The cycle of innovation in financial services is always in motion and marketplace banking is fast becoming an invaluable business model.

Incumbent banks, challenger banks, and account aggregator products are all eyeing the transition to marketplace banking, which is driven by customers, market and competition.

In times where customers are moving away from banks to non-bank entities for their financial service needs, customers’ trust in banks has been diminishing, particularly in their ability to provide unbiased and high-quality advice. Banks are pressured to find alternative means to reestablish customer trust and relationships.

“Forty per cent of customers expressed decreased dependence on their bank as their primary financial services provider and have rather used non-bank providers for financial services in the last 12 months” – Ernst & Young’s 2016 Global Consumer Banking Survey

Big tech firms, such as Google, Apple, Facebook, Amazon, and Alibaba, are making increasingly bold forays into the financial sector. These non-bank players (such as Wechat, Alipay and ApplePay) and neo-banks (such as Chime, Digit and Aspiration in the United States) are altering the banking customers’ expectations and behaviour.

We see Google offers payments via Google Pay, while Amazon and Shopify are offering short-term cash advances or loans to their sellers. Furthermore, their online sites or user interfaces have conditioned consumers and customers to an intuitive e-commerce or marketplace-like user experience.

Also Read: Why P2P lending can be the end of banking as we know it

With these factors in play, traditional banks are rethinking their roles and relevance to their customers, as well as reviewing their business and delivery models. Some have responded with marketplace banking.

What is marketplace banking? How does it work?

The marketplace banking model is an ecosystem of aggregated products and services sharing similar characteristics presented to a customer as a set of offers with addressing specific customer needs in mind.

These products and services could come from different ecosystem partners such as retail or healthcare players, in addition to those offered by the banks themselves. This approach offers transparency, choices, better pricing and better matching of banking customers’ needs – the key benefits of any successful marketplace.

We have seen a couple of variations in the marketplace banking operating models. First, there are those that aggregate to provide a wide menu of choices for the products and services on their marketplace platforms, such as Go-Bear, PolicyAdvisor.com, and Starling’s Marketplace.

Another model stems from the bank offering a one-stop-shop platform enabling deep integrations with select third-party ecosystem partners to address very specific customer needs, such as the most recently launched online car marketplace by VTB Bank, Russia’s second-largest bank.

What is a better model?

Personally, I believe the best banking marketplace model where it best addresses the needs of the customers at the right time, at the right place and one which aligns with the maturity of the market it serves.

Also Read: Digital banking in Asia Pacific: What we can expect to happen in 2020

For instance, higher frequency purchases or lower pricing banking or insurance products may work better in a financial services aggregation platform where choices, reviews, and recommendations are what matters most to a customer.

However, for low frequency, big-ticket items or life significant events such as buying a car, buying a house, or having the first child, the customers are generally overwhelmed by a flux of confusion and decisions with multiple information points to understand their options and arrive at the decisions they are most comfortable with.

In such situations, having a trusted marketplace that offers guidance and advisory with a one-stop-shop proposition to help navigate the tedious and complicated process is more than welcome. Banks occupy a position of authority for their customers and could help narrow down their choices for their customers.

So, it all boils down to the customers and how as a bank, you could deliver greater value to your customers. The traditional operating model of banks making money by charging fees for products and services with a product-focus approach is fast becoming obsolete.

Banks need to create customer value by, for example helping them to save money on foreign exchange fees, switching over to a lower-cost energy provider, offer pre-approved mortgage loans quickly, or streamline supplier financing. In some of these value creation processes, the bank could take a referral fee from the beneficiary provider (for example, energy provider or property listing platforms).

Who has deployed it successfully?

Many bank marketplaces seem to be launched in the last five years with varying degrees of success and progress.

GoBear was launched in 2015 to operate an online financial products marketplace that offers over 1,800 consumer financial products such as travel, health and car insurance, credit cards, and personal loans. It offers a smart targeting system that matches users’ profiles to the financial products they wanted.

Also Read: How unique lending platforms boost small businesses in Southeast Asia

Globally, GoBear has reached 40 million people, and is active in Asian markets, including Singapore, Hong Kong, Malaysia, the Philippines, Thailand, and Vietnam.

In Canada, there is a similar marketplace to GoBear called PolicyAdvisor.com which is launched by a Toronto-based Insurtech startup in 2017. PolicyAdvisor.com is an online marketplace that aims to “take away the pain” of searching for life insurance, critical illness insurance and mortgage protection products for the Canadians.

It plays as a matchmaker, connecting Canadians to insurance products that suit their needs, such as financial security, debt reduction, family planning and protection or future retirement. It is a mobile-first platform that offers “real-world advice” from experienced licensed brokers and advisors whom clients can speak to online, on the phone, or through video.

In the United Kingdom, Starling Marketplace, owned by the London-based Starling Bank, puts products from other partnering fintech providers, lifestyle products and services providers onto its in-app marketplace. It competes head-to-head with Revolut, which offers insurance and wealth management services to its customers in-app, as well as access to consumer loans via a partnership with peer-to-peer lender Lending Works.

