We are seeing two major shifts in the global markets; the growth of e-commerce and also the rise of the sharing economy.
In 2017, ecommerce sales grew by 23.2% and accounted for 10% of total retail sales worldwide (eMarketer, 2017), a massive feat given that the Tim Berners-Lee invented the World Wide Web only in 1989 as compared to traditional retail which has a history that stretches back to the dawn of civilisation. Asia’s ecommerce scene in particular has been booming and by 2021; revenue from the ecommerce market will exceed $900 billion up from $320 billion in 2015 (Bangkokpost, 2017). Most notably, Alibaba’s Singles’ Day 2017 hit yet another milestone, bagging a record $25 billion in sales within only 24 hours, an increase of 40% from 2016 (Forbes, 2017).
The titans of the sharing economy; Uber, Airbnb and Lyft will collectively earn $335 billion by 2025, an impressive feat which attests to the power of digital transformation, given that they were all established less than 10 years ago (The Heritage Foundation, 2017). Interest in the sharing economy has also been on the rise in South East Asia. Indonesia’s Go-Jek for example is set to receive $1.2 billion in their investment round which includes investors like Google, Temasek Holdings and Meituan-Dianping (Southeast Asia Globe, 2018). Singapore’s Grab has also been attracting huge investors like Hyundai, Didi Chuxing, SoftBank and Toyota Tsusho (CNBC, 2018)
To learn about the two aforementioned trends, I had the pleasure of speaking with Ms Wu Ying Ying from ShopBack, a regional start-up headquartered in Singapore which has an innovative take on combining both e-commerce and sharing.
Unlike other companies in the e-commerce space, ShopBack does not sell any products. Neither do they provide a platform for users to rent from each other, as with other conventional companies in the sharing economy. Instead, ShopBack creates value for online stores such as Lazada, Expedia and Deliveroo, by directing sales to them. For every completed sale, the online store pays ShopBack a commission. ShopBack then shares the majority of the commission with the customer by giving them “Cashback” which goes into the customer’s ShopBack account. The “Cashback” can thereafter be withdrawn as actual cash.
In addition to helping customers save through “cashback”, ShopBack also offers convenience by providing a powerful one-stop platform. Through the ShopBack app, users can shop on a multitude of online stores, compare prices, use promo codes and receive their “cashback” without having to leave the app.
Established in 2014, ShopBack has since expanded to Malaysia, Indonesia, the Philippines, Thailand, Taiwan and soon, Australia. The average age of ShopBack’s staff is 30 years old and they have a vibrancy that I was absolutely blown away by. Just watch this tour of their office and you will see what I mean
Trends in the region
The ecommerce market in Southeast Asia was worth $5.5 billion in 2015 and is set to grow at a 32% CAGR, reaching $88 billion in 2025 (The Independent, 2017). As a result of this growth, Ms Wu has noticed that there are more online stores springing up in the region. Behemoths such as Alibaba, JD.com and Amazon have expanded into the region, setting the grounds for a showdown (Reuters, 2018). The online grocery market in South East Asia is also heating up, with Alibaba purchasing RedMart which will come into competition with other popular brands like HappyFresh, HonestBee and DownToEarth (We Are Social, 2017).
Riding on the trends
As the deluge of online stores into the ASEAN region continues, ShopBack has wisely developed a strategy to benefit from the e-commerce growth without having to jump into the ring. Describing ShopBack’s approach as “agnostic”, Ms Wu shared that ShopBack focuses on never-ending customer obsession. The platform is designed for customers who wish to make smarter purchase decisions, saving both time and money. On the front of online stores, ShopBack looks to serve all who wish to use their “cashback” performance-based marketing solution.
Challenges in expanding overseas
ShopBack has expanded to 6 countries and Ms Wu feels that the key challenge is in understanding cultural nuances of each country. The ASEAN region is particularly fragmented especially due to linguistic differences. In Singapore, our four official languages are English, Mandarin, Malay and Tamil, but Ms Wu highlights that this list omits the most common language; “Singlish” which needs to be understood by any foreign company if it wants to relate better to Singaporeans. Similarly, as a Singaporean company expanding overseas, the cultural nuances of each country need to be understood, not just in the area of linguistics but also in understanding consumer behaviour since different nationalities of people do their online shopping in different ways. For example, the time that they browse online stores and the products they buy will be different.
