Here’s why investors should bet big on m-commerce startup CarousellMobile commerce startup, Carousell, is set to be the hottest startup in Asia this year. Here is why.It’s been a while since I was genuinely excited about a startup in Singapore. Last year in September,there was a startup from Singapore which I was bullish about: Gridblaze. I wrote then:“Singapore-based Gridblaze aims to optimize the Internet by bringing it back to its roots ofdistributed storage. A shakeup that can bring massively faster speeds, greater fault tolerance and a50% global reduction in international Internet traffic. [...] For the less technically inclined, imaginebeing able to use Dropbox in Singapore at local speeds instead of international speeds. That isGridblaze for you, andpotentially revolutionary.”A few months after that, the Founder Institute graduate was acquired by an undisclosed SanFrancisco startup in tech transfer, and the founder cashes out in the millions.Another startup which I was bullish about is Singapore based NoiseStreet. Essentially NoiseStreetturns billboards and big outdoor screens into interactive media that can be accessed throughsmartphones. Back in November last year, they ran an outdoor marketing campaign with Gong Chawhich resulted in phenomenal engagement from shoppers. NoiseStreet has since then worked withseveral other clients. My personal assessment: Game changing, This is definitely a Singapore startupto watch.Fast forward to today, there’s a Singapore-based startup which is killing it: Carousell. For thebenefits of those who are not familiar with Carousell, what started off as a Singapore StartupWeekend weekend project is amobile commerce marketplace which allows anyone to simply snapClient : PayPal Country : SingaporePublication : E27.co Section : Singapore NewsDate : 24 June 2013Topic : Here’s why investors should bet big on m-commerce startup CarousellCirculation : 8,512URl: : http://e27.co/2013/06/24/why-i-will-put-my-money-on-carousell/
and sell their items. Launched in August last year, Carousell also partnered with STClassified toprovide their users with a larger base of prospective buyers.But that’s not the point of this post. What I wanted to share is why I will put my money on Carousell.Huge industry potentialLet’s look at the macro picture first: both the mobile and e-commerce industry in Singapore.Everyone has said this over and over again, mobile is definitely here to stay and has huge potentialthat as a business, you can’t afford to ignore. Eric Schmidt, Executive Chairman of Google, oncestated, “If you don’t have a mobile strategy, you don’t have a future strategy.”Figures from regulator Infocomm Development Authority of Singapore (IDA) revealed Singapore’smobile population penetration rate reached 151.8 percent, with the number of post- and prepaid 3Gsubscription totaling 5,721,100 as of the first quarter of the this year. Singapore currently has morethen 5.3 million population.Due to this amazing smartphone penetration, Carousell has a great discovery and distributionchannel to begin with. Coupled with the fact that commerce is a hot rising industry (Accordingto PayPal’s study, the size of the Singapore online shopping market reached S$1.1 billion in 2010and is forecast to reach S$4.4 billion in 2015), the growth potential for mobile commerce issignificant. Mobile and Commerce are definitely here to stay. What do you get when you combinethem both? A killer industry. Carousell is merely riding the wave.