Coming back to Asia, there have been a few interesting banking marketplaces which leverage ecosystem partnerships with non-financial services providers to address specific customer needs in their purchasing journey and decisions. This was in response to the new Monetary Authority of Singapore (MAS) rules in 2017 which allow banks to operate and invests in digital platforms that match buyers and sellers of consumer goods and services.

Also Read: 5 key trends in banking for 2020 and beyond

These banking marketplaces are owned and operated by two leading financial services group in Southeast Asia – OCBC Bank and DBS Bank.

OCBC Bank launched the OCBC OneAdvisor Home in January 2018 as a one-stop advisory service portal for property purchases to enable buyers to do a home search based on affordability criteria.

It provides information such as property listings, rules and regulations, comprehensive affordability advice to help residential purchasers, and policy details, and even offer customers the option to speak to mortgage specialists for consultation or loan applications. All property listings came from OCBC Bank’s ecosystem partners, EdgeProp, 99.co, and Soreal.

OCBC Bank has also launched an e-commerce platform called mumstruly.com targeting mothers and mothers-to-be but was shut down late 2019 due to change in strategic directives. That was OCBC’s first foray into e-commerce, offering a range of goods and services, from health services to baby and motherhood products as well as wealth and insurance products.

The bank partnered up with Asia-based healthcare, retail and service providers to offer a one-stop-shop service.

DBS Bank, on the other hand, has launched four consumer needs-driven banking marketplaces since 2017 – DBS Car Marketplace, DBS Electricity Marketplace, DBS Property Marketplace, and DBS Travel Marketplace. It was named both the World’s Best Digital Bank and the Best Bank in the World in 2018.

DBS Car Marketplace was the first marketplace launched in July 2017 to offer a one-stop solution for car buyers and sellers, providing all the relevant services and information the customers may require in their car purchases or sales journey.

Also Read: Think like a fintech company: How banks can capitalise on the digital banking revolution

It partners sgCarMart and Carro to establish Singapore’s largest direct seller-to-buyer car marketplace for car listings, while the bank offers car insurance and car loans. In its first year of operation, the marketplace attracted more than 550,000 unique visits, 40 million views, and 2.6 million visitors a month.

Almost eight months later, DBS launches DBS Electricity Marketplace to allow consumers to compare various pricing plans, hunt for deals and make a seamless switch of electricity retailers. Four months after, DBS Property Marketplace was launched with a similar proposition as OCBC OneAdvisor Home.

DBS’s property listing partners are EdgeProp and Averspace. It was reported that the DBS Property Marketplace has generated more than SG$300 million in home loan requests within the first 12 months.

The last e-commerce platform launched by DBS in July 2019 is the DBS Travel Marketplace. DBS has partnered with Singapore Airlines, Expedia Partner Solutions, and Chubb Insurance Singapore to create a one-stop platform where travellers can book flights, hotels, and complimentary travel insurance in one place.

The bank wants to generate customer value by helping travellers reduce the time and effort they need to spend on multiple channels for their pre-vacation planning. In addition, the bank’s customers get free travel insurance and can use their DBS or POSB Daily$ rewards points to offset travel costs.

Singapore banks are not the only contenders in Asia. In India, Bank of Baroda, India’s third-largest bank, announced its plans to launch an online marketplace to offer banking services and farm-related products last year in July. The state-owned lender is keen to enhance its online digital capabilities and is seeking a partner to supply ‘digital commerce platform’ to provide assistance to merchants on catalogue management, purchase management fulfilment, pricing, promotion and other similar services.

Also Read: What makes investments in fintech and alternative lending in SEA promising?

These Asia-based banking marketplaces are showcasing how banks could create meaningful ecosystem partnerships by collaborating and innovating together with partners through a marketplace platform. In this way, customers will benefit from a seamless, fuss-free experience that brings together the best of banking solutions and relevant products and services needed by customers to address specific consumer needs.

Are you ready to brave the new world of Banking Marketplaces?

Marketplaces are gradually becoming a more attractive banking business and operating model that increases customer convenience and efficiency by providing targeted solutions to match their needs while allowing banks to leverage their massive business and enterprise customer networks and partner with the right marketplace ecosystem providers.

This also enables banks to strengthen their position in an environment where customers’ trust in banks was diminishing. Banking marketplaces could be an effective strategy where it offers tremendous convenience as a one-stop-shop with a comprehensive range of curated products and services to address specific customer needs. Customers also enjoy greater peace of mind knowing that the platform and products are trustworthy and backed by their bank.

In a report by McKinsey & Company, it was described that self-service and greater transparency give customers more autonomy, automatically translating into higher customer satisfaction. This could strengthen customer engagement, causing new customer acquisition and lead generation. The convenience, security, and satisfaction all create a more meaningful customer experience, thus reducing customer loss and churn.

