Online shopping isn’t just a COVID-19 fad, it has become a lifestyle. Even as we move on from the pandemic, an increasing proportion of consumers in the Asia Pacific region continue to embrace self-serve and mobile retail experiences.

Indeed, in a 2022 report, 9 out of 10 millennials listed online shopping via their smartphones as their preferred means of purchasing. Elsewhere, in the United States, a record US$9.12 billion was spent online on Black Friday 2022, up 2.3 per cent from Black Friday 2021, while Thanksgiving saw US$5.29 billion in online spending, up 2.9 per cent from 2021.

This holiday season, the digital space will once again be the battlefield where shoppers hang out, and businesses compete. Anyone who wishes to survive and thrive in the competitive environment must buckle up and brace for the biggest shopping window of the year.

In this article, we’ll explore some tips and strategies, illustrated with the success stories of three e-commerce businesses that we were able to partner with to help take their business to new heights.

Create a brand that speaks to customers’ hearts

In the crowded e-commerce space, numerous businesses are selling the same type of products. How do you stand out? Why should people choose and stay loyal to your business? The key lies in creating a brand that connects with your customers.

Founded in 2020, Cheak (formerly known as Butter) is a Singaporean brand offering women’s activewear. With only five products in their catalogue in their first year of business, Cheak generated an impressive six-figure revenue, and they did it by building a unique brand around women in Asia.

Cheak was born when its founders, Olivia Yiong and Tiffany Chng, couldn’t find active apparel that is chic, affordable and fit for Asian body types. Setting out on their own to address this gap in the market, Olivia and Tiffany built a brand that made it a point to listen to the Asian women’s community and what Asian women wanted.

Not to mention, Cheak’s collection of vibrantly coloured activewear fits both the body and budget as well. Finally, Asian women’s voices were heard, and Cheak quickly became a newfound favourite.

But as with any start-up retail business, there is a substantial outlay required to purchase inventory to sell. In fact, this is a problem often faced by newer e-commerce companies who are often not able to secure any financing from traditional financial institutions, as many e-commerce merchants lack sufficient assets to serve as collateral for bank loans, while private equity and VC firms tend to favour disruptive innovators over e-commerce businesses. 

Fortunately, we were able to work with Cheak to provide the funds required to finance their inventory purchase. With this injection of life, Cheak was able to significantly fulfil more orders, increase their revenue, and grow their brand.

Also Read: Profitable e-commerce: Making real money in the new year

This caught the eye of Love, Bonito, Singapore’s leading women’s fashion label, which is poised to expand to overseas markets such as Hong Kong, Japan and the US. Cheak was recently acquired by Love, Bonito enabling their female-founded activewear brand to continue to empower millions of women with confidence in themselves and in everyday life.

Scale growth with paid search advertising

When it comes to scaling a business, it’s often said that you have to spend money to make money. In this regard, digital advertising is what you can do to multiply your revenue quickly and exponentially.

Jaco Hardware illustrates this well. Now a big name in Hong Kong’s hardware industry, Jaco Hardware began as a college hustle by its founder, Henry Chao. It wasn’t until Henry decided to double down on the digital venture and seek funding that he turned the business around.

Henry invested some 60% of funds secured into digital marketing – which is a huge sum for a business, but one that paid dividends. Noticing huge search volume for certain products, he started sourcing new hardware tools from across the globe and amped up Google Ads spending in those categories. When people searched for hardware products on Google, Jaco Hardware’s ads would show up and drive visitors to its online store.

As a small business owner, Henry shared that the amount of money spent on advertising seemed overwhelming at first. With clearly defined goals, performance tracking, analytics and optimisation, however, returns on ad spend (ROAS) turned out to be very promising.

Revenue grew 100x in less than two years,  establishing the company’s leadership position in the online hardware industry. Henry’s hardware empire now turns a seven-figure monthly revenue and is continuing on an upward trajectory.

Sell directly to consumers to accelerate growth on your own terms

For digital merchants just starting off, joining marketplaces like Amazon, Shopee and Lazada are the easy path to take. To push your business towards further growth and success, however, building a direct-to-consumer (DTC) brand is a must. In fact, this is how Archiology grew its revenue by 5x in 6 months.

Archiology is a designer company of home lighting and furniture goods and first came into being as one of the many merchants on the Amazon Marketplace.

Also Read: How e-commerce brands can tap into the US$600 billion social commerce market potential

Among all challenges of being a marketplace seller, commission fees are where it hurts most. Platforms pocket up to 45 per cent on every transaction, often undercutting merchants’ profit margins to razor-thin levels. Interacting with customers, delivering customised marketing messages and offering seasonal promotions also prove challenging since all must be done within platform rules and policies.

