Thinesh Kumar started his first business at the age of 21.
In order to grow his company Raxxon Diagnostics, which imported medical devices and sold them to local clinics and hospitals in Malaysia, Kumar participated in tenders to acquire new customers. But he soon realised that the whole process was quite non-transparent and the winners of tenders were ‘fixed’.
“One day, my brother Lakshman Das, who was my business partner then, asked me to think about developing a platform, on which vendors could simply list their products for potential buyers. A fair, transparent and merit-based way of purchasing, which would provide vendors an equal opportunity to sell their products. This is how Lapasar was born,” Kumar tells e27.
Saving time and cost
Lapasar was founded in 2016 by Kumar (CEO), along with Das (COO) and Dannis Raj (Chief Process Officer) — both previous employees of Raxxon. Headquartered in Kuala Lumpur, this online B2B platform allows companies to purchase supplies for their businesses via a system that acts very much like a ‘add-to-cart and checkout’ service used in B2C marketplaces. According to the founders, Lapasar helps corporates save time and cost, and makes it easy for them to buy in bulk.
“We are a corporate B2B marketplace integrated with a powerful workflow feature targeting SMEs to large organisations to help streamline the purchasing process creating immense administrative and purchasing savings,” claims Kumar. “Besides having the marketplace in place, we also have request-for-quotation management, vendor management, reports, document management system, e-bidding and benchmarking.”
Kumar observes that there has been immense progress in the B2C e-commerce space over the past 10 years in Asia, and we are all used to purchasing on sites like Lazada and Shopee, making payments online, and getting items delivered to our doorsteps within days or even hours.
“But corporates don’t work that way. They still purchase and procure items manually. It is quite complicated and is nowhere near the simplicity of the consumer marketplaces. At Lapasar, we are bringing the e-commerce-like experience into corporate procurement,” explains Kumar.
The beginning was tough, and the product that the founders had in mind didn’t match the requirements of clients, admits Chief Process Officer Raj.
“Our very first version was based on lots of assumptions, and our experience from the B2C segment. So after a few months, we improvised the initial plans and followed what the market told us. We interviewed 20-plus corporates in various industries and built our first real minimum viable product around that. That was during 2017. Because of this early experience, I have since thrown most assumptions out of the window, and instead always speak to our clients. That’s how the product was developed and expanded in the last two years,” says Raj.
Currently, Lapasar has 15 active clients and 15 more are in the on-boarding stage, claims Das. Most of Lapasar’s clients are government-linked companies (GLCs) and multi-national companies, including Telekom Malaysia and Tenaga Nasional Berhad. These enterprises, according to Kumar, provide their employees access to purchase items on Lapasar which are part of the company’s direct (raw materials) or indirect spend (IT supplies, stationeries, furniture, projectors, etc.).
Most of Malaysia’s corporates are very open to the new concept of buying, as it brings transparency into the whole procurement process. “Today, CEOs of most large companies have made governance and transparency a priority, and are committed to reducing chances of foul play in their organisations,” adds Kumar. “Lapasar is helping them in this regard.”
For the startup, opportunities in Malaysia are huge. Local MNCs and GLCs are continuously striving for excellence in procurement, especially in the area of tail-spend (spend for any firm which is not actively managed in all the spend categories and may have an impact on the firm’s financial performance) that incurs huge time and resource, Das adds.
“Our main focus in 2019 will be the Malaysian market. We want to see Malaysia’s B2B segment become an example of efficiency and transparency. Having said that, we are looking to explore a second country towards the end of this year,” adds Das.
However, challenges with regard to reaching out to suppliers and signing still remains a pain, admits Kumar. “We are operating nationwide, including the states of Sabah and Sarawak. In Klang Valley, we have a very strong base of suppliers. Outside of Klang Valley, especially on the East Coast and East Malaysia, we have a growing demand for products, but difficulties reaching out to suppliers. Most of the vendors are traditional and offline. That is a big challenge. That said, we also see that it is a huge opportunity for vendors all over the country. Vendors with good products and service now have to opportunity to supply to some of the nation’s biggest companies.”
The B2B marketplace is a highly competitive market. Majority of Lapasar’s clients are SAP Ariba or Oracle users. SAP is a giant ERP system, that has conquered the world in the last 20 years.
“It is a good base to have for big clients, but it is also quite complex and expensive to use. It has become what we call a legacy system. It is our competitor, but we usually see us as complimenting them. Clients that decide to go with Lapasar will still use their existing systems, but they will switch — for that specific category of purchasing — from SAP to Lapasar. We are able to integrate and work around existing systems. We call it plug & play. The most important thing is that we can make things easier for the clients,” states Raj.
In early 2018, Lapasar raised a pre-seed round of funding from NEXEA. The startup, which currently employs close to 20 people, also received a grant from Cradle in that year. These investments helped the startup speed up its technology development.
“We have started a new fundraising process in the mid of January. Several of our clients would like to expand within their own organisation — and we want to ensure we can keep up with their speed. This funding will help there,” says CFO Noomi Fessler.