iPrice Co-Founder and Executive Vice Chairman David Chmelař
The year was 2014. Digitisation was accelerating in Southeast Asia, and e-commerce was about to explode. German startup accelerator Rocket Internet was setting up Lazada in the region. Sea Group’s Shopee was also making early strides.
David Chmelař, an aspiring entrepreneur from the Czech Republic who considers Southeast Asia his home, decided to grab this opportunity. Chmelař, uninspired by the corporate work culture, joined hands with Heinrich Wendel, a German, to launch iPrice, a shopping comparison venture in the region.
“I was in the banking industry working for a 100-plus-year-old company, and it was clear that digital would disrupt any industry, including banking. So I realised if I didn’t embrace digitalisation, I might face big troubles in the future of my career,” Chmelař, Co-Founder of iPrice, recalled.
Headquartered in Kuala Lumpur, Malaysia, iPrice Group aids Southeast Asia’s online shoppers to compare prices, promotions and discounts across its vast catalogue of 7.5 billion offers from 8 million sellers and merchants, including Shopee, Lazada, Tokopedia, and Tiki. The firm claims it serves more than 125 million unique users across Malaysia, Singapore, Indonesia, Thailand, the Philippines, Vietnam, and Hong Kong.
iPrice operates in a region where e-commerce is one of the fastest-growing sectors. In Southeast Asia, a fragmented market with many languages and cultures, e-commerce registered a 20.6 per cent growth rate in 2022, the fastest globally. Shopee, Lazada, Tokopedia, and Bukalapak continue to dominate the sector. A study projects that the region’s e-commerce players will generate US$89.67 billion in revenues, which will cross the US$100-billion mark in 2023.
Chmelař’s anticipated this enormous opportunity early on. “It was obvious that e-commerce would be a big thing in this part of Asia. Everybody was already running around with a smartphone; however, even super-essential services were unavailable. Lazada was starting. We realised that bringing transparency to the market would have tremendous value to users and help them save a lot of money. Plus, people in the region are generally not that rich (except Singapore). So, we felt it was perfect timing to start iPrice,” he said.
A ‘price-worthy’ beginning
Unlike many entrepreneurs of his ilk, Chmelař launched iPrice in seven markets in one go, which was unusual for a first-time entrepreneur as the risks involved were massive.
Fortunately, iPrice got a few things right at the very beginning: it had robust technology, a clear vision, and articulated its future story well to attract investors. This helped it to get strong traction quite early. The company also picked the proper acquisition channels, which propelled its growth.
The decision to launch its product across seven markets simultaneously was very strategic. The logic was that iPrice needed to scale to build that business successfully. So, instead of waiting for one single market to become large enough, it would be tactical to attack all seven markets simultaneously, covering four languages and tackling that complexity from the beginning.
There was also another rationale behind this move: since iPrice’s business model revolved around aggregation, the margins were very thin. Besides, the market was so tiny. It meant the firm wouldn’t earn enough to pay for the technology and data processing that happened in the backend.
“We thought our business model had a heavy tech element, replicable across the countries, and we ran it as one platform. While the offerings in each market were different, the process was the same. Eventually, we would achieve massive economies of scale,” Chmelař went on.
Culture & inclusion
Since iPrice operates in seven markets with different languages and cultures, it had to recruit talent with knowledge and experience in respective markets. Thankfully, the Malaysian government’s favourable policies allowed it to do so. This laid the foundation for iPrice to become a “truly inclusive” company, he said.
“In one team, there were people from Thailand, Vietnam, the Philippines, and Indonesia, working together on a problem to ensure that the problem also accounted for the local specifics. These people, born and raised in those countries, understand the cultures and habits and could interpret local user behaviour. This helped us operate in all seven countries without people on the ground,” Chmelař said, explaining the rationale behind the move.
Today, about 170 employees of 25-30 nationalities work in its only office in Kuala Lumpur, creating a global mix and match of cultures.
