trillion) which accounts for one-third of the industry size in Japan. That said, factors such as Malaysia’s dynamic growth in GDP, high proficiency in English, high smart devices penetration rate (93%) as well as culturally diverse landscape creates fertile conditions for Giftee Malaysia. Furthermore, Malaysia offers a plethora of opportunities for our e-gifting platform, from festive seasons such as Hari Raya and Lunar New Year to special occasions such as birthdays and others. 

We noticed that, until now, digital gifting is not widely adopted in Malaysia. However, there is a lot of potential for Giftee Malaysia to enter the market with a first-mover’s advantage. 

E-gifts is a unique and exponential marketing opportunity to touch two target consumers at once – the gift buyer who makes the purchase and the receiver of the gift. Ultimately, e-gifting is a form of word-of-mouth marketing but delivered in a concrete manner through the medium of e-gifts. 

Although we work predominantly with the F&B industry for our eGift system service, there is opportunity for us to work with other industries whose products and services would make good gifts. These gifts could also come in the form of experiences such as spa treatments as a wedding gift or scuba-diving trips for friends who enjoy the outdoors. 

For our giftee for Business solution, this is industry-agnostic as companies across a wide range of industries would generally embark on marketing and promotional activities and can leverage on our egifts as a way to enhance participation in their campaigns or show their appreciation to their own customers and clients in a fuss-free way. 

In Japan, it started off initially with the F&B coming onboard and followed by the retail industry to a total of 157 brands currently onboard(F&B: Retail=2:1.)So we believe the same trend of development would happen in Malaysia.

How eGifts look

What’s next for giftee Inc? What do you see as the next big market in Southeast Asia? 

Overall, giftee Inc is keen to continue to expand the eGift platform and expand geographically as a growth strategy. giftee Inc aims to achieve approximately 50% growth in distribution value and approximately 40% growth in sales. 

In Malaysia, we have developed local partnerships with notable companies such as Secret Recipe, Starbucks Coffee and Baskin-Robbins who are now eGift issuing companies on our platform. We have also expanded the eGift distribution volume to develop and meet  the demands of companies through giftee for Business. These 2 measures are our growth strategy.

giftee Inc also plans to expand into the Vietnam market by establishing joint partnership locally. We shall be making official announcements very soon. Vietnam would be the 2nd country after Malaysia in our overseas expansion plan in the ASEAN region, and we would continue to explore expansion to other countries.