However, the journey to becoming a successful banking marketplace is paved with difficulties and possibly, failures, as seen from the many failed online marketplaces in the retail and other non-banking industry sectors.

The success stories to-date suggest a successful banking marketplace involves engaging and integrating with the right ecosystem partners to deliver a robust marketplace ecosystem.

Also Read: Today’s top tech news: Ant Financial seeks digital banking license, Ctrip discusses new listing in Hong Kong bourse

It needs to overcome stagnation and complacency and goes beyond technology, products, data, and processes to disrupt how traditional banks have always operated and created a new value chain delivery system. It is definitely more challenging to execute.

Nonetheless, it is mission-critical to start strategising on how to embark on this journey as the customers are changing fast while neo-banks and challenger banks are responding to the change and well accepted by the banking customers in this digital era. Braving a new frontier and heading towards a new business model is daunting but essential for future survival.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

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The crisis at honestbee has deepened further with its employee approaching the Ministry of Manpower (MoM) regarding non-payment of salaries, says a report in The Straits Times.

Of the total 77 employees who have filed salary claims with the ministry so far, 16 were filed in the past month. The MoM has scheduled their cases for mediation in March.

The embattled startup owes its employees salaries for February.

In an emailed response, honestbee spokesperson told e27: “The company has no intention of shortchanging its employees. However, the protracted closure has made it difficult for the company to commit on payment terms until further funding can be secured.”

Last week, honestbee handed pink slips to 80 per cent of its 130 employees in Singapore, as investors are unwilling to provide funding for paying salaries of employees who had no work.

Also Read: 3 high-growth industries to watch out for in Southeast Asia

According to the ministry, honestbee had committed to a repayment schedule for former employees over five instalments from September 30 last year. The firm had complied with the schedule except for the final instalment which was due on Jan 31 to 45 former staff.

honestbee had owed more than 200 of its former employees around US$1 million in unpaid salaries and Central Provident Fund contributions.

The ministry and the Tripartite Alliance for Dispute Management (TADM) have warned honestbee to prioritise the final instalment. The government has also urged all of honestbee’s current and former employees with outstanding unpaid salary, including work pass holders, to file their claims with TADM.

Separately, the company closed its physical grocery store ‘habitat’ in Pasir Panjang since Feb 10, citing the coronavirus outbreak and a fall in walk-in traffic.

Meanwhile, a leaked video emerged of honestbee management and executives taking goods belonging to habitat, such as groceries, cutleries and furniture, for their personal taking.

According to Business Times, honestbee has S$1.97 million worth of furniture and fixtures, S$3.87 million worth of store equipment and over S$84,000 in office equipment as of end-January.

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Image Credit: Yang Shuo on Unsplash

For the Summer 2020 accelerator programme, Y Combinator may go completely virtual

Y Combinator has revealed plans to possibly make its Summer 2020 accelerator programme entirely virtual.

The Silicon Valley firm, as reported by TechCrunch, has already made its Demo Day for its Winter 2020 cohort an online-only affair and has accelerated the timeline for the Demo Day a week early.

Application for the summer programme is open now.

“This is a unique worldwide crisis, but it will not lessen the extraordinary opportunities for terrific founders to start and build epic companies,” the accelerator wrote. “We look forward to reading all your applications and wish good luck and good health for everyone.”

Tech companies in Indonesia start implementing work-from-home policy

In a bid to curb the coronavirus spread, major Indonesian companies including tech giants headquartered in Jakarta, have put in place a work-from-home policy, The Jakarta Post reported.

The report further added that some companies are even devising entirely new workflows over concerns about the spread of COVID-19. One of the large tech companies that have shared its plan is e-commerce firm Tokopedia, which has announced that it would conduct a trial period for remote work from Monday to Tuesday to assess the viability of such a plan.

Online airline ticketing and hotel booking platform Traveloka approached the situation by establishing a special team to monitor the latest developments regarding the health emergency and to ensure that the company’s day-to-day operations remain normal.

Also Read: This 4-month-old Y Combinator startup wants to be the Stripe for the Philippines

DailySocial.id, an Indonesia media covering tech and startup news, also implements the work-from-home policy and has announced the cancellation of its regular #SelasaStartup event.

“We have yet to prepare a protocol for that, but offices and companies have to prepare for the protocols and procedures. We did not wish for this to happen, but at least they will be prepared if something happens,” Anies Baswedan, the governor of Jakarta, said on Friday, a statement similar to what President Joko “Jokowi” Widodo has urged.

So far, Indonesia has reported 117 confirmed cases of COVID-19, as well as six deaths. Transportation Minister Budi Karya Sumadi was the first government official confirmed to have tested positive for the coronavirus.

Indonesian VC firm Convergence Ventures reportedly merges with Agaeti Venture Capital

At least six sources familiar with the matter have confirmed to DealStreetAsia that Indonesia-based VC firm Convergence Ventures has finalised a merger agreement peer Agaeti Ventures. Both VC firms’ General Partners and teams are now said to be working together, bringing their respective networks to a single new entity.