David Chmelař with his colleagues ay iPrice’s headquarters in Kuala Lumpur
Chmelař acknowledges that startup life brings enough pressure, and the company makes fun on the way to release the stress a little bit. It also encourages its team members to have courage and look for personal growth. “We drive a lot of feedback culture in that loop. We’ve seen this as the most difficult to crack because many people in Southeast Asia are grown by their early careers in traditional companies; the culture of ‘you follow what I say’.”
“We encourage our employees to swim against the tide. We have developed a very healthy culture, which allows people to raise their opinions, bring their problems up, and look for solutions. Many of our former colleagues are now entrepreneurs running their own companies, some of which are much bigger in funding and valuation than iPrice It is super encouraging. We encourage and support people to do that,” he shared.
Lack of resources and knowledge was challenging
As its operations kicked off, iPrice managed to partner with Zalora and Lazada. In addition, iPrice also onboarded hundreds of localised entrepreneurial merchants (mom-and-pop shops).
However, the journey was far from smooth, as the ecosystem was like a small family. The shopping aggregator didn’t receive much support, resources, or knowledge from the ecosystem. There were just events run by e27 and Tech In Asia, and everyone knew each other.
“We sailed through by making many mistakes, such as not following the best hiring practices and not having a structured performance management system,” Chmelař confessed.
There were also several situations when the founders thought of giving up and some near-death experiences, too. “There were days when we woke up from the bed defeated and then felt like a hero when we went back to bed at night. It repeated every day,” Chmelař said, narrating the roller-coaster ride. “You would raise a big investment one day, and the next day, you got to know one of your major customers was leaving. Then you fixed it. And then, the next week, you would feel that something was wrong with one of your key employees, and then you solved that as well. It was a crazy and wild ride,” he said.
That being said, iPrice was lucky to onboard some early-stage investors with experience building similar models in Europe. Besides providing the much-needed capital, they also advised iPrice on building a great business model, its elements, and how to kick it off successfully.
At the same time, the startup had several moments where literally, it found itself in a fix. “On one occasion, we only had enough to pay staff salaries. We planned to pay salaries and all other expenses from the investment we were raising then. Luckily, the funding landed a few hours before the cutoff time for the other payments,” he said. “On another occasion, our investors from Japan transferred the money, but it got held in the Central bank here in Malaysia, and then we needed to get some extra approvals for its release. And then a public holiday came. We went through several similar stressful periods throughout our journey.”
How iPrice works
From a consumer perspective, iPrice provides users with an overview of the cheapest deals across various e-commerce platforms. It takes everything a consumer buys on any of Southeast Asia’s e-commerce platforms, puts them in one basket, sort and clean them, and cuts them in a simple way for the user to pick the best deal for the desired product. Chmelař said these deals are trustworthy because iPrice checks the seller rating, reputation, and other dimensions of that purchase.
On the other hand, iPrice acts as a marketing channel for its partners; it helps them get access to additional users coming to the iPrice platform to check on the best deals.
“We advise our users that anytime they buy products online, especially if they are expensive, it’s worth checking iPrice before the purchase,” he said, explaining the working model. “We then send our customers to one of our partners, so we are an affiliate business to our partners. We are a channel and a good source of high-quality traffic for them.”
For example, some of the most desired smartphones in Indonesia are being offered by 5,000-10,000 sellers on various marketplaces and e-commerce merchants. To make the perfect decision and know the best deal, the user will have to do hours of research. “That’s the time we save for our customers by giving them advice within seconds,” he elaborated.
An edge over rivals
When iPrice started, there were a few competitors in the market (this number grew to 20-25 over the years). Some of them had the advantage of market knowledge but often struggled to deploy the global law.
Several international players — winners in their respective markets in Japan, Korea, and Europe — also tried to enter Southeast Asia. They failed because they were doing it out of their headquarters, far from the region, without really understanding the specifics of the region. A few firms tried the regional approach but failed in the execution phase.
