A growing Halal market

The scale of MIHAS highlighted the growth of the global Halal industry. The growing and increasingly affluent Muslim population have made the Halal industry a booming market. In addition, a growing interest in Halal food has contributed to this trend. Countries such as Korea and Japan are also viewing Halal products as ‘healthier’ and ‘cleaner’ products, allowing Halal products to gain as much traction as organic products. The bulk of the 800 MIHAS exhibitors and visitors were from Southeast Asia, portraying the scale of the Halal industry in this region.

Going beyond food

Contrary to my understanding, Halal is more than just food. The Halal industry has expanded further into lifestyle offerings, such as Halal fashion and Halal travel. These took up about one-third of the trade show booths. Halal fashion, a sector that is expected to see rapid growth was the sector to be featured in this year’s trade show.

Enabling the Halal trade

While exploring the booths and speaking to sellers from around the region, I realized that a key reason that is preventing sellers from expanding their businesses overseas is knowledge. Small businesses do not have the know how to export. There is currently limited cost-efficient ways to fill this knowledge gap.

For tech-savvy sellers that have turned to ecommerce platforms, many have highlighted that most of the platforms still do not assist with solving the trade barriers. They merely function as a business listing site and the onus is still on the seller to figure the necessary processes out for order fulfilment. Besides, many of these platforms charge for membership and listing fees up front. Poor results, minimal trade support and high cost have made sellers become wary of platforms.

The other point frequently mentioned was the desire for a mobile-based platform to sell. As the industry grows, many small medium enterprises are expected to pop up.  These companies do not have the typical setup, with a back office to support sales orders. Many are accustomed to working out of mobile devices on the go.

In summary, players in the Halal trade from sellers to financing to logistics are relatively fragmented and sellers are hoping to find a one-stop solution.

The procurement challenge

Speaking of buyers, the few I managed to sieve out of the crowd shared that verification of Halal certification was the biggest pain point. Halal standards differ from country to country. Halal certifications are not recognized across countries unless both certification bodies have mutual recognition.

The largest deciding factor for a buyer’s purchase has always been the pricing of products. Other factors like quality and packaging take a backseat as buyers are more willing to purchase cheaper products in comparison to quality products. This is also one of the largest reasons why it is difficult to match sellers with buyers because sellers often pride themselves on their product quality.

Through this trade show, I realized that there are many B2B platforms out there trying to solve the varying pain points of buyers and sellers in the Halal industry. However, none of them can provide a one-stop solution for these industry players. Many of them end up as a business matching platform where buyers and sellers just bypass them to transact on their own. To be able to grab a share in this market, platforms should handhold budding buyers-sellers relationship, and oversee transactions from sourcing up until when the buyer receives the products and sellers receive their payment.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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