The company subsequently cast about for ways to establish a DTC brand and eventually made substantial capital investments in the transition from being an Amazon seller to establishing its own DTC brand. 

The pivot to DTC opened up a treasure trove of opportunities for Archiology. On top of eliminating exorbitant platform fees and offering higher profit margins up for grabs, selling directly to consumers enables Archiology to engage in hyper-personalised interactions with them.

With its own online store, Archiology now offers 15 per cent off a customer’s first purchase, a US$5 reward for each referred purchaser, as well as a live chat box to answer shoppers’ queries right away.

This way, interested visitors turn into purchasers, existing customers bring in new ones, and they themselves remain loyal customers of the brand. More importantly, most of them know Archiology by its name, not just another seller on Amazon.

Reaching into the opportunities of e-commerce

As the Chinese saying goes, starting a business is difficult, but keeping it going is even harder. Running a business in today’s crowded digital landscape, the real challenge is to stand out from the competition and achieve continued growth.

As a key funding partner for the Southeast Asian/APAC e-commerce market, we have partnered with hundreds of e-commerce businesses. We believe that the full potential of the region remains untapped and that, contrary to recent reports, there remain great opportunities for growth and funding in the e-commerce space. 

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What Sistema Asia Capital is facing is likely no different from any other established VC firms in the market in the current downturn, said former CEO Edward Tay.

He was responding to a recent DealStreetAsia report that said India- and Southeast-Asia-focused Sistema Asia was caught in a liquidity limbo and struggling to find buyers for its Asian portfolio. Sistema had placed its portfolio on the secondary market but could not evoke buyer interest owing to the political implications of being associated with Russia, which is engaged in a fierce war with Ukraine. 

Sistema Asia’s parent company is headquartered in Russia.

Also Read: ‘The era of easy money is over’: VCs speak of funding winter and exit landscape in Southeast Asia

Tay quit as Sistema Asia CEO amidst this crisis and is currently an Associate Professor with the UNITAR (the UN Institute of Training and Research). UNITAR provides innovative learning solutions to individuals, organisations and institutions to enhance global decision-making and support country-level action for shaping a better future.

“From Sequoia Capital to SoftBank, many VCs have already announced an investment freeze because the outlook looks very negative,” Tay said in an interview with e27. “Therefore, top VCs, including Sistema Asia, have to relook at their portfolio companies’ valuations as part of the fiduciary role as a fund manager. Looking at some of the portfolio companies, deciding whether they should keep some of them because there’s still potential despite the negative outlook, and investing their capital to support them through this crisis are the areas they are currently looking at.”

He further remarked different VCs have different outlooks on portfolios and valuation. Top-tier VCs will look at how best to protect Limited Partners’ interests and help them recycle their hard-earned capital in this hostile environment. “They also have a different perspective on how the global economy, especially the regional economy, will move and how they ultimately affect their portfolio valuations. So I believe the fund managers now have their task cut out.”

Established in 1993, Sistema Asia Capital (part of Russian investor Sistema) invests in telecom, utilities, retail, high-tech, pulp and paper, pharmaceuticals, healthcare, railway transportation, agriculture, finance, mass media, and tourism. It has invested in over a dozen companies, primarily in India, including Qwikcilver (acquired by Pine Labs), Licious, Lendingkart, Faasos, netmeds (acquired by Reliance Retail), Uniphore, and Seclore.

‘2023 is a watershed moment’

Tay also said 2023 would be a watershed moment for the VC investment industry. There has been an increased tendency to focus on sustainability-related investments because of the global pandemic and fundraising challenges. Over the last 36 months, ESG-related investments have grown to about 11-12 per cent across the entire classes of venture capital globally. 

“Many foreign portfolio companies are also being reevaluated because globally, consumers (young and old) demand that manufacturers and producers build products using less energy so that they tax the planet less. They also demand companies carry green labels on their products,” Tay said. 

Listed companies with a clear sustainability action plan are rewarded with higher valuations and stock prices simply because they solve world problems. At the same time, organisations that don’t release credible sustainability reports with their annual reports are being marked down by many global retail and institutional investors. 

Also Read: Can Chinese VCs be a potential wild card for SEA during funding winter?

“In the past, many VCs and startups used artificial intelligence to solve different pain points. They now use the same deeptech in artificial intelligence, quantum mechanics and data analytics to solve practical sustainability-related issues. Such companies are being rewarded with revenues and contracts by the markets,” Tay continued. 

