Getting fresh: The Pasar Segar story

This article first appeared in Enterprise, The Edge Malaysia Weekly, on September 9, 2019 - September 15, 2019.
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Ivan Scott Abdullah Misso, a 44-year-old Eurasian, has spent a lot of time in the kitchen. Sometimes, he cleaned and cut fish, squid, chicken and vegetables so that he could cook a nice meal for his wife, who would return home from work famished.  

While a lot of people do not really enjoy food preparation, it is different for Misso, who has been doing it since he was 15. His mother, a single parent, was a school canteen operator in his native Singapore, so he would wake at 3am every day to accompany her to the wet market to buy ingredients for nasi lemak, mee rebus and lontong.

Then, Misso would help her prepare those dishes until 10am, before going to school at 1pm. In the evening, he would go to bed by 7pm so that he could wake early the next day for a repeat performance.

It was not that Misso was an only child. In fact, he had an elder brother and sister. But his mother decided early on that he would be the one to help her. “I would cut the fish and vegetables and squeeze out the santan from grated coconut while my siblings were happily sleeping,” he tells Enterprise during the interview.

Misso did not take to these tasks at first but he grew to enjoy them later, so much so that he ventured into the food and beverage industry when he completed his secondary education. He joined forces with his mother to start a hawker stall at East Coast Park — a beach park that stretches across the southeastern coast of Singapore — which they later sold for a profit.

Misso then launched Viet Café, one of the earliest Vietnamese restaurants in the island state at the turn of the century. Several years later, he started Spize, a restaurant selling Malay cuisine that has expanded over the years and still exists today.

Why did he decide to cross the Causeway? It was because he met and married Mastura Ahmad, a Malaysian corporate sales professional last year. It would also be a fresh start for Misso after the failure of his food delivery business, Hawker Express, in the city state.

Hawker Express started with a bang in 2014 and quickly gained traction to become the second largest food delivery business in Singapore, after Food Panda. At its peak, it had 180 riders and several hundred hawkers as its vendors. Also, it was the only start-up with access to Jurong — the heart of Singapore’s energy and chemical industry — which housed more than 100 global petroleum and petrochemical companies.

However, the business started to fall apart in 2016 due to problems with his partners. Misso tried again with a new start-up, Fresh Express, an online platform that delivered fresh food ingredients to consumers. But it was not as successful as Hawker Express.

In Singapore, fresh food ingredients are mostly imported and supplied to supermarkets, large and small, located all over the island. It is a tough market to penetrate. “I knew it would be tough. But I was a little lost and wanted to try it out,” says Misso.

That is why he arrived in Malaysia a little worse for wear and needed to recover from the slings and arrows of outrageous fortune while figuring out what to do next. He had some savings, so he was not looking for a job but another business opportunity.

Starting a restaurant seemed like a good idea, but finding a good location would not be easy. Another option was to start a small food catering business, so Misso did that for a while.

One day, as Mastura watched him clean and cut fish and squid in the kitchen, she had an idea. “Why not supply seafood ingredients to people?” she said.

She knew working mothers would be willing to pay more to buy fresh seafood ingredients that had already been cleaned and cut, not to mention fresh and directly sourced from fishing ports.

Mastura took a picture of the freshly cleaned and cut fish and squid and sent it to her friends, asking them whether they would like to order these. To her husband’s great surprise, the picture generated a lot of interest. She had hit upon something.

 

Sourcing fresh seafood from fishing ports

At first, it was a one-man show. Misso sourced, cleaned and cut the seafood and delivered it to his customers at no charge. But he was not able to continue doing this because the orders ratcheted up very quickly. Clearly, there was a great demand for this service and thus, a clear business opportunity.

Once again, Misso was waking up at 3am to drive to coastal towns in Selangor to source for ingredients at a lower price. He would drive from Kuala Lumpur to Sekinchan, Kuala Selangor or Sabak Bernam, visiting one fishing port after another to do his market research.

It was a two-hour drive and Misso would arrive at these ports at about 5am, just when the fishermen were coming in with their catch. Standing by the sea, he would record the time of arrival of each of the boats and look to see what they had to offer. He talked to the boat owners — who were mainly Chinese businessmen who rented out their boats to fishermen — and the boat captain, usually a foreign labourer. “Since I did not speak their languages, it was like a chicken and duck trying to communicate,” he laughs.