The merger, a source said, took place in the third quarter of last year, and saw the newly joint fresh entity looking to raise a new fund. The new fund being raised by the combined entity, according to another source, goes by the name of ACV Capital.

The merger was reportedly driven by Pandu Sjahrir from Agaeti Ventures and Adrian Li, from Convergence Ventures, who have spent time together studying at Stanford University in the US.

Blockchain platform Ziliqa partners with crypto exchange platform Switcheo to launch Zilliqa DEX

Singapore-grown blockchain company Ziliqa has partnered neo blockchain-decentralised cryptocurrency exchange Switcheo to work together in bolstering the decentralised finance ecosystem in the region through building a non-custodial, decentralised exchange (DEX).

With the new, UX-improved Zilliqa DEX, Zilliqa token holders and traders will have the ability to tap into digital assets on the Ethereum blockchain. Users and traders on Zilliqa DEX will not need to sign-up to the exchange to access trading services with its API-based mobile wallet integrations, allowing users to swap between different assets.

Amrit Kumar, President and Chief Scientific Officer at Zilliqa, said: “We believe that this partnership with Switcheo is essential to supporting the meaningful progress we’ve made for our stablecoin initiative, StraitsX, as more companies look to come on board. The opportunity to collaborate with one of the world’s leading decentralised exchanges was one that we simply couldn’t pass up as we hope to garner further ecosystem support and look to solidify our position in the global DeFi ecosystem.”
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Picture Credit: Yang Shuo on Unsplash

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Taiwanese accelerator SparkLabs Taipei has announced the names of the eight startups pitched on its third demo day. 

These startups are working on solutions in diverse industries, from telemedicine to commercial AI to IoT. 

Prominent personalities like Steve Chen, co-founder of YouTube; Taipei’s Deputy Mayor Huang Shan-shan; and CY Tu, Deputy Director-General of the Ministry of Science and Technology, spoke at the event.

Chen, who is also a Venture Partner and Advisor at SparkLabs Taipei, said: “I meet many Taiwanese entrepreneurs who often say, ‘I will wait until I have more traction and resources before I can expand into the international market.’ But, crossing borders into new markets is actually not as expensive or difficult as one may think.”

“SparkLabs Taipei encourages entrepreneurs to target the international market from day one. That’s the mindset entrepreneurs in Taiwan must-have,” Chen added. 

Also Read: SparkLabs launches US$50M early-stage fund for South Korea and Southeast Asia

Here is a short bio of the eight startups:

iDrip

iDrip is a coffee maker, which uses IoT to replicate the brewing techniques of world champion baristas for coffee lovers.

The company currently has partnerships with top luxury brands such as Maserati, Audi, and Tsutaya Bookstore.

Terminal 1

Terminal 1 is a tech recruitment firm, which uses automation to help enterprises and engineering candidates match through their platform.

The company filters quality candidates through personalised assessments.

Cocomelody

Cocomelody is a bridal brand that aims to transform the way brides shop for their wedding dress by offering an omnichannel retail experience to quickly and easily find personalised, affordable and tailored-to-fit dresses.

The company has a built-to-order platform that reduces the lead-time from the industry average of four to six months to only 45-60 days.

PenguinSmart

PenguinSmart aims to increase the efficacy of rehab therapy, through individualised rehab therapy for all via their platform.

Also Read: How Metro Manila’s COVID-19 community quarantine is affecting the local startup community

The team uses data sciences with expert insights to empower caregivers to become a vital part of the rehab journey. 

MoBagel 

The company uses Machine Learning to produce fast and actionable predictions for enterprises, who want to make the right decisions for themselves.

One of its core products, Decanter AI, allows anyone with basic data analysis knowledge to build and deploy machine learning models.

FunTek

FunTek is an app-free chat solution provider, which enables enterprises to interact directly and engage with customers by simply scanning a QR code.

Its direct-to-chat solution, PinChat, allows customers to communicate with businesses without the hassle of registering a new account or downloading any apps.

JustKitchen

JustKitchen creates and curates delivery-only food brands and cuisines on the internet via its hub-and-spoke infrastructure model.

The company is already working with top restaurants like Dan Ryan, Smith & Wollensky and TGIF’s.

VAR LIVE

VAR LIVE creates an immersive entertainment experience for all players. Its core product VAR BOX is an all-in-1 VR eSports solution, which integrates e-sports, community, entertainment, business application and training in one.

VAR BOX currently has 14 patented technologies and nine eSports games.

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Image Credit: SparkLabs Taipei

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Temasek, others invest US$500M in America’s plant-based meat company Impossible Foods 

US-based Impossible Foods has raised US$500 million in a Series F funding round, led by South Korean investor Mirae Asset Global Investments, according to DealStreet Asia. Other investors in this round include Khosla Ventures, Horizons Ventures, and Temasek.

This brings its total funding to date to US$1.3 billion.