Southeast Asia has also been supportive of sustainability efforts. Six of the ten countries in the region, including Singapore, have clear sustainability policies. The Singapore green plan, conceived in 2020, already has an offshoot of more than 20 plans at different agency levels. “Singapore also has energy plans for 2050, green bonds programmes, and enterprise sustainability programmes to support startups and founders who want to learn more about sustainability,” he concluded. 

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Indonesian cybersecurity-as-a-service startup Peris.ai has raised an undisclosed sum in funding led by East Ventures, with participation from Magic Fund.

The startup will use the money to build and enhance its cybersecurity platform, train Machine Learning and AI capabilities, and nurture the ethical hacker community. Peris is supported by a community of more than 1,200 ethical hackers.

Also Read: ‘From a cybersecurity perspective, the Asian market still uses legacy tools’

“With constantly evolving cybersecurity threats and how there has been a significant increase in reliance on technology and connected devices, the potential for cyber attacks is more significant than ever. We believe Peris.ai is at the forefront in providing the right data protection solutions for every business and individual,” said David Samuel, Co-Founder and Chief Executive Officer of Peris.ai

Peris.ai was co-founded by David Samuel (CEO), Co-Founder and former CTO of Ritase.com and its former Cybersecurity Head Deden Gobel.

Peris.ai offers its solution as a subscription-based service with different pricing tiers based on the organisation’s needs. It also provides a specialised SaaS-based platform for high-risk industries and companies with complex IT infrastructures.

All the services are performed with the advanced technologies and the expertise of Peris.ai’s cybersecurity consultants and software engineers to ensure maximum protection. It comprises 13 highly skilled individuals with in-depth knowledge and expertise in cybersecurity and software engineering.

Peris.ai claims it has recorded a minimum of 20 per cent month-over-month growth in monthly recurring revenue (MRR).

Also Read: watchTowr can tell an organisation in real time if it can get compromised

“The advancement of technology should be followed by strong data protection. An organisation’s security level is no stronger than its weakest spot. It requires a holistic approach, including local relevancy. We believe Peris.ai is building cyber security solutions based on local and regional needs,” said Willson Cuaca, Co-Founder and Managing Partner at East Ventures.

The co-founders’ previous startup Ritase provided a trucking services platform in Indonesia. In 2019, it raised US$8.5 million in Series A funding led by Golden Gate Ventures, with participation from Jafco Asia, ZWC Ventures Insignia Ventures Partners, Beenext, and Skystar Capital.

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An agile, speedy and proud animal, the rabbit can leap over obstacles and maintain its pace as it navigates the complex landscapes it finds itself in. A symbol of longevity, peace, and prosperity in the Chinese Zodiac, the year of the rabbit is a timely token for the digital payments industry.

Yet, in the midst of the Lunar New Year celebrations, we find ourselves facing a challenging landscape. Inflation is rising rapidly, Singapore, for example, has introduced a higher rate of GST, and in the tech sector, we see a wave of layoffs as some of the world’s largest tech firms grapple with staying on course in the face of post-Covid corrections.

However, it’s not all bad news. The fintech industry is expected to see significant growth in Asia this year, and current predictions suggest the global payments revenue – which APAC accounted for over 50 per cent of in 2021 – will top US$3 trillion by 2026. As we leap over the economic challenges, there’s a lush landscape of opportunities for the tech and payment sectors across the APAC region to graze on.

Challenges present a hotbed for innovation

As the retail sector becomes even more competitive, transcending borders and channels, merchants and enterprises are fighting to get the attention of consumers, wherever they may be.

But, as the digital payments rabbit leaps through this competitive landscape, it must remember the lesson from that well-known fable – it mustn’t stop to rest on its laurels and be outdone by the slow and steady tortoise, but instead, it must innovate to maintain pace throughout this year. Innovation and creativity thrive in difficult environments, so we should expect great things this year.

One area where we can expect to see creative use cases is Buy Now Pay Later (BNPL) systems across the B2B industries. Due to the larger and more expensive purchases involved in the case of corporates, it can be challenging to implement a BNPL system for B2B transactions.

Also Read: How to scale up your DTC game with payments

However, as more SMEs turn to BNPL for their zero per cent interest rates, we can expect businesses will take the leap to integrate BNPL systems to attract more customers in the current environment.

