Fashion e-commerce platform Sale Stock Indonesia claimed that it will soon reach break-even point (BEP) and be ready to make profit for the first time since the startup was founded in late 2014. This performance was supported by the company’s multiplying revenue nine months since it closed a US$27 million Series B+ funding round in 2017.
Unfortunately CEO & Co-Founder Lingga Madu declined to share more details on his claim in the interview with DailySocial. “We are on track to reach BEP, but we are still unable to disclose when exactly,” he said on Tuesday.
He further explained that that the company was basically founded with the mission to serve one billion customers; thus it needs to have a “coherent yet healthy” strategy to achieve it. It is not possible for the company to continue on burning money in order to secure transactions; it has to figure out how to build a sustainable business for the future.
Sale Stock then decided to look up to companies such as Unilever, P&G, and Coca Cola which manage to survive for decades despite relying solely on their revenue. As an early step, the company began by achieving gross margin that is said to be comparable to leading fashion e-commerce companies in the world such as Boohoo, Asos, and Zalando.
“From inventory side, we only sell goods we produce ourselves. We are able to cut off the inefficiencies then allocate the majority of what we managed to save for the customers, and the rest to build a foundation for our company to grow.”
This is why, according to Madu, Sale Stock is not the kind of e-commerce startup that is continuously looking for new funding round every year. The latest funding round that the company announced was a US$27 million Series B+ funding round led by Gobi Partners and Golden Equator Capital, with participation from MNC Media Investment, SMDV, Convergence Ventures, Kip, and Alpha JWC Ventures.
“The funding that we raise yesterday will be enough until we reach BEP. Once we manage to get there, it will be nice. We will be able to live off our operations; if we want grow faster or expand regionally, then we can raise another round. There are many options that we can take once we achieved BEP, and it will also prove that we are a solid, ‘real’ business.”
Sale Stock’s core business model is B2C (with no plan to enter the B2B segment), providing quality yet affordable fashion merchandises for both men and women. The products sold on the platform are produced by the company itself, the result of a partnership with small- and medium-sized dressmakers in various locations.
The startup’s inventories are being kept in a warehouse in Cawang, East Jakarta, to be distributed using third party courier services. It also utilises a multi-platform sales channel, from mobile app, web sites, LINE, WhatsApp, BBM Channel, and Instagram, supported by its chatbot Soraya.
Soraya is a customer service bot that is available for 24 hours. Using the chatbot, users can ask for product recommendation according to their taste. It can even accommodate payments.
Strategy to lure in new customers
Despite being a fully digital service, Sale Stock also provides a cash-on-delivery (COD) feature called Coba Dulu Baru Bayar (CDBB, “try first pay later”). The goal is to lure in new customers who had qualms about shopping online, for fear that they might end up receiving the wrong product.
With this service, customers are allowed to try the clothes fro 15 minutes after the courier arrived at the destination. Customers are able to return the product if they do not like it, and pay for the product that they like if they have opted for COD payment method.
The service was launched in September 2017 for Greater Jakarta Area. The company claimed to have learned a great deal since its launch, and is now ready for expand the service 250 cities in Indonesia, all the way to Moluccas, Papua, Borneo, East Nusa Tenggara, West Nusa Tenggara, and Bali.
“We decided to turn CDBB into a permanent, instead of a temporary, periodic service.”
This service, according to Madu, is filled with inefficiencies due to the great potential of products being returned, particularly once the service is being launched nationally. But the company was able to minimise the concern by giving 100 per cent guarantee of likeness for their products, which they design and produce themselves. The company also sets up a standardised sizing for every piece of clothing.
“We have made a calculation for when returns happen. But based on this learning process, we have made an internal research by reaching out to our customers. Seventy-four per cent of them said that they first shop online through the Sale Stock platform. This has allowed us to be very optimistic.”
Sale Stock claimed to have secured 400,000 users using the service across Indonesia. In total, Sale Stock has sent out more than four million orders with a total SKU of 150,000 goods.
Sale Stock has offices in six locations in Jakarta, Bandung, and Jogjakarta, run by a team of 700 fully local employees. Its Android app has been downloaded for more than five million times.
The article Tiga Tahun Berdiri, Sale Stock Segera Capai Titik Impas dan Dulang Laba was written by Marsya Nabila for DailySocial. English translation and editing by e27.