Increase productivity with seamless back office operations

This article first appeared in Digital Edge, The Edge Malaysia Weekly on 8 July 2024 – 14 July 2024.

When Niklas Frassa and Maximillian Lotz decided to enter the e-commerce space in 2016, flowers were the only thing that stood out. The two entrepreneurs realized that it was an untapped segment with huge potential. In Malaysia, all you could find was the occasional florist who had a website.

The first thing they did was create a website. Then the two of them drove around Kuala Lumpur talking to traditional florists about having a website that could take orders. Now all they needed was the actual fulfillment of the product.

“It’s quite random when you run a flower shop somewhere in Kuala Lumpur and suddenly two German guys come in and start talking about a flower delivery website. But it worked,” recalls Frassa, co-founder and COO of Limitless Technology Group (LTG).

LTG is an e-commerce group that aims to acquire, launch and scale gift brands in the Asia Pacific region. It focuses on four categories: flowers, gifts, cakes and confectionery. These include six different brands in six markets, which are Malaysia, Singapore, Indonesia, Philippines, Hong Kong and Australia.

Initially, starting an e-commerce business was a challenge as last-mile logistics were still in their infancy and setting up online payment gateways was more difficult.

They were able to overcome this problem thanks to their proprietary technology platform and in-house development of comprehensive capabilities.

“It was good that it was tough back then. That’s when we developed our skills, from learning how to build a website to creating our first marketing campaigns and running customer service,” Frassa says.

“In the beginning, (Lotz, LTG co-founder and CEO) and I would sit in the showroom and answer the phone when a customer had a problem. Because we had to do all of this stuff ourselves, we were able to embed it into the organization,” he says. “Two weeks after the website went live, it was Mother’s Day. Of course, we had an increase in orders on the website, and that’s when we fell in love with the business.”

According to Kai Kux, co-founder and CFO of LTG, a solid technological foundation was crucial as LTG expanded into different markets and entered other sectors, such as cake and confectionery production.

As Kux explains, this was achieved through a central platform that enabled management of all aspects of the company’s operations, from online stores to order fulfillment, streamlining operations across countries while maintaining efficiency and quality.

“Our goal is to really integrate every data point that we can collect. We built a back-end suite very early on that was designed to cover the entire customer journey in terms of data from the moment they land on the website. (That includes) capturing traffic data, conversion data, incoming orders, all the fulfillment stuff,” Frassa says.

Essentially, data is aggregated from all parts of the platform. The platform’s central services include brand concept, inventory management, data analysis, payments, and fulfillment.

The collected data will then be used for quality assurance, marketing and business analysis, Kux says.

“We have a lot of transparency about what’s happening in the company. We have very extensive dashboards that help us see what’s happening in the company and be transparent about everything,” Kux adds.

Because there is limited competition in the gifts and celebrations industry, that leads to an influx of potential acquisitions for LTG, Kux says. LTG then acts as a platform company and is able to plug and play new acquisitions into its backend systems.

Then, unified plug-and-play technology makes the process of acquiring and integrating new brands seamless. For example, when LTG acquires a company, both companies operate independently for a short period of time. Then, the company’s products are integrated into LTG’s existing platform, and fulfillment processes are trained for each product.

“Once that’s done, we take their front end, put it on top of our stack, and then it automatically starts working. (Basically) it’s plug and play. We make sure we keep the brand as it is and continue to evolve it,” Kux notes. “That’s the only thing that’s separate… the brand itself. Everything else is processed through our existing fulfillment centers and software.”

Fulfillment centers are the backbone of LTG’s ecosystem, Kux says. LTG currently has seven such centers.

Happy Bunch is an example of a brand acquired by LTG. To date, Happy Bunch revenue has increased by 150%. The brand, which previously operated only in Malaysia, is now offered in Singapore and the Philippines, with further expansion plans.

Another example is the Australian brand LVLY. It currently also operates in Malaysia, Singapore and Hong Kong.

While the company is ready to conduct an initial public offering (IPO), Kux believes the market is not currently conducive to such a venture.

“We have strong relationships with banks that have indicated that as soon as the market is ready, we can launch an IPO. In terms of longevity of the company, I think the most important thing is that we have a diversified cash flow,” Kux says. “We are in the process of raising convertible bonds before the IPO.”

Meanwhile, as LTG continues to look for companies to complement its brand portfolio, organic growth remains a key focus, Kux says. This will be achieved by nurturing existing brands and maximizing their potential; gaining market share through improved product offerings, competitive pricing and exceptional service; and expanding existing acquired brands into new markets.

According to Frassa, technology will always be a constant at LTG, regardless of the ups and downs of running a business.

“I think technology is probably the best tool we have to keep us sane. To give you an idea, every month there are fluctuations (in revenue), but it’s only through technology that we can understand where those fluctuations are coming from,” Frassa says.

“If you want to build an e-commerce business of any scale, it’s not about your marketing mix, it’s about the operations that pull it all together. It’s about making sure you have a reliable technology backbone that can scale from 1,000 orders one day to 10,000 orders the next day. That’s when you realize that technology is actually the most important part of the equation.”

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