“So, I would use simple words like, ‘Hi, boss, I want 10kg of this and 5kg of that. I will pay you this much in cash.’ Sometimes, I would just pay cash and buy the fish or squid from them for market research and to get on their good side.”

It did not take too long for Misso to understand the market and he struck a deal with some of the fishermen to directly source ingredients from them. “The wholesalers pick what they want when everything comes up to the port. But I do not. I hire the boat owners and tell them to secure my portion first,” he says.

“For instance, I would tell them that I need 10kg of sotong (squid). So, the fishermen would put aside the first 10kg they catch into a bag and pass it to me when they arrive at the port.”

However, to buy directly from the fishermen, Misso needed to buy in bulk, which meant that he had an excess supply of fish and squid. The problem was that although he had some demand from the customer side, it was not enough for him to use up his daily supply. As freshness was key, he never kept anything overnight.

Again, his wife’s business savvy came into play. Mastura marketed the products and services to a broader group of her colleagues and very quickly garnered more than 200 new customers for her husband. She created a WhatsApp group for the customers and they made their purchases online. The business picked up very quickly and Misso had to work very hard to meet the orders.

Soon, he had a very demanding daily routine. He would set out at 3am and reach the ports two hours later to pick up his purchases. At 4pm, he would clean and cut the fish and squid. At 6pm, he would hop into his car and deliver the ingredients to customers in areas such as Taman Tun Dr Ismail, Damansara, Jalan Duta and KL Sentral.

Misso would not get home until 11.30pm. Then, he would collect money from his customers before going to bed at midnight. Three hours later, he would be doing it all over again.

 

The ups and downs

Misso’s business got even better in the second half of last year. So, he bought a sports utility vehicle to store the seafood packages. He would park it on the side of the road and turn on the hazard lights. At lunch time, his customers would come out of their offices in nearby buildings to pick up orders made the previous day.

The business slowly expanded to Cyberjaya, where his wife’s colleagues from the R&D department were based. The demand was so strong that Misso had to create another WhatsApp group just to cater to this crowd, which had more than 100 people.

“They are so far away in Cyberjaya, so they do not have easy access to wet markets and supermarkets. Even if there are some, they may not want to get stuck in a jam after work just to do their grocery shopping. That is why the business there picked up so quickly,” he says.

Also, the seafood ingredients he sold were fresher than those being sold in the supermarkets and his prices were more attractive.

At one point, Misso set up a stall near a building in Cyberjaya, not realising that he could get in trouble for doing this without a licence. He did it at the exhortation of one of his loyal customers.

“When I started delivering seafood with my SUV, a girl told me, ‘Eh, just open a shop behind the building lah!’ I said, ‘How can?’ She said, ‘Can! Can! Why cannot?’”

This convinced him, so he took out his food trays and started displaying them at the stalls. His business was immediately popular. “People started coming and suddenly, it became like a pasar. It did not take long for the security guards to walk out and tell me off. I panicked at first but luckily, it was all sorted out and I did not get into any trouble,” Misso laughs.

As his business grew, he decided to hire two workers and rent a small shop in Kampung Sungai Penchala, a small Malay village in Segambut. He rented the premises for RM1,500 a month and turned it into a small factory to clean the seafood.

If things went well, Misso wanted to turn the shop into a retail store for people to buy fresh seafood. He thought it was a brilliant idea. “There were two grocery shops near ours and they were selling fish that we called ‘ikan kena langgar lori’ (fish that had been run over by a lorry). These were really not fresh, but people were still buying from them. I thought we could do better,” he says.

However, Misso did not expect the shop to impact his business negatively. There were water supply disruptions twice a week and the electricity was cut off from time to time without warning. As a result, he would sometimes not have water to wash the fish. At other times, he would come back to find that the fish in the fridge had gone off because of a power disruption.

“At one point, I would buy mineral water from convenience stores — just in case. But I knew I could not continue like this. After a while, I decided to move everything back to the house,” says Misso.

Meanwhile, he faced other challenges. He was finding it increasingly difficult to deliver the fish and squid to his growing number of customers. Assuming that the business would continue to grow, he knew it would be impossible to make all the deliveries himself. He reached out to some food delivery start-ups in town, but nothing came out of that because they demanded cutthroat commissions.

