First published in The Straits Times on 28 November 2019.
It’s a convenience store made more convenient by technology.
Students strolling into Octobox at the National University of Singapore’s (NUS) University Town place their palms on a biometric scanner at the entrance before the door swings open.
Inside, they pick what they want to buy and enter the checkout room. They place their items on the counter and their shopping list appears on a screen with the final amount. They scan their palms to confirm their purchases and enter four digits from their mobile phone numbers.
Payment done. Exit door opens.
No need for cash or credit cards, or scanning QR codes, or a cashier.
Since July, Octobox has been operating a wholly unmanned retail store that uses radio-frequency identification (RFID) and biometric technology to beat the manpower crunch faced by retailers.
“We knew from the start that if we want to enter the retail space, we must be manpower lean,” said Octobox executive director Ng Kiat Seng, 33. “It’s the only way we can offer low prices to shoppers, as labour is expensive in Singapore.”
Revamping an old-school business
The idea for Octobox was born from the frustration of running parent company, Overseas Chinese Trading (OCT), a wholesale business that supplies goods to supermarkets and smaller retailers.
Mr Ng, and Mr Jeffrey Sun, 35, OCT founder and Octobox managing director, saw the inefficiencies of the wholesale trade dominated by older operators who rely on manual processes for stock taking and inventory management.
This affected other parts of the business too. At times, OCT’s delivery staff ended up waiting in a long line just to unload goods at a client’s warehouse as others ahead in the queue were stuck manually tallying goods.
“The process can take as long as four to five hours, especially during the peak festive seasons. It was highly inefficient,” Mr Ng added.
At the same time, their clients, from brandname supermarket retailers to smaller heartland grocers, were struggling with a shortage of workers. Change became critical.
A new approach to shopping
In 2016, Mr Sun assembled a team of six with retail or technology backgrounds. They began brainstorming on ways for retailers to do without staff. They came up with the novel concept of a retail store powered by RFID tags.
RFID technology is not new in the retail sector. Some suppliers have been using it to manage inventory. But the Octobox team believed it could be adapted to retail stores by combining it with other biometric scanners.
The team then approached Enterprise Singapore (ESG) for help to develop their new business concept. ESG introduced them to trade associations and location partners keen to host the business in their premises.
Three years later, after countless hours of trial and intense negotiations with partners and key stakeholders, Octobox was born. It is the first unmanned convenience store that uses a combination of a palm scanner and RFID tags.
Its first outlet opened in NUS in July 2019. The location was deliberate. “We targeted students for our first outlet as most of them are already familiar with technology. We felt this would be a good testbed for us,” said Mr Ng.
No staff, no problem
Theirs is unlike typical unmanned stores that require shoppers to download an app or manually scan QR codes when checking out.
The biometric palm reader controls access to the Octobox store, while RFID chips tagged to every item in the store contain information such as the product’s manufacture and expiry dates.
The RFID chips have also simplified the stock taking process at both OCT and Octobox. The system automatically tracks every item that enters and leaves, giving alerts when goods are nearing expiry.
First-time customers need to sign up for an Octobox account on their phones and register their palms at the biometric scanner by the store entrance – the only time their phones are required.
They have the option of linking their Octobox accounts to DBS PayLah wallets to automate payments, or pay via their NETS card.
The checkout room is fitted with RFID sensors able to detect individual items – even if shoppers place them in a bag – and tabulate the prices. Shoppers do not have to manually scan the items.
“We have designed our system such that shoppers just need to do the bare minimum to be able to use it,” said Mr Ng.
First-year student Ryan Ma, who attended the store’s opening, described the entire process of signing up to checking out as fuss-free.
“The payment process was especially efficient, as you just have to place the items on the counter, scan your palm, and you’re done. This makes the queue move a lot faster,” he said.
Once the items have been paid for, the sales data, such as the date and time of purchase, is updated in the store’s internal system. The data helps the team select items for the store.
For instance, the team discovered that pimple creams rank among their top selling products. Its energy drinks and shower gels, which are 20 to 40 per cent cheaper than other stores, are popular too.
Close to 6,000 users have opened accounts with Octobox so far. The store is open from 9am to 11pm daily, but will soon be running 24/7.
Two more outlets are being planned – in Jurong Island by year-end and NUS’ Bukit Timah campus by the first quarter of next year.
‘Key is still customers’ wants, prices’
Mr Ng Kiat Seng is clear on what is needed to make a retail store work: Convenience, competitive pricing and products that are relevant.
Even with cutting-edge technology, the three factors remain crucial to succeed in the retail business.
“At the end of the day, retail is about selling and buying. No matter how good your technology, you must be able to give customers what they want, and at low prices,” he said.
Mr Ng, who worked in a supermarket chain for about seven years before joining Octobox, brought along with him a wealth of knowledge from the retail industry, and valuable insights on the buying patterns and behaviour of customers.
In his previous role, he was responsible for negotiating and purchasing goods from suppliers, thinking up promotions, analysing sales data and deciding on products to add or discontinue.
A crucial advantage of RFID technology, apart from removing the need for retail staff at the story, is the large datasets it collects from shoppers.
“We have large volumes of data, which help us to analyse trends and figure out what people are buying, and why,” he said.
The data helps the company decide on the product mix. At the NUS outlet, where customers are mainly students – many of whom live in dormitories – there is a wide assortment of packaged food and drinks and personal care products, but not fresh produce.
Why is it important to adopt a manpower-lean model for Octobox?
Mr Ng: It is the only way we can offer lower prices to shoppers.
Labour costs are relatively high in Singapore. If we want to run a 24-hour store, we will need at least three work shifts. This means a minimum of five employees on the roster. Now, we need just one staff who comes in to replenish the stock. Another staff is stationed in our headquarters to monitor the checkout room via video surveillance and offer remote assistance if needed.
In future, when we open more outlets, the same staff can monitor the checkout rooms of those outlets too.
What other concepts are you working on?
Mr Ng: We are working on a smart fridge that uses the same RFID technology and biometric palm scanner. Think of it as a new-age vending machine, or a share-fridge within a community.
The concept targets small families that don’t do much cooking. We believe it can be placed in void decks and residents can buy what they need easily, as and when they need it.
- 2012: Mr Jeffrey Sun sets up Overseas Chinese Trading (OCT).
- 2016: Seeing the inefficiencies of the traditional retail sector, the OCT team decides to use RFID technology to simplify the stocktaking process. They also adapt the technology to an unmanned retail concept, which would later become Octobox.
- 2017: Octobox begins developing its RFID and biometric scanning technologies, and starts negotiations with key partners, such as payment service providers.
- July 2019: Octobox opens its first outlet in NUS’ University Town.
- Nov 2019: Octobox has close to 6,000 signups at its NUS outlet. Works are underway to open two more outlets in Bukit Timah and Jurong Island.