Impossible Foods CFO David Lee is confident about his business even though the global market is severely hit by Covid-19 outbreak.

“Whatever the headlines are, we have the means to withstand short-term shocks and realise our long-term mission,” said Lee.

The company, which uses genetically-engineered soy, had launched its newest plant-based sausages and pork earlier this year.

Shop101 raises US$3.9M to enable entrepreneurs to sell online using social media

Indian startup Shop101 has secured an additional capital of US$3.9 million in Series C funding from existing investors, including Stellaris Venture Partners, Unilever Ventures, Kalaari Capital, and Vy Capital, according to DealStreet Asia.

Prior to this, the company had raised US$11 million in Series B funding from Kalaari Capital and Unilever Ventures in December 2018.

It is not clear where the company is going to deploy the funds.

Also Read: Morning News Roundup: Y Combinator accelerator plans to run next cohort completely remote

Shop101 enables entrepreneurs to sell through social media platforms such as WhatsApp, Facebook and Instagram. It also provides delivery tracking via its tie-ups with third-party logistics players.

Other competitors in this space include Bulbul, EkAnek, GlowRoad, WMall and Alibaba.

Covid-19 forces Vietnam-focused PE firm to delay fifth fund close

Vietnam-focused Danish private equity firm PENM Partners has confirmed the delay of its fifth fund, according to DealStreet Asia. 

“We were supposed to raise the fund by mid this year. But the coronavirus has caused a lot of uncertainties, so the end of this year or early next year would be more realistic,” said Hans Christian Jacobsen, managing partner of PENM Partners. The amount to be raised is about US$150 million for PENM V.

Some of the Vietnamese firms PENM Partners has invested include Hoa Phat Group, Masan Group, Taseco Airs, GTN Foods, International Consumer Products and Loc Troi.

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Image Credit: Moritz Kindler

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The booming technology startup ecosystem of Asia is the new talk of the town. The days where it was hiding in the shadows are long gone. This regional ecosystem has been making exceptional strides over the last couple of years.

The last decade has been one of the most rewarding periods for Asia’s tech startup scene. It has remained unparalleled in terms of investment activity and commercial innovation. Despite earning immense global recognition, the success of this ecosystem is still a mystery to many outsiders.

There are many reasons for that. One of the biggest reasons is the geographical distance between Asia and the West. This distance has led to commercial and cultural differences between the two regions. Therefore, it’s hard for the outsiders to keep up with the innovative and technological development this region has been making.

Anyone who wants to capitalise on the extraordinary growth of this region needs to learn all that is happening on the ground. In this article, we are going to learn all that is causing the tech startup ecosystem of Asia to thrive. So, continue reading.

The surge of the tech startup ecosystem of Asia 

The young and vigorous tech startup scene in Asia is taking over the global tech market by storm. According to the figures collected by McKinsey Global Institute in 2019, more than one-third of the world’s best startups are in Asia.

That makes 119 of the 331 global startups. Among these, 91 startup s are China-based. Thirteen of them belong to India whereas six of them are from South Korea and four from Indonesia.

Also Read: Morning News Roundup: Mandiri Capital to invest up to US$5M in Indonesian startups; OKCoin expands to Singapore

Be it, autonomous vehicles, AI, Virtual reality, drones, robotics or 3D printing, Asia has become the top destination for venture capitals globally.

Only China is responsible for providing around 20 per cent of global venture capital. The following are the reasons why the tech ecosystem of Asia is flourishing at an astonishingly fast pace.

Passion to digitalise

Adapting the latest technology has played the biggest role in Asia’s tech ecosystem’s success. Companies are keen to transform their operations by hopping on the growing technological trends.

They are not afraid of the change and are ready to adapt to the technological development. The sluggish economic growth of Asia is gradually picking its pace. This growth can be attributed to the desire of Asian startups to innovate with time.

The majority of the Asian startups have grabbed the opportunities that technology had offered them. In India, system integrators are part of almost every startup.

Since companies are ready to integrate a combination of technologies in their systems, it is a big step forward to revolutionising the entire tech startup scene. By keeping up with the latest technology Asian companies such as Grab, Sea and GO-JEK Indonesia have taken the lead.

In Korea, everything is being reshaped by technology. India’s mobile-first economy has become one of the prominent names in the list of tech giants.

Japan, China, Singapore, and South Korea are only a few of the Asian nations which are paving way for the digital revolutionization of the world. By digitalizing the market, these nations are taking their economic growth to the next level.

Also Read: IdeaSpace launches new fund for early-stage startups in the Philippines

Exceptional market conditions

Another important reason why Asia’s tech ecosystem is growing at a rapid pace is the ever-increasing consumer demands. The Asian middle class is set to hit three billion by 2040. Each year millions of new consumers are added to the population.

These consumers have demands technology needs to fulfill by innovating health-tech, fintech, cyber-security and a lot more. This is what is creating more opportunities and driving the Asia tech startup ecosystem.

