108shops adopt new supply system

SUN108 Co has recently set up a special team called DFL to keep its 700 convenience stores fully stocked with highly profitable food merchandise, particularly chilled and frozen products.

"We have many suppliers from small, medium and large companies. And under the old system, individual suppliers needed to carry their products to the stores themselves," managing director Vathit Chokwatana said last week.

The old system was not convenient for suppliers, especially small ones. It was quite costly for them to deliver and display their chilled and frozen-food merchandise by themselves.

Under the DFL system, chilled and frozen-food suppliers will now deliver their products to the company's central distribution centre on Sathupradit Road, and the centre will transport the merchandise to 108Shops.

"We started the DFL project at our 108Shops in greater Bangkok as well as in Chon Buri," he said.

Food merchandise is a profitable contributor to the stores.

While general non-food merchandise has average gross profit margins of about 16 per cent, food merchandise enjoy margins of 20-30 per cent.

About 70 per cent of products available at 108Shops are food.

"The new DFL system will allow 108Shops to improve their own product displays and enjoy higher margin benefits, encouraged by ready-to-eat and take-home food products," Vathit said.

The move will attract more shoppers, as the stores can offer a wider selection of food merchandise.

The company will show a profit this year for the first time after operating 108Shops for about four years.

"The main objective of this 108Shop business is to create an effective solution for traditional small and medium-sized retailers who want to develop towards modern trade," he said.

With 108Shops' low-payment franchise system, individual franchisees are required to pay only a monthly service fee to run the business.

The company then provides the full retailing system to its 108Shop franchisees, including retailing management, point-of-sale system, product fulfilment and auto-reordering system.