“I spoke to a few of them and they wanted to charge me a commission of 35%. If I had accepted, my business would have been immediately unprofitable. After some negotiation, they were willing to bring it down to 25% but I told them, ‘No way!’” says Misso.

Given the challenges, he decided to take a break in November last year. Frankly, he was exhausted. If he had continued this way, he could have fallen asleep at the wheel and had an accident.

More importantly, Misso realised that although there was a demand for his products and services, he was not doing things in the most efficient way. He would have to restrategise and figure out a business model that would work.

 

Making a comeback

Misso was determined to tackle all his challenges before restarting the business. It took him five months to stage a comeback. He only started running his fresh seafood business again in March.

First, Misso rented a factory with a stable water and electricity supply in Sungai Buloh. It had a much bigger space so he would be able to expand the business by hiring more people and installing machinery to enhance work efficiency.

“It is a labour-intensive business and manpower will always be an issue. Machines will be critical if we continue our business for the next 10 years. For instance, people have told me there are machines with conveyor belts that can distribute products automatically based on their weight. If we have such as machine, we may not need to sort our products manually, one by one, according to our customers’ requirements,” says Misso.

Then, he partnered Lalamove, a food delivery start-up based in Hong Kong that recently started trying to penetrate the Malaysian market. The start-up charged him a reasonable fee to deliver products to certain areas in the Klang Valley.

Misso also extended the range of his products to include chicken, beef and vegetables. He combined some of these ingredients and sold them to customers in packages.

“One of our packages, priced at RM180 each, contains 1kg of sotong, two types of siakap (barramundi) or bawal emas (sea-raised pompano), with a bit of kerang (cockles) or crab. It comes with five vegetables — cauliflower, broccoli, carrot, lemongrass and ginger. We also provide a chilli sauce that we blend ourselves,” says Misso.

At such pricing, he could sell these packages to customers who lived further away, such as in Putrajaya and Shah Alam, at a fixed delivery fee of RM10. “These two areas are an emerging market for us,” he says.

Meanwhile, Misso moved the front end of his business online and named the website Pasar Segar. Anyone interested in purchasing fresh food ingredients can visit the website, make an order and pay via the platform. In other words, by leveraging technology, he has managed to improve business efficiency and is now able to focus on how he can grow the business further.

However, the downside of migrating the business online is that Misso has lost a significant number of customers who used to buy fresh ingredients from him through WhatsApp. “The dashboard shows that only 20% of our old customers continue to buy from us through the online platform while 80% of them are new customers,” he says.

Misso has come up with an idea to win back old customers but he is not willing to disclose it for competitive reasons. He is already servicing a new sector — the restaurants in town.

“We are supplying fresh ingredients to five restaurants. We help them to clean and cut those ingredients according to their requirements. More inquiries are coming in, but we are cautious about how many customers we can take on based on our current workforce,” says Misso.

As at July, the growth of his business has been on track even though it is not profitable yet. With the income generated, he can pay the operating costs such as goods, rental, water and electricity bills as well as staff salaries.

“I have not paid myself a salary yet. Excluding this, you can say that the business has broken even,” says Misso.

After pouring RM450,000 into the business, he is looking to raise RM2.5 million from investors. He wants to invest RM1 million to develop a mobile application that will attract more consumers to buy from Pasar Segar. It will also link the front- and back-end of the business so that it operates even more efficiently.

“That means when someone buys 5kg of fresh fish, my workers in the factory will receive the information and prepare it before delivering it. The entire system will be our intellectual property,” says Misso.

With all the time saved with the use of the app, not to mention the projected increase in demand, he wants to focus on building a more extensive fisheries network by visiting the fishermen more frequently. If he can buy in greater bulk, he will be able to lower the purchase price while improving his relationship with them.

Misso plans to use the remaining RM1.5 million raised to franchise the Pasar Segar concept. “There are many grocery shops in neighbourhoods nowadays. Not all of them are running a sustainable business and some of them are just not doing all that well. So, we can propose a partnership and rebrand their stores using our name and technology. We can provide them with expertise, a network and supplies to improve their business,” he says.

“It will be hard to penetrate this part of the market. We will need to identify like-minded individuals who are willing to work with us and try out this idea.”