Support from the government

According to research, it is expected that Asia will generate more than 50 per cent of the GDP while driving 40 per cent of the global consumption this year. The governments in Asia has been playing an instrumental role in supporting the tech startup ecosystem.

They are committed to establishing this sector by imposing technology-friendly policies. They are also investing a good percentage of their budget in tech businesses. This helps them attract venture capital investors and private established businesses to take an interest in the local tech scene.

Asia is revolutionising the global tech market. Soon every aspect of life will be digitalized. Companies need to be more open to integrating new technologies into their business operations.

Asian startups understand the need to familiarise with the advanced technology and how to translate it into their financial growth.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

Join our e27 Telegram group, or like the e27 Facebook page.

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Many entrepreneurs fall into the trap of believing that they need to create something new when starting a business. The truth is startups that launch with new products often run a high risk of failure, since it is built upon assumptions that may not necessarily be true.

Instead of creating something new and then finding a reason for its existence, try reversing the thinking process. Identify a problem first, then find ways to address it. This, along with a solid plan, is the key to a sustainable business.

It was with this principle that Shootsta was founded. The opportunity presented itself when I realised that the demand for video content was growing, but client budgets weren’t.

Organisations that wanted to produce more videos would often hit a wall when they realise the high cost involved, and a large number of resources and time required to produce quality videos.

Responding to the industry demand for cost-effective, high-quality videos with quick turnaround times, Shootsta empowers clients to become videographers and support them with the post-production work. This essentially means that clients can record their own videos any time, at their own pace, with a kit that is provided to them.

The idea quickly took off, and Shootsta is now one of the fastest-growing video production companies in the world.

Know the landscape well

No good idea is formed in a vacuum. The best way to come up with a new business idea is to first be actively involved in the industry. Having also founded a video production agency over 10 years ago, I had a clear understanding of the market and its demands.

Also read: Why every startup needs to embrace video marketing in 2020

Knowing that the enterprise video market is also projected to grow from an estimated US$16.34 billion in 2017 to US$40.84 billion by 2022 helped propel the idea to fruition. Of course, if you have an idea and want to test the market fit, interview as many prospective clients as possible.

You’ll pick up some valuable information but just remember that their words mean nothing until they put their money where their mouth is.

Starting on a shoestring budget

It is a common belief that having a large capital is necessary to run a business successfully. However, there are many ways to skin a cat. While having a sizeable capital to work with can be beneficial, it isn’t necessary.

Just look at how renowned brands like Spanx, GoPro and Craigslist, for example, bootstrapped in their early days. As for Shootsta, we nearly tripled our business growth in Asia while bootstrapping the growth from our positive cashflow.

Running the numbers can be scary, especially in the early stages of a business, but don’t let the fear of a thin cashflow hamper your potential for growth. Once you have tested your idea, really ask yourself whether you need early-stage funding or if your product is enough to attract clients from the get-go.

It can be tempting to aim for hyper-growth, but I believe that slow and organic growth is more beneficial as you focus on market demand and gain a strong reputation in the long run.

If a product is a right fit for a market, growth will come naturally. Just don’t take anything for granted – treat every percentage of equity-like gold, because it’s quite possibly the most valuable asset you own.

With the right attitude and enough research, it is likely that any new venture can thrive. In a world where hypergrowth has become an expectation and entrepreneurs harbour hopes of becoming overnight millionaires, it’s worth keeping in mind that that the slow and steady, more often than not, win the race.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

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Vietnam witnessed a fierce battle in the e-commerce industry, while billions of US Dollars have been invested with no current return. However, it is still attractive for investors, especially those of foreign origin. 

The reasons partly came from the scale and market size. In fact, Vietnam e-commerce was reported as the third-largest market in Southeast Asia (SEA), which expectedly increase the total revenue to US$10 billion in 2020.

In comparison with other markets in SEA, Vietnam got the highest conversion rate across Asian 6. A report from Deloitte emphasised that the online conversion rate of Vietnam reached a peak of 1.3, followed by Indonesia and Singapore with an index of 1.1. It means that commercial brands in Vietnam converted relatively more online visitors to a sale than any other area in SEA.  

Overview of e-commerce market in Vietnam 

Regarding e-commerce platforms in 2018, Lazada was the most popular platform choice with the monthly traffic of roundly 42.5 million visitors. Unfortunately, it could not protect this position.

In 2019, Shopee raised to become the market leader with the monthly traffic of over 40.7 million, dramatically increasing by 71 per cent compare to its performance in 2018.  

With the enormous investment in advertising in music MV, Tiki was successful in capture the market share of Thegioididong, which claimed to be the second-largest platform with a growth rate of 58 per cent to gain average traffic of approximately 35.7 million visitors per month.  

Also Read: How COVID-19 is changing traditional retail and e-commerce in SEA

In terms of devices and channels, smartphones still dominate the market, generating over 70 per cent of user traffic. As a result, about 30 per cent of the last shopping trips made in e-commerce apps, surpassing e-commerce websites and manufacturer sites.