(Best Sellers in Qoo10 Singapore)
(Best sellers in Qoo10 Malaysia)
Planning for overseas expansion
To overcome cultural differences while retaining the ShopBack identity in overseas offices, Ms Wu shared that ShopBack sends “launch team” from Singapore to set up the infrastructure and build local teams in their target markets. The launch-team is equipped with in-depth knowledge about ShopBack and is tasked with building infrastructure to be similar to what the Singaporean HQ has. For exam ple, all of ShopBack’s offices look as cosy as the Singaporean office as seen in the video above. In addition to building the infrastructure, the launch-team is tasked with hiring local talents who fit the values of the company and mentoring the local hires about the ShopBack model.
To harness the full potential of the local teams’ knowledge of their respective markets, ShopBack adopts a decentralised and flat organisational structure that grants the overseas offices autonomy from the HQ to operate freely and localise ShopBack’s offering. However that does not mean that the offices are totally separated. Among other regular engagements, Ms Wu particularly looks forward to the monthly townhall where the different offices live-stream each other. In this way, the different offices continue to maintain contact in a comfortable manner even across borders.
Enabling overseas expansion
In the second year of ShopBack’s expansion, ShopBack worked closely with International Enterprise (IE) Singapore which was able to give them a significant lift. In addition to financial support, IE provided ShopBack with important networks in their target countries which allowed them to hit the ground running. For example, when ShopBack expanded to Taiwan, IE connected them to AppWorks a Taiwanese Startup Accelerator, which provided similar support as what NUS Enterprise offers in Singapore.
However when ShopBack was first established, they applied for a grant from SPRING Singapore but were turned down as the idea was thought to be “not innovative enough” and needed to be “proven” first. Looking at ShopBack’s success today, the idea has been undoubtedly innovative. Ms Wu feels that more can be done to improve the application process. Hopefully with the establishment of Startup SG by SPRING, companies at the stage of where ShopBack was when they were turned down will have a better chance of receiving grants. Under the new Startup SG Founder scheme, Accredited Mentor Partners (AMP) will be the first layer of selection and will groom successful applicants to be eligible for the SPRING grants. Given that most of these AMPs are incubators with considerable experience in the startup space, they will perhaps be a better judge of startups with unicorn potential.
Call to Singaporean companies
Trends like e-commerce and the sharing economy are transforming Asia and while these trends only appeared a few years ago, the lucrative nature of riding on these trends means that the market is already packed with competitors. Therefore directly competing may not be the smartest way forward and Singaporean companies should look beyond the obvious opportunities to find unaddressed market gaps. ShopBack is an example of a Singaporean company who successfully found a relatively unaddressed gap and they have grown to be a regional powerhouse employing around a hundred people.
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CNBC. (2018). Hyundai invests in Asian Uber rival Grab. [online] Available at: https://www.cnbc.com/2018/01/11/grab-gets-investment-from-hyundai-motor.html [Accessed 23 Jan. 2018].
eMarketer. (2017). Ecommerce Will Pass a Key Milestone This Year. [online] Available at: https://retail.emarketer.com/article/ecommerce-will-pass-key-milestone-this-year/596e4c8cebd40005284d5ccd [Accessed 23 Jan. 2018].
Forbes. (2017). Alibaba’s Singles’ Day By The Numbers: A Record $25 Billion Haul. [online] Available at: https://www.forbes.com/sites/helenwang/2017/11/12/alibabas-singles-day-by-the-numbers-a-record-25-billion-haul/#59d7e0641db1 [Accessed 23 Jan. 2018].
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Walters, R. (2017). Realizing the Potential of the Sharing Economy in Asia. [online] The Heritage Foundation. Available at: https://www.heritage.org/international-economies/report/realizing-the-potential-the-sharing-economy-asia [Accessed 23 Jan. 2018].
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