No risk no reward, or no pain no gain is a common phase for everyone. For an entrepreneur, risk-taking seems to be an unavoidable journey for success. Every company has to take some level of risk to grow and expand, up-levelling profit, income and brand. With the Movement Control Order (MCO) further extended to another two weeks to 12th May, overall business confidence is weak. Prior to this, it had been extended twice – first to 14th April and then to 28th April. As the negative economic impact from the Covid-19 intensifies, many companies are no longer risk takers, but extremely cautious on their costs and how they run their business.
“We have tailor made an Exclusive Risk Free Ownership programme for the large and medium logistics players to cope with the current market situation. While the big logistics companies might have the cash reserves, many medium fleet operators are very tight in their cash-flow. This is our risk free fleet expansion offer for them, allowing them to expand their fleet with total peace of mind,” said Mpire Group Managing Director Dato’ Billy Goh.
Goh said the idea emerged during the outbreak of Covid-19 in China. He foresaw the business activities and economic slowdown in China due to the virus, but what he never expected was the level of spread and severity of this new disease. China’s economy has suffered a historic slump due to Covid-19, and this has offered us a glimpse of what to expect. Like the rest of the world, Southeast Asian economics have been hit hard by the virus, like the rest of the world, including Malaysia.
“However,” he said, “things aren’t all grim, there is a significant sales rise in the eCommerce sector during the MCO. Many Malaysians have been spending more time online as they work from home, and online shopping has spiked, showing that there is more willingness to purchase online, especially for food and groceries. We expect that the logistics business will be good in the next six months. The rise in demand has also caused many logistics players unable to cope with their current fleet capacity. With a heavier reliance on online shopping now, consumers expect eCommerce players and their logistics partners to be more efficient and communicative. Although some of the logistics operators did think of expanding their fleet, they are very cautious in investing as the current market is full of uncertainties.”
With the company’s Exclusive Risk Free Ownership, Goh said, logistics players can now expand their fleet without any risk. “Buying additional vehicles such as trucks and vans can be quite costly, especially at the beginning. With hire purchase agreements, a significant amount of money will be sunk into vehicles, and inaccessible for the long term. In addition, banks are tightening credit for hire purchase lending. ”
Goh thinks that this is the right timing for the company to introduce this risk-free expansion offer to help the logistics operators to meet market demand and achieve further growth. Under the programme, he said, operators only need to pay a monthly payment as low as RM2,100 and above, varying according to vehicle model and body. There are three available essential models for eCommerce logistics – Foton C2 Panel Van, JAC N45 3 tonnes and JAC N75 5 tonnes truck. After two years, there is an option to own the vehicle by paying half price to the company.
To begin with, he said, two months deposit and one upfront monthly payment are required. He revealed that the company has a limited fund of RM 10 million to finance the programme, and that is why the offer is limited to 100 units only.
“The packages include free maintenance, road tax and insurance as well as cover selected wear and tear items. For instance, some of the customers prefer we handle tyres for them as well, we could also include tyres in the wear and tear items with a charge. The benefits are many - worry-free ownership, zero inflation, fixed monthly payment, minimum administrative work, more working capital, flexibility at the end of the term with an option to own the vehicle or give the rig back, 100 per cent financing, rental converted to down payment and with telematics provided. In short, the logistics players can now expand their fleet without concern, and the risk is on us.”
Furthermore, Goh said, the logistics players could take the company’s vehicles to increase their revenue without exposing any risk and have the option to own them at only 50 per cent of the selling price after 24 months or 2 years, when the pandemic should be over and the economy should be back on track and booming.
Unlike hire purchase that requires at least 15 per cent down payment of the total vehicle value, the company’s Exclusive Risk-Free Ownership programme only requires two months deposit and a one-month up-front payment. The financial commitment for hire purchase is typically up to seven years, while the Mpire programme is only two years. In addition, hire purchase agreements do not usually cover yearly road tax, insurance and maintenance, which are covered by the Mpire programme. Last but not least is a low monthly payment as compared to hire purchase‘s limited warranty period.
“In order to keep up with the ever evolving trends, we need to innovate to sustain the viability of our business. Our Exclusive Risk-Free Ownership is a win-win solution for us and the eCommerce logistics players. We are looking to increase our brand awareness and presence in the market while they are searching for ways to expand their fleet without risk to meet the market demand and increase their business. As the programme is limited to 100 units, it is exclusive to the medium and large logistics players that meet our criteria,” he concluded.