Across the APAC region, BNPL has continued to surge in popularity with consumers, evolving to become Live Now Pay Later (LNPL). When money is tight, consumers want to spread their costs for new work wardrobes, flights for their next escape, or even routine health and dental costs. We can expect consumer payment trends like BNPL and LNPL to continue to evolve, with entrants into the APAC market likely to come from China and the US.

Alongside BNPL, new digital wallet functionality often combined with Embedded Finance services and apps will appear on the scene, paving the way for merchants, enterprises, and payment service providers to offer customers unrivalled and highly personalised payment experiences.

Where innovation grows, it is vital that regulation must follow, particularly in the payments industry where trust is of paramount importance. We have already witnessed active regulators over the last year in the region with the BNPL space and the crypto industry, protecting consumers whilst promoting innovation.

Digital banks on the rise

In a market that is forward-thinking from a digitalisation standpoint, it’s surprising to see that digital banking is a concept that has seen a slow introduction into the region up until now. Popular for some time in the US and Europe, in 2023, we will likely see digital banks surge in popularity across the APAC region.

This will throw incumbent banks into a state of disruption in which they need to compete against offers of shopping rebates, improved interest rates, and sign-up bonuses, as well as greater convenience and the streamlined interfaces of digital banks.

Also Read: What the payments industry should consider when preparing for the holiday season

However, traditional banks are leaping towards the same opportunities as their fintech counterparts, increasing their offerings and stalling digital banks from winning the race for now. It will be exciting to see how the new and old players battle it out this year in the hopes that this will also spur innovation in the banking sector.

Hopping into the metaverse

Could this be the year that most of us take our first jump into the metaverse? Shifting our perspective on reality, big tech companies and financial institutions are foraging for their pixelated piece of the metaverse, which is estimated to be worth over a trillion dollars by 2024.

In December, Indonesia’s central bank (BI) announced plans to use the digital Rupiah to buy products in the metaverse in the future. Many central banks around the world are also developing Central Bank Digital Currencies (CBDCs) for use in the metaverse.

This emerging technology could have a transformative impact on APAC economies, with the metaverse having the potential to have its own digital economy with integrated payments and an avenue for commerce.

Though it is still in its dawning stage of development, countries such as China and South Korea are already ahead of others when it comes to adoption rates and regulatory stances on developing and integrating the metaverse.

Hopefully, other markets in APAC will mirror these steps, and we’ll see collaboration between regulators and industry players as we journey towards making the metaverse the next big transactional channel.

Whilst the year of the tiger promised adventure and bravery – as well as an element of cruelty which we saw play out in 2022 – the year of the rabbit promises to be a bumper one for the APAC payment market.

With innovation, the rapid advancement of digital payments, and new technological experiences presenting endless opportunities for those that seize them, I am left wishing you and the payments industry gong he xin xi (good luck in the year ahead).

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

Join our e27 Telegram group, FB community, or like the e27 Facebook page

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Early-stage Philippine VC firm Foxmont Capital Partners has announced the close of its Fund II at US$21.3 million.

Notable institutional investors participated, including Singapore-based Pavilion Capital, Taiwan-based AppWorks, and Netherlands-based Orient Growth.

Also Read: Fund managers have their task cut out right now: Edward Tay

The newly raised fund brings Foxmont’s total net asset value to over US$30 million across both funds.

With Fund II, Foxmont Capital will continue investing in Philippine-focused and Filipino-founded early-stage startups that have proven to scale effectively and lead the Philippine digital evolution.

The VC firm made the first close of Fund II in November 2021 with US$12 million in committed capital.

The Philippines, with a population of 113 million, is an attractive destination for venture capital. In 2022, local startups raised US$1.1 billion, exceeding the US$1.03 billion amount raised in 2021.

The country is experiencing continued GDP growth momentum and is one of the fastest-growing e-commerce markets globally, according to a Google-commissioned report.

Foxmont believes that the Philippines is among the most technologically advanced emerging markets, ripe for digital innovation.

Over 60 million Filipinos are actively utilising fintech solutions paving the way for sustainable adoption of other digital solutions across varying sectors.

Also Read: Monde Nissin CEO backs Foxmont Capital’s initial close of US$20M Fund II

Founded in 2018, Foxmont Capital has invested in 31 startups, including live-streaming app Kumu, vertical e-commerce player edamama, D2C beauty brand Colourette, stock trading platform Ztock, and digital ledger and PoS app Peddlr.

“We look forward to continuing our investment track record, scouring the Philippine market for great entrepreneurs, and empowering them to build Filipino solutions to Filipino problems,” said Franco Varona, Managing Partner of Foxmont Capital Partners.

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