Green Packet 2.0: Digital tranformation taking shape

Tan: We have a market share of 1 and aim to grow it to 15-16 by this year.

Green Packet Bhd is increasingly looking like a different animal these days.

Years after hiving off its mobile telecommunications business to Telekom Malaysia Bhd, Green Packet began a digital transformation journey to reinvent itself as a provider of much needed digital related services in the market.

Now the company is poised to reap the rewards after two years of painstaking efforts.

Chief executive officer Tan Kay Yen says the tests of its three digital services are already showing results and monetising them will be the next step.

The services carry the brand name “kiple” and one of them is called kipleHome.

Since its soft launch in May 2018, this product is being used in 20 condominiums in the Klang Valley.

Forty more condominium managements have signed up with kipleHome, and are currently undergoing system training.

Here’s essentially what kipleHome does. It allows the condominium management to communicate with residents.

Notices and monthly maintenance bills are posted by the management on kipleHome, while residents can use the app to generate QR codes for visitor registration and access other localised services within the area that are integrated into the app.

Green Packet charges a small monthly subscription fee to the condominium management for the base services but the bigger revenue will come from merchant discount rate (MDR) from other localised services bundled into kipleHome.

The MDR, which is a rate charged to a merchant for payment processing services, is averaged at 2% to 3% on kipleHome.

Apart from services rendered on the app through partnerships with grocery delivery and handyman services, the MDR is also applied to monthly maintenance fees paid on kipleHome.

Tan points out that parcel collection services can eventually be incorporated on the app.

“Our target market are condominiums in the Klang Valley, Penang, and Johor.

“We have a market share of 1% and aim to grow it to 15%-16% by this year,” he says, adding that the potential market size is 3.1 million strata title properties.

The contract tenures of kipleHome are generally for a year or two.

There is also the kiplePark, a cashless parking solution platform.

It is available at some 20 locations in the Klang Valley comprising shopping malls, office buildings and hotels as well as valet services.

Green Packet has been fine-tuning the app’s licence plate recognition (LPR) system and is set to expand kiplePark’s reach after the LPR system is launched.

Essentially, the LPR scans number plates as cars pass the boom gates, and car park charges are transacted on kiplePark.

“The challenge of implementing the LPR system in Malaysia is the fanciful and varying fonts of car licence plates, which makes it difficult for the LPR system to read.

“Based on our test site runs over the past three months, we have achieved a success rate of 96% and we plan to improve that to 99% using artificial intelligence and machine learning. We expect the system to be ready in one to two months,” he says, adding that the group targets to launch kiplePark in two sites this quarter. It plans to obtain at least 10% of the 800,000 parking bays in Malaysia by this year.

The current transaction values of kiplePark and kipleHome are negligible.

Even more impressive is kiplePay, which has registered a massive RM125mil in annual transactions last year.

kiplePay operates on two fronts, namely, a cashless payment gateway for the business to business segment and an e-wallet for the business to consumer segment.

“kiplePay may have a small market share but its transaction value has grown four times since its launch in 2017.

“The gross transaction value of the e-commerce industry in 2018 amounted to RM10bil, and the compound annual growth rate is at an estimated 15%.

“In 2015, the e-commerce industry contributed 5.9% to the country’s gross domestic product. This figure is expected to grow to 6.4% by 2020,” Tan elaborates.

kiplePay’s cashless payment gateway is akin to iPay88 and MOLPay.

The service is mobile-based and provides analytics for businesses.

What sets kiplePay apart from its peers are its competitive pricing, better user experience, as well as customised features.

Green Packet plans to engage with large communities like universities to enable cashless transactions and grow online purchases for the retail segment.

Green Packet is also looking to extend its digital push by making strategic and opportunistic acquisitions in the space.

The group has RM60.08mil in its coffers following its rights issue in December 2018.

Green Packet had said it would utilise the proceeds to expand its solutions and Internet of Things (IoT) business segment through the purchase of trade equipment.

The digital services segment of Green Packet contributes less than 5% of total group revenue.

For 2019, Tan expects double-digit growth for the digital services segment’s revenue contribution. The gross margins of the digital services segment will improve with scale.

Hence, Green Packet is expected to see stabilised earnings and a turnaround in end-2020 to 2021.

“We aim to close as many sites as possible for the kiple suite of products, at this opportune period where there are few competitors and lack of holistic, integrated services in the market.”