Amazon and Alibaba get the headlines; Lazada and RedMart are startup success stories; Shopee and Carousell are duking it out for dominance in the peer-to-peer game.
And yet, quietly, Qoo10 has grown into the powerhouse of Singapore’s e-commerce scene.
Qoo10, which is headquartered in Japan, has 3 million total users and 600,000 daily active users. Singapore is its second largest market and the site remains incredibly popular in the city-state.
The company plans to leverage their success — and the ‘rising tide’ created by the Alibaba/Amazon buzz — to take the company to an IPO in 2019, according to Singapore Country Manager Hyunwook Cho in a conversation with e27.
They plan on listing on the NASDAQ exchange. When asked, “why NASDAQ?”, Cho said,
“Well one reason is we go where the money is. Well and also our previous history, our familiarity.”
Qoo10 is a rebrand of the South Korean e-commerce company Gmarket and in 2006 it listed publicly on NASDAQ. When it was bought by eBay in 2009 the shares were removed from the bourse.
To accomplish its IPO goals, the next year is going to be dedicated towards building its leadership position in its core markets, Singapore and Japan, while keeping tabs on its other bases of operation in Indonesia and Malaysia.
While Qoo10 has navigated nearly a decade of e-commerce in Southeast Asia, and has built a large following, it is entering the most interesting period for the industry in Southeast Asia.
Qoo10 in the context of Southeast Asia’s e-commerce scene
The growth of the startup economy, mixed with the fact that Amazon and Alibaba are two of the biggest global companies, has created an interesting phenomenon in Southeast Asia.
The buzz around e-commerce far out paces its actual economic impact.
According to eMarketer, the share of e-commerce in the total retail market for Singapore is 3.5 per cent, a number that corroborates with what Cho said in the interview.
In Indonesia, the number was 2.2 per cent in 2016, according to Statistica.
This is why Cho expressed a tempered enthusiasm about the entrance of Amazon and Alibaba into the region.
“They are really slashing the prices, so that is competition for us, but surprisingly, since the Amazon launched here, we have been growing. They have helped people get into e-commerce. It doesn’t mean that competition is not there; there is competition on the price, it hurts our profit margin, but the good thing is the market is growing,” he said.
Which is why companies and investors alike consistently point to e-commerce as a huge opportunity in Southeast Asia.
Take Singapore for example, while that 3 per cent of retail sales is small, the revenue number is just under US$50 billion. Furthermore, while the percentage has dipped from 2016, the total sales number is increasing.
The theory goes that Amazon is such a large brand that it will push those ‘maybes’ into people who will start to make ordering online part of their lifestyle. This means the next step for any e-commerce company is to decide if they want to be a drive the industry forward or if the strategy is to maintain growth along with the market. Qoo10 is choosing to pursue the latter.
“For us, the first approach is too costly. I mean, look at RedMart, [they are a] fantastic service. I love RedMart, but to make that happen, it is too expensive,” said Cho.
Plus, and Cho pointed to the Rakuten experience, nobody actually knows what will happen in the next five years. Rakuten entered Southeast Asia in 2009 to much excitement, only to completely leave the region by 2016.
While sitting here in 2017 it seems like Alibaba and Amazon are set to dominate the future, this is not a predetermined fact.
A marketplace for SMEs and Qpay
One factor that gives Qoo10 a unique selling point in Singapore is its business model, which is comparable to Tokopedia in Indonesia.
The marketplace is focussed on getting SMEs to use the platform and Cho said it now has over 10,000 companies using Qoo10.
“In the early days we gave flyers, business cards, [we were] taking photos to get them on board. Now we have more than 10,000 merchants. Those merchants [are now] earning US$1,000 more to US$100,000 more,” he said.
Fast forward to today, and Qoo10 is launching its most innovative strategy to facilitate O2O sales within its marketplace. The product is called Qpay and it helps SMEs sell their products offline.
It works a lot like WeChat, but Cho said the goal is not to build a full-scale financial product but rather to make it easier for merchants to sell via the Qoo10 network.
For example, in Singapore, malls that are almost always featuring a rotating “open market” of stalls in the forums. It is usually based on a theme — wine sales, kitchen appliances, local food — and stalls visit the mall to try to sell goods at a discount in the open-areas.
With Qpay, a QR-code based payment system, customers can either use the Qoo10 app or any reader to scan a code provided by the merchant. They then choose their payment method (Visa, Mastercard, Qmoney or a shop coupon), once the payment is complete, they get a little check mark and can enjoy their latest purchase.
Qoo10 takes a 3 per cent fee for every transaction via Qpay.
Cho also hopes people will use the product in the opposite direction. Let’s say I see a nice shirt online but want to get it today. The hope is that I will find the merchant’s shop in Singapore, visit the store and use Qpay to pay and pick up in person.
“They need a little bit of advertising for customers who are ready to buy online. So the product we offer to them is to do a little bit advertisement and the customers go to your shop,” he said.
This is the heart of Qoo10, to be a platform that helps small businesses to sell online that doesn’t break the bank. For most local shops, getting into e-commerce is extremely expensive and frankly not worth the money.
Qoo10 wants to lower the barrier to entry by providing a robust marketplace to help merchants bridge the O2O gap at an affordable rate.
“What we are trying to build here is a high conversion website for the SMEs. We have the high ROIs. ‘Oh you need your own website?’ Ok we can provide. ‘Oh you need to maintain your own retail business?’ Ok, do this, but here is the QPay. We want to build up the ecosystem,” said Cho.
This is the mission Qoo10 hopes will help it maintain a leading status as the Southeast Asian e-commerce scene grows into a pot of gold at the end of the rainbow.