This article first appeared in Digital Edge, The Edge Malaysia Weekly on May 3, 2021 - May 9, 2021

The subscription e-commerce market in Malaysia has untapped potential compared with its mature counterparts overseas, according to W H Mak, CEO of Subplace, a subscription-based e-commerce platform that sells a wide range of products, from mattresses to groceries.

He says there are already many local businesses that use the subscription model, from fitness to tuition centres. But until last November (when he started Subplace), there were no subscription-based e-commerce platforms to cater for people’s daily needs.

Subplace, which is wholly owned by AbleTech Solutions Sdn Bhd, enables customers to purchase items in monthly instalments or receive monthly orders of things such as groceries.

Mak came up with the idea when he was chief revenue officer at the Malaysian branch of Cuckoo, a home appliance brand from South Korea. At the company, he saw the benefit of subscription services, especially for its flagship water purifier. “In the past six years, Cuckoo Malaysia has served up to one million households and its total revenue last year was more than RM1 billion,” he notes.

“Through a subscription [business] model, the company could grow quickly and achieve such a large revenue in a relatively short period of time. That is why we believe in this business model and are using what we learnt there to build Subplace.”

Mak has hit upon a key trend. Even before the pandemic, the subscription e-commerce market — which spelled convenience for customers — was thriving. But following the movement restrictions that were imposed to contain the Covid-19 outbreak, it became even more pronounced.

According to a McKinsey & Co report, the main reason for the popularity of subscription e-commerce is the convenience it brings, especially in terms of automatically replenishing certain goods.

Market research firm UnivDatos Market Insights predicts that the global subscription e-commerce market will experience a compound annual growth rate (CAGR) of 68% from 2019 to 2025. Globally, subscription e-commerce is expected to reach a market size of US$478.2 billion by 2025, with the highest growth recorded in Asia-Pacific.

Given the growing number of subscription e-commerce consumers, Mak believes that this model benefits businesses that wish to gain brand loyalty and build customer retention. “Today, brand loyalty is very difficult to achieve because customers have too many choices. People can see different prices everywhere, even for the same products,” he says. 

“So far, we see that this [subscription model] is the only model that will retain customers for the long term.”

But it takes work to convince companies with products, especially the more expensive and high-quality ones, to get on the platform. “We need to help them visualise just how effective the subscription business is with data,” says Mak.

Subplace also provides end-to-end solutions to help businesses adopt the subscription model, says Mak. 

For instance, it provides help for companies looking to build their online stores by offering features such as custom URLs, fulfilment management, invoicing and billing, analytics, artificial intelligence chatbots and advertising. Businesses would only need to focus on fulfilling every order as scheduled, he points out.

Subplace currently offers two subscription plans — SUB and SUB+. According to the company’s website, with the SUB plan, consumers can subscribe to daily necessities such as groceries, personal care products and beauty services. The SUB+ plan allows users to rent or lease high-end products such as furniture and electrical appliances at an affordable monthly subscription.

Mak has big plans for Subplace. “Malaysia is definitely our starting point. It is a stepping stone for us to expand into other regions.” 

He hopes to develop his own ecosystem within Subplace. “Currently, we are using third-party infrastructure for our last-mile fulfilment. So, we want to build our own warehouse and get our own packing team [on board] to provide subscribers with a good end-to-end experience,” he says.

“We still need a lot of resources. I hope, at least for this year, subscription becomes the new thing. And when people think of subscriptions, I hope they link it to Subplace.”

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