At Echelon 2014, a group of panelists sat down to discuss the trends and the challenges in the e-commerce space
L-R: Chua Kee Lock, Roger Egan, Nguyen Hoa Binh, Alexis Horowitz-Burdick, Grace Clapham
The e-commerce scene in Asia is thriving and beaming with potential. However, while there are several real problems to be solved, from being able to purchase cosmetics online to same-day delivery of fresh food, these founders often meet roadblocks in the form of cash on delivery and traffic woes.
These issues are not unknown to a panel conducted at Echelon 2014 today. The panel was moderated by Grace Clapham, Founder, Change Ventur.es, and saw participation from Nguyen Hoa Binh, President and CEO, PeaceSoft Solutions Corporation; Roger E. Egan III, Co-Founder and CEO, RedMart; Chua Kee Lock, Group President and CEO, Vertex Venture Holdings; and Alexis Horowitz-Burdick, Founder and CEO, Luxola.
Clapham started the session by talking about niche and personalised products, like subscription boxes, which do not appear to generate a lot of traction. Just last month, Indonesia-based beauty subscription box service Lolabox announced its closure, stating that it was not able to fulfill the demand from customers with the meagre number of samples from brands.
Horowitz-Burdick, who runs Luxola, a Singapore-based online beauty store, said, “From our standpoint, in Southeast Asia, we still have an issue of disposable income. … When we think about Luxola versus other subscription boxes, if they are going to spend money, they would rather choose what they want to get.”
Binh added that such novelty ideas are still nascent, and will only take off once traditional e-commerce gains popularity in Southeast Asia.
Trust the brand
Having been around for the last three years, the value of building trust is not foreign to Luxola or Singapore-based online grocer RedMart. Egan said that in order to create a brand identity that customers will identify with, trust is very important. “When we started, people wouldn’t pay with credit cards, and we had to do cash on delivery. … Since then we’ve gotten rid of cash on delivery and gained a lot more trust.”
Customer experience also comes hand-in-hand with building trust or a brand identity. Luxola has a simple yet surefire strategy. “We’re looking at what our users are suggesting,” said Horowitz-Burdick. In the future, the firm might move towards including white label products in its offering.
“For online e-commerce, branding is a huge issue,” added Lock, adding, “Customers can disappear the next second.” Online stores often do not receive the same sort of leniency which its offline counterparts have enjoyed for years.
While there is a plethora of ways to keep users engaged, being price competitive is also a pertinent point to remember, said Egan. He added that convenience isn’t as valued in Asia, as compared to its peers in the West.
Fundraising for an e-commerce firm
How does an e-commerce company like Luxola or RedMart raise funds to enter emerging markets? “… Maybe there’s a misunderstanding about how much it takes (to run an e-commerce startup). If you’re looking to do something with a small (amount) of investment, you’re better off with a niche market,” said Horowitz-Burdick.
The entrepreneur had previously raised S$740,000 (approx. US$591, 000) from WaveMaker Labs in 2o12, an undisclosed amount of funding from Japanese investor GREE Ventures in 2013, US$10 million from transcosmos in March 2014, and around US$2.6 million from various investors including Global Brain and Singapore’s F&H Fund Management last month.
“As e-commerce founders, a large percentage of time is spent fundraising. Be prepared,” said Egan. In the past, RedMart received several investments from a number of angel and early-stage investors like Toivo Annus, Co-Founder, Skype; Golden Gate Ventures; and East Ventures, and some US$3.4 million from gaming company Garena. As of July 2013, it secured US$4.6 million in funding, according to The Next Web.
Setting up a website to sell digital or physical goods is probably the easiest task on an e-commerce owner’s to-do list. In order to accomplish feats like same-day delivery, which both RedMart and Luxola offer, and provide value-added services like fresh food delivery, startups need a tonne of funding.