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When a Cooperative buys over a business
The business decision stops making sense
NTUC Fairprice took over Kopitiam in 2018.
Other than having FairPrice, Foodfare and Kopitiam come together as one to hold the crown as the largest food court operator in Singapore, nothing much changed for Kopitiam until…
So instead of using the “old fashioned” pre-paid card, Fairprice insisted that every Kopitiam customer will need to use the Fairprice app to enjoy the 10% discount.
So in one fairly broad and maximum pain inducing stroke, FairPrice force and entice users into their existing app by combining e-commerce, payment and rewards. If this sound like I am praising them, then you seriously mistaken.
The move from physical card to app will only inconvenience and bring about unhappiness to the very people that a cooperative like FairPrice is trying to serve and help. The irony is that the poor, the elderly and the illiterate are the ones who will struggle to adapt to this change and they are exactly the people where any discount will definitely help.
The purpose of this post was never about the unhappiness (which is well understood and keenly felt), but on the business decision of moving to the App which is also so darn stupid and unbusinesslike.
In the past, you top up your cash into the physical card and then proceed to enjoy a 10% discount on all purchase. The discount is borne by the hawkers and Kopitiam gets to create a “float” using their customers’ deposited cash. That is such a genius business move. This is exactly the playbook that Starbuck uses for its pre-paid cards to generate billions of excess cash on their balance sheet.
Now with the App, Fairprice has given you the option of linking the payment using your credit card with NO top up required.
So in one swoop, Fairprice have enhance their data scientist’s work life balance by creating an easy analysable dataset and destroyed one of Kopitiam most valuable asset - the “float” of free money.
Maybe that cash meant nothing to Fairprice…
But when you replace business people with bureaucrats.
Lots of action no longer make any business sense…