“Very soon, it became clear that our regional approach was the right strategy because it provided a certain scale, and then we signed Lazada, Zalora and later Shopee,” he said. “Eventually, we became an undisputed leader in our vendor vertical over the years.”
While some of its earlier rivals still exist (local vertical winners in some of the countries it operated in), they struggle with the scale. Also, according to him, it’s difficult for them to deploy the latest technology.
“As we grew, we started thinking about the competitive landscape a bit broader. Then our competitors turned out to be companies like Google. Eventually, our competitors became our partners,” Chmelař shared.
iPrice regional competitors are Priceza (which operates in Thailand, Indonesia, Malaysia, Singapore, the Philippines, and Vietnam), BigGo (Vietnam and the Philippines), and PriceMe (the Philippines, Malaysia, Singapore, Thailand, and Vietnam). However, on closer inspection, iPrice doesn’t consider them rivals as iPrice has a different value proposition and market size from them.
Market comparison: similarities and differences
iPrice operates in seven markets — Malaysia, Singapore, Indonesia, Thailand, the Philippines, Vietnam, and Hong Kong. All these markets are similar in terms of some key trends. They are all mobile-only, where people access the internet and buy e-commerce products on mobile. (Singapore is the outlier here, which follows the Western development of desktop-first than mobile than a combination of desktop and mobile)
There is also a super-fast adoption of e-commerce. When e-commerce started, the region was way slower and smaller than India. But, according to the latest reports, the region’s e-commerce market size has already surpassed India’s, although Southeast Asia’s population is about half of India’s.
“The adoption curve has been steeper than in India. This suggests that the geographical complication of the region and the fragmentation in several countries made retail accessibility for users difficult. As such, they were very excited when they had a chance to buy stuff online and behaved faster,” he noted.
On the other hand, there are a lot of differences between these markets, the big one being the basket size. The average order value in Singapore is easily 5-7x higher than in Indonesia.
iPrice Co-Founder Heinrich Wendel
The types of products people search for are also different. In Singapore, and to some extent in Thailand and Malaysia, branded products like iPhones and others are the favourites. In Indonesia and the Philippines, people desire branded products but eventually settle for cheaper versions as their purchasing power is lower. Hence, the actual purchase happens on products that are much cheaper and non-branded.
“For example, in Singapore, a consumer probably searches for the latest version of the GoPro Hero camera. An Indonesian consumer would also search for a US$4,000 action camera, sorts it by price, and then buys it from a Chinese brand you’ve never heard of before, but with one-tenth of the cost of GoPro,” he explained.
In Thailand, the capital Bangkok has a relatively wealthy community. A significant number of people are concentrated there. However, the behaviour of the users is very different from those outside of Bangkok; it is almost like two worlds there.
“When it comes to Vietnam, it is a world by itself. From our perspective, it’s the most challenging market to crack as an outsider. It is one of the markets with a strong local community. There are very good techies with entrepreneurial mindsets and people. And as such, many of the game’s rules develop according to local development, not based on regional standards. It is different from what we see, for example, in the Philippines, where consumers tend to adopt the regional approach. In every sense, Vietnam is the hardest nut to crack,” Chmelař added.
In Vietnam, iPrice has adopted a ‘Vietnam-only’ approach. “There was a time when we wanted to win Indonesia, and we framed this rule called ‘Indonesia-first’, not ‘Indonesia-only’, where all the experiments, technology deployment, etc., went into the country. It was a success; now, around 50 per cent of our user base comes from this country.
After that, we focused on Vietnam. In the last three years, we made a big step change in our performance in the country, which we’re excited about. But it requires our highly dedicated approach,” he disclosed.
Also Read: Woowa Brothers injects US$1.5M into Malaysian shopping aggregator iPrice
In terms of revenues, the Indonesia business is the largest revenue generator. Vietnam, the Philippines, Thailand, and Malaysia are similar in size. Hong Kong and Singapore are smaller. “We don’t publish revenue numbers, but we can say that we are 4-5x times bigger than the next close competitor in gross merchandise volume,” he revealed.