Read also: Here’s Lazada’s scoresheet on conquering Southeast Asian e-commerceLiquidity is kingAnother reason why I think there is a huge potential in Carousell is because they have a highliquidity. For any marketplaces, liquidity is a critical element other than your typical supply anddemand equation. Liquidity is thereasonable expectation of selling something you list or findingwhat you’re looking for. I often write about the importance of liquidity in my posts aboutmarketplaces. In Greylock Partners’ Simon Rothman’s words, liquidity isn’t the most important thing.It’s the only thing. Until you reach liquidity, you’re vulnerable. After, you have the opportunity fordominance. The first marketplace to reach liquidity wins.Does Carousell have it? A definite yes. Here’s some proof:
Due to its liquidity, Carousell now has a community of avid shoppers actively refreshing Carousell inthe hunt for items to purchase (See a lot more examples here). Due to its liquidity too, its users areactively sharing about Carousell to their friends. Here’s how their viral process look like:Register -> Use Product -> Tell friends (to get buyers) -> Purchase success (Tell friends again) -> Useproduct again. Cycle repeats.It helps to have a young community of users who are avid users of social media too. There are alsosigns of shoppers shifting and congregating to Carousell and Instagram.When users from other platforms are shifting to use your service, and when your users areevangelizing for you, you know you are definitely on to something. This echoes something whichJoon from Pigeonhole mentioned in a sharing session which I will always remember: “How do youknow when you have reached product/market fit? When your users do your pitch for you.”How exactly is Carousell currently doing?Which leads to the question I always ask, how exactly is Carousell doing now? The Carousell teamhas been really tight lipped about their traction and any numbers. However, few things are for sure:1. The team is currently focusing on growing its community of users.2. There are no revenue/monetization model in place yet. Huge potential of revenuestrategies.3. There are clear signs and proof of happy and returning users. Users love Carousell.4. There are no clear leaders in the mobile commerce space in Singapore, as well as SoutheastAsia. At least not yet.5. Carousell has a solid product centric team.Put all of these together, if I have the resources, I will definitely put my money in Carousell.
Vanda Fine Clothing on going global, retail prices and good serviceClassic menswear e-commerce service Vanda Fine Clothing has 70 percent of their customerscoming from outside Singapore.Last month, we covered local merchant Helena Tang-Lim with her e-commerce business, Manek-Manek Beads, which sells exquisite hand-made bead jewelry going cross-border with a crediblepayment method. With approximately 90 percent of her customers coming from Europe, the US andAustralia, she noted that she knew she had to go online from day one.Vanda Fine Clothing is another example of a Singaporean small business having up to 70 percent ofits customers coming from cross-border sales (the US, Australia and the UK). The co-founders, DianaChan and Gerald Shen, had started selling hand-sewn pocket squares and neckties on a popularfashion forum, Styleforum in early 2010.The company, founded in August 2011, never really came together until both co-founders realizedthey really wanted to stake out on their own. Before that, Diana was working at a leading luxuryhotel doing corporate sales for some time but just as she made up her mind to leave, a promotioncame in. She shared that by then, it was already too late. Gerald, on the other hand, went into thisbusiness straight with a degree in finance and economics from the Singapore ManagementUniversity (SMU). It had always been his dream. So just like that, they set out on their sartorialjourney of selling hand-sewn classic menswear.Payments, complaints and language barriersLike any other startup business, Diana and Gerald met with numerous challenges along the way.However, they were unfazed. Firstly, there were many logistical issues that had to be countered.Payments was one of them. Diana explained, “Those trying to reach out to a bigger audience [needto accept] global payments. Neither do we need to accept payments on our own.” Hence, theybecame a merchant with PayPal.Just like Helena’s hand-made bead jewelry, Vanda Fine Clothing caters to a small audience and notso much the masses. However, that’s the way Diana and Gerald wanted it. “We might not havethousands and thousands, but the ones that do, follow us,” said Diana. She also added that they sellabout 150 neckties and another 150 pocket wears every month, and are pleased to say that theyhave been breaking even and making profits ever since.And as a fashion e-commerce service, their ability to bring an in-store experience online was veryimportant. Diana said that to be a good online retailer, one needs to have “top notchcommunication skills.” While good experiences will garner the e-commerce business owner morepotential customers, bad experience will smear your reputation and work against you – multipletimes worse than the former. Putting in the time to connect with your customers is especiallyimportant when there is no real employee by their left and right to cajole them when upset. Geraldsaid, “You’re not there to smile at the guy and [...] keep up with them to ask if they are happy.”But of course, complaints can always result in good publicity if you are careful. There was one timein particular where they nipped the issue in the bud with a customer who had some problems with
his purchase. They sent him a replacement in three days and that saw many other customersshowering them with praises, saying that they were not a company to make a quick buck.Diana and Gerald also shared about the strong menswear market in Japan which they have not beenable to enter fully due to language barriers and payment issues. According to them, the Japanese arenot as keen to adopt PayPal as their key payment method.Image Credit: Vanda Fine Clothing