Brian Chow, Mail Boxes Etc Business Corp Sdn Bhd

Mail Boxes Etc is a US-based global franchise. What made you set up the franchise in Malaysia?
When I came back [from studying in the US] I was with Sime Darby as a lease executive for about eight to nine months. But at the back of my mind, I had always wanted to start a business. So it was just a matter of what kind of business and the right time. When I was working, I was more or less out every day and I realised the market didn’t have services such as retail courier, fax-on-demand and so on. So, I thought of MBE and that’s how it started. I went back to the US to find out more from them, do due diligence and in the end, brought it [the franchise] to Malaysia.

How did you know about MBE?
When I was studying finance at Western Michigan University, I was a customer of MBE. Mail Boxes Etc in the US is like 7-Eleven, it’s everywhere. In every town, they have a few [outlets] to serve the local community.

What can customers find at MBE?
If you look at MBE, it’s a one-stop business service centre. From a product standpoint, we have mailbox rental, document services and courier services. We are the only retail courier establishment that houses more than five different courier companies under one roof: we have DHL, UPS, Citylink, Poslaju and Redbox. It’s all very convenient for the customer. They can come and choose whichever courier service they want, with no actual mark-up [on the fees].

Did you set up MBE in Malaysia on your own or with a few partners?
I was supported by my own family and my then-girlfriend, who is now my wife. Basically, we started it all together. My family was very supportive because they are all business people as well.

Where did you get the funding to start?
It was all internal funding because the brand was relatively unknown in Malaysia. It was very difficult for us to apply for any commercial loans at that time, so we decided to use internal funding.

What were the initial challenges when you started MBE?
My age! [laughs] I negotiated [with Mail Boxes Etc] at the age of 21. It took me about two years to bring the brand back [to Malaysia] because while I was in the midst of negotiations, 9/11 happened. The US shut down for six to eight months. At that time I was very deep into the negotiations already.

When you’re 21, people question whether you can actually do it, whether you know about the local market. Furthermore, this business is a franchise, so we had to apply for a licence from the local government to buy, as well as to sell, to local individuals. It was the same thing with the government, there was a lot of convincing to do. I would say I had to grow beyond my expected maturity. I was tossed [into the deep end] and I grew up very fast.

In July this year, you tied up with AirAsia’s low-cost courier Redbox. Tell us more about it.
It’s very much a domestic-focused product that we developed together with AirAsia. I think we are going to expand to the next phase as of the first quarter of next year. So we’re trying to go regional with the product. We’re working with our counterparts in Thailand, Japan and South Korea to also establish Redbox’s presence within these countries.

How has the response been [to Redbox]?
So far, it’s been very encouraging because it’s also a very innovative product. I would say it’s the first online courier product. For example, if you want to send [something] to Kota Kinabalu, just log on to the website, choose the weight, the content, the box size that you require and here’s the price. [The website] will direct you to the nearest MBE centre to complete the transaction. We could’ve achieved a much better result but the product now only provides services between KL and East Malaysia.

How much do the courier services contribute to MBE’s earnings?
Courier services right now contribute between 50% and 55% of our network revenue. The rest of it comes from mailbox, document services, as well as other products and office supplies, fax services.
The mailbox [service] is actually quite popular. I think among our network, the average occupancy rate is over 60%. In some locations like Sri Hartamas and Mutiara Damansara, it’s already 100% filled up.

Who use the mailboxes?
Mainly Malaysians but we could categorise them into ‘small office, home-based office’ [SOHO] people who work from home, and also SMEs.

We also have Malaysians who travel a lot, travelling sales people or businessmen... so they don’t have to trouble their relatives or friends to manage their mail for them.

Expatriates contribute only 5% of the occupancy rate. The rest comes from Malaysians. That’s a very good statistic; this is what we want. I mean, expatriates can come and go.

How has MBE been affected by the economic downturn?
Definitely, we were not excluded from the whole thing, but we have been seriously looking into how we can control our costing by not bringing unnecessary products for retail. When you’re in the services industry, it doesn’t matter how much stock you have. We can have 50,000 stock [units] and we can still generate RM1 million in revenue because we are service-oriented. So, we have been going back to basics. We have been refocusing on all service-based products where we’re not required to maintain stock. I think even in a downturn, a lot of Malaysians are looking for opportunities, especially people who are thinking of starting their own business. This year, we managed to set up four to five new locations.

What’s your plan for MBE looking ahead?
Well, MBE will definitely continue to expand. We are now looking outside the Klang Valley — Penang, Ipoh, Johor Baru, Sabah, Sarawak and so forth. If you don’t expand outside [the Klang Valley], you’re basically confining your opportunities. We will also continue to invest in internal training because we have to anticipate the big comeback for the market. We have to go back to our partners for refresher courses, to make sure all our staff are equipped with adequate information or updated information to take care of incoming customers. Those are the two important things that we’ll concentrate on next year.




This article appeared in Manager@Work, the monthly management pullout of The Edge Malaysia, Issue 786, Dec 21 - Dec 6, 2009.