Here’s why investors should bet big on m-commerce startup Carousell

Mobile 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 of

distributed storage. A shakeup that can bring massively faster speeds, greater fault tolerance and a

50% global reduction in international Internet traffic. [...] For the less technically inclined, imagine

being able to use Dropbox in Singapore at local speeds instead of international speeds. That is

Gridblaze for you, andpotentially revolutionary.”

A few months after that, the Founder Institute graduate was acquired by an undisclosed San

Francisco startup in tech transfer, and the founder cashes out in the millions.

Another startup which I was bullish about is Singapore based NoiseStreet. Essentially NoiseStreet

turns billboards and big outdoor screens into interactive media that can be accessed through

smartphones. Back in November last year, they ran an outdoor marketing campaign with Gong Cha

which resulted in phenomenal engagement from shoppers. NoiseStreet has since then worked with

several other clients. My personal assessment: Game changing, This is definitely a Singapore startup

to watch.

Fast forward to today, there’s a Singapore-based startup which is killing it: Carousell. For the

benefits of those who are not familiar with Carousell, what started off as a Singapore Startup

Weekend weekend project is amobile commerce marketplace which allows anyone to simply snap

Client : PayPal Country : Singapore

Publication : E27.co Section : Singapore News

Date : 24 June 2013

Topic : Here’s why investors should bet big on m-commerce startup Carousell

Circulation : 8,512

URl: : 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 to

provide 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 potential

Let’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 potential

that as a business, you can’t afford to ignore. Eric Schmidt, Executive Chairman of Google, once

stated, “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’s

mobile population penetration rate reached 151.8 percent, with the number of post- and prepaid 3G

subscription totaling 5,721,100 as of the first quarter of the this year. Singapore currently has more

then 5.3 million population.

Due to this amazing smartphone penetration, Carousell has a great discovery and distribution

channel to begin with. Coupled with the fact that commerce is a hot rising industry (According

to PayPal’s study, the size of the Singapore online shopping market reached S$1.1 billion in 2010

and is forecast to reach S$4.4 billion in 2015), the growth potential for mobile commerce is

significant. Mobile and Commerce are definitely here to stay. What do you get when you combine

them both? A killer industry. Carousell is merely riding the wave.

Read also: Here’s Lazada’s scoresheet on conquering Southeast Asian e-commerce

Liquidity is king

Another reason why I think there is a huge potential in Carousell is because they have a high

liquidity. For any marketplaces, liquidity is a critical element other than your typical supply and

demand equation. Liquidity is thereasonable expectation of selling something you list or finding

what you’re looking for. I often write about the importance of liquidity in my posts about

marketplaces. 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 for

dominance. The first marketplace to reach liquidity wins.

Does Carousell have it? A definite yes. Here’s some proof:

Community and high viral loop

Due to its liquidity, Carousell now has a community of avid shoppers actively refreshing Carousell in

the hunt for items to purchase (See a lot more examples here). Due to its liquidity too, its users are

actively 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) -> Use

product again. Cycle repeats.

It helps to have a young community of users who are avid users of social media too. There are also

signs of shoppers shifting and congregating to Carousell and Instagram.

When users from other platforms are shifting to use your service, and when your users are

evangelizing for you, you know you are definitely on to something. This echoes something which

Joon from Pigeonhole mentioned in a sharing session which I will always remember: “How do you

know 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 team

has 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 revenue

strategies. 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 Southeast

Asia. 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 service

Classic menswear e-commerce service Vanda Fine Clothing has 70 percent of their customers

coming 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 credible

payment method. With approximately 90 percent of her customers coming from Europe, the US and

Australia, 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 of

its customers coming from cross-border sales (the US, Australia and the UK). The co-founders, Diana

Chan and Gerald Shen, had started selling hand-sewn pocket squares and neckties on a popular

fashion forum, Styleforum in early 2010.

The company, founded in August 2011, never really came together until both co-founders realized

they really wanted to stake out on their own. Before that, Diana was working at a leading luxury

hotel doing corporate sales for some time but just as she made up her mind to leave, a promotion

came in. She shared that by then, it was already too late. Gerald, on the other hand, went into this

business straight with a degree in finance and economics from the Singapore Management

University (SMU). It had always been his dream. So just like that, they set out on their sartorial

journey of selling hand-sewn classic menswear.

Payments, complaints and language barriers

Like 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 [need

to accept] global payments. Neither do we need to accept payments on our own.” Hence, they

became a merchant with PayPal.

Just like Helena’s hand-made bead jewelry, Vanda Fine Clothing caters to a small audience and not

so much the masses. However, that’s the way Diana and Gerald wanted it. “We might not have

thousands and thousands, but the ones that do, follow us,” said Diana. She also added that they sell

about 150 neckties and another 150 pocket wears every month, and are pleased to say that they

have 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 very

important. Diana said that to be a good online retailer, one needs to have “top notch

communication skills.” While good experiences will garner the e-commerce business owner more

potential customers, bad experience will smear your reputation and work against you – multiple

times worse than the former. Putting in the time to connect with your customers is especially

important when there is no real employee by their left and right to cajole them when upset. Gerald

said, “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 time

in 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 customers

showering 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 been

able to enter fully due to language barriers and payment issues. According to them, the Japanese are

not as keen to adopt PayPal as their key payment method.

Image Credit: Vanda Fine Clothing