The customer acquisition and go-to-market strategy
Chmelař said iPrice’s successfully generated a lot of traffic and user demand through Google SEO (organic search). When people in the region search for the cheaper iPhone 12 on Google, they get the iPrice suggestions, where they get advice on where they can find it. “That has been a global behaviour we’ve seen and adopted and mastered. So at this point, it is still one of our core channels for generating traffic effectively.”
It also means the company doesn’t have to pay for user traffic. Users get directed to the iPrice website for free when they click. While it sounds great, it is not free. “There is a cost, but it is more than the fixed cost. We have a big team to create top-notch content, which Google considers the best answer to a user query and sends us traffic. While you don’t have typical customer acquisition costs, you invest money in building a team to take care of the content on the website to make sure Google appreciates it and ranks us high.
This approach hasn’t changed; we are still investing, and Google is getting more sophisticated and demanding. Users are getting more demanding on the quality of content. So spend more as e-commerce is becoming bigger. Users are also searching more and more on Google, so we’re getting more and more customers,” he said.
iPrice aims is to become the Google for shopping comparison, according to Chmelař. “If you compare Google and Bing, they have the same features. But the results being thrown may not be as good as Google’s. We want to become a Google for shopping comparison. We believe our engine and technology help us provide the best results compared to our competitors.”
Funding and expansion
Since its inception, iPrice has raised US$26 million from investors, including 500 Global, Naver Corp, and some Japanese investors, including KDDI. The firm has yet to discuss plans to raise additional funding as it generates recurring revenues.
The firm turned profitable in 2018 but decided to invest the money into the business as there were still untapped opportunities. It invested in developing new features and enhancing the product to capture a bigger chunk of the market. “We’re not profitable now, but we can turn profitable any time and are working on it,” he said.
Also Read: iPrice Group raises US$5M from Itochu, Global Brain unit
The company has no plans to expand into new markets, he revealed. “We believe that seven is already a stretch. However, we regularly reevaluate new markets outside Southeast Asia, including South Korea and Japan. We look for opportunities in markets about to experience the e-commerce explosion.”
He claimed that there are companies that have approached it with the prospect of merging with a blank cheque company or SPAC. But it has no plans to take the company public at this point. “We are not optimising for SPAC, IPO, or other exits. We’re trying to build a great business. We believe exit opportunities will eventually come.”
The impact of COVID-19 on iPrice
The pandemic didn’t impact iPrice much. The effect was relatively moderate. It saw a substantial spike in demand for e-commerce products as people were locked in at home. As the crisis worsened, it saw some interesting trends.
“In Thailand, there was an enormous demand surge for inflatable pools because people, confined to their homes, wanted to buy pools for their kids,” he revealed. “In Jakarta, the demand surge was for bicycles because the public transport capacity was limited by regulation, and people queued up for hours to get on the bus. They started buying bicycles to cycle to work. There was a demand spike for condoms as well.”
On the other hand, the travel vertical was the worst affected. Before the pandemic, quite a substantial amount of iPrice revenues came from travel, where it advised people about where to get the best deals and discounts. “This segment declined as the pandemic spread. We also used to generate good revenues from ride-hailing and food delivery. And while the demand surged so much, those companies were at the edge of their capacity and decided to stop marketing activities because they couldn’t cope with the demand. It was a wild, crazy period; we all probably worked the hardest of our lives,” he admitted.
There has not been a dramatic shift in consumer behaviour, pre- and post-pandemic. E-commerce has always been the most substantial part of iPrice, and the pandemic helped accelerate it.
“While we might not even appreciate it fully, five to ten years down the road, we’ll see what has similarly accelerated the adoption of e-commerce in China during the SARS spread,” Chmelař said.
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