Furthermore, Facebook refers to one of the popular channels for online shopping, especially for small retailers due to lower requirements of technical capacity. For website and app developments, e-commerce firms commonly hold a strong in-house developer team, which enclosed with high operating costs. 

Unfortunately, the trust of online payment might not have any significant improvement last year. In which, cash on delivery (COD) has been the most proffered payment method, constituting approximately 88 per cent of total transactions.

Only 17 per cent of consumers used e-wallet to make their payments. Fortunately, the increasing rate of the whole e-wallet sector reached 10 per cent, which is over the double value of the year before.

That is why there still be a growing trend for investing in e-wallet business. However, 90 per cent of this market share belongs to five giants, which have a portion of foreign investment range from 30-90 per cent. 

One of the on-demand platforms that enjoy the greatest growth in Vietnam could be food delivery. Last year, 50 per cent of customers using food delivery apps to orders their meals due to the surge in the number of delivery apps, which led by Grab Food (63 per cent ) and Now Shipping (43 per cent ).

Also Read: Morning News Roundup: Vietnam’s e-commerce startup Leflair accused of owing US$2M to suppliers

Generation X reported spending more than others, which experienced an average of US$4 for each order, while Generation Z spent only US$2.3.

Undoubtedly, e-commerce in Vietnam has a large space to grow in the next five years. It generates both opportunities and challenges for investors. Here are some key points: 

Heavy investment from foreign titans 

Vietnam’s e-commerce market is still standing in the initial stage, which requires a tremendous amount of capital to invest in. Apart from the power from domestic sectors, foreign investors have already entered the game.  

JD.com, a corporation from China invested two disbursements in Tiki.vn, with undisclosed value to take over the 25 per cent stake. Additionally, another stakeholder of Tiki is VNG with the total investment of roundly US$22.3 million in exchange for a 28.9 per cent stake.

Additionally, Tiki received US$75 million from Northstar Group in 2019, which expected to increase shortly. With enormous capital support, Tiki had a dramatic expansion period in both scale and scope, which currently provide millions of products in its platforms, including flight bookings, insurances, vouchers, motorbikes, and cars. 

From 2016 to 2017, Chinese tech giant Alibaba invested US$2 billion to buy 83 per cent of Lazada stake. Moreover, in 2019 Alibaba had announced to double its investment on this Vietnam e-commerce platform. 

Also Read: Why 2020 is the year for tech startups in Vietnam

Sendo.vn had received approximately US$1 million from several Japanese companies, including SBI holding, Daiwa PI Partners, and SKS Ventures. Shopee Vietnam also got support from its parent company in Singapore with the amount of US$50 million.  

Generally, investment in Vietnam e-commerce currently suffers high risks for investors, which have strong barriers to exit. In fact, the entire commercial platforms have endured a loss that investors might lose all their investment in case of withdrawing. 

Promotion wars and greater losses 

Vietnam’s e-commerce market is seemingly driven by promotion. Particularly, 46 per cent of customers claimed that they choose e-commerce sites because of the promotion it offers.

Therefore, e-commerce platforms were burning their massive amount of money to run campaigns to attract users. In 2020, Shopee, Tiki, and Lazada are expected to become the three key players in the promotion war.

Particularly, regular deals and flash-sales are successful in becoming the brand images of Shopee, while Tiki tends to be popular with the supper-fast delivery. 

Also Read: How are small brick-and-mortar retailers in Malaysia coping with the e-commerce revolution

On the other hand, to pursue sales and marketing plans, e-commerce firms have to deal with the huge loss. Shopee, Tiki, Lazada, and Sendo had announced the net loss of roundly US$221.4 million in 2018, while this data in 2016 and 2017 was US$73.9 million and US$147.8 million, respectively. 

Clearly, customers gained a great benefit from the promotion wars due to more beneficial services, lower product prices, and higher technological innovation. 

Several e-commerce giants withdraw from Vietnam Market 

Unable to withstand the fierce competition in Vietnam e-commerce industry, several players gave themselves up. In Q4 2019, Vingroup decided to cancel its online retail sector.

Meanwhile, Adayroi platform had merged to VinID, which had closed down several of its brick-and-motor stores. Zalora, commonly known as Robin Online, had shut down all selling activities in March 2019 after seven years of launching its business in Vietnam.

Other collapses of e-commerce platforms in Vietnam can be told through stories of Beyeu.com, Lingo.vn, Deca.vn, etcetera.   

The biggest reason why these companies were heading towards a sad ending is related to financial exhaustion after promotion races. This means e-commerce firms without continuous investment will die.    

Big risk followed by a big opportunity 

Obviously, e-commerce companies do not only consider dry numbers in financial statements. What they are looking for is the users’ data and the future of e-payment.

Also Read: 3 trends that will drive Vietnam’s e-commerce sector in 2019

Additionally, in the era of big data and IoT, the outlook of these companies refers to the advertising platforms, similar to Amazon, Facebook, or Google. As a result, profit will come from providers that are willing to purchase advertising.    

In reality, no e-commerce site has positive profit within the first three years. As the largest e-commerce companies in the world, Amazon suffers net loss in several years before obtaining an impressive profit in 2019.

Moreover, in addition to selling in virtual stores, advertising sales on Amazon and Alibaba has grown rapidly, accounting for US$44 billion in the US alone, according to eMarketer. 

As a final word, Vietnam is claimed as a promised location for e-commerce firms, which attract even more foreign investment in 2020, including new entrance by Lotte and Aeon Mall.

It is due to the large market of over 95 million population and the remarkable increase in the speed of digital transformation.

As the above opportunities revealed, we expect more foreign investment in e-commerce and e-payment sectors in the next five years.

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According to the latest Nielsen Report, US consumers of 18 and older spend close to 12 hours each day engaging with podcasts, which is up nearly one-and-a-half hours from a year ago.

Also, the number of heavy podcast listeners— those listening every day —grew by more than 3.6 million. The U.S. podcast audience could double by 2023 as per Nielson.

The number of podcast listeners is growing exponentially. And this reiterates the importance of optimising this media and making it an integral part of your content marketing strategy.

No matter what business you are in —the fight to stand out always remains and podcast helps you achieve just that. Providing a perfect mix of education and entertainment, podcasts are a compelling, engaging, and useful medium for businesses and listeners alike.

Most companies do not realise the true potential of podcasts and how including it in the content strategy can help their brand build trust, earn goodwill, and position themselves as a market leader.

Also Read: Afternoon News Roundup: Vietnamese startup Waves raises US$1.2M seed funding for its podcast service

Here are five reasons why podcasts should be an essential part of your content strategy:

Low competition means more opportunity

Online marketing channels are highly competitive—and it is not easy to stand out. The challenge all marketers face is to find a platform that gives them maximum returns with minimum cost.

There are more than 80 million Facebook business pages, but only 850,000 podcasts, and the numbers reduce when you search by topic, making podcasts just the right content marketing platform for your business.

This confirms that it is the right time to start one of your own or reach out to popular podcasts in your niche for an interview or a talk.

Convenient to consume

A podcast is an ultimate multi-tasking content format making it easy to consume. According to Edison Research, 59 per cent of Americans do chores while listening to podcasts, making it an efficient way to educate oneself while doing mundane tasks like cleaning, grocery shopping, etcetera.

Unlike written and video content such as blogs, webinars, e-magazines, YouTube, etcetera, which requires a consumer to devote a specific time regularly to entertain and educate—all that a podcast listener has to do is plugin and play.

That allows people to consume the content as per their convenience. Therefore, we can see the massive jump in the number of listeners monthly.

Also Read: The podcast fever: why are listeners tuning in more frequently than ever?

Podcast ads are cost-effective and engaging

As per Nielsen, nearly 70 per cent of podcast listeners agreed that the podcast ad they experienced increased their awareness of new products/services. Showcasing that consumers are engaged listeners, and they do get influenced by what they’re hearing.

The storytelling and conversational format of podcasts tend to gravitate the listeners more—that’s the reason ‘host-read ads’ are more popular as it adds personal touch and credibility.

Also, people go to podcasts because they are interested in a particular topic that allows brands to reach an extremely attentive audience while leveraging trust and loyalty.

Establish yourself as a thought leader

The best way to boost your brand’s reputation—and build authority, expertise, and credibility in any industry is through publishing knowledgeable and engaging content. Where all other forms of media are getting saturated, podcast presents an exciting opportunity to help catapult your influence and pave your way as a thought leader.

Also Read: How to use podcasts to enhance your brand visibility and reach

Listeners get to hear personal stories, strategies, experiences straight from an expert’s mouth, which brings any subject to life—which gives podcast an edge over other forms of media.

Strengthens your relationship with customers

Online media platforms like blogs, newsletters, Facebook, etc. have allowed businesses to establish a more direct relationship with their customers.

Still, nothing can beat podcasts as it helps you connect with your audiences at a more personal level. Hearing your voice, your expressions, and listening to ‘live’ you make a whole lot of difference. They can put a name and voice to you and build a healthier and more personalised relationship.

From giving interviews, or having a chat with successful personalities from your industry or participating in an exclusive Q&A episode to dive into customer questions, podcasts opens a lot of doors and helps you create a long-form dialogue between you and your customers.

It is time to swoop in and become a winner in your industry by making podcasts an essential part of your content strategy. The best way to start would be to tune in to the podcasts specific to your industry, schedule a few talks on existing shows.

Once you get a taste of this medium, chances of you walking away from a platform that allows you to connect with your audience in an uninterrupted and unfiltered way are zero.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post. We are discussing inclusivity at work and women all of March. Share your thoughts, tips and best practices on how we can make the startup ecosystem more inclusive, gender and culture diverse.

Join our e27 Telegram group, or like the e27 Facebook page.

Image credit: CoWomen on Unsplash

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