Erik Cheong is a serial entrepreneur from Singapore. In 2016, he co-founded Park N Parcel which employs an asset-light business model to deliver logistics services to the major e-commerce platforms such as Taobao and Lazada. Erik switched his venture-building focus to the Central America market where very few Asian entrepreneurs have explored before. In 2019, a super app, dubbed as OMNi, was launched in Costa Rica as a joint effort spearheaded with his Costa Rican partners, Moises and Samuel. In the same year, Erik was invited to join the eFounders Fellowship (Southeast Asia) organised by Alibaba Group and UNCTAD, and was nominated as one of Forbes 30 under 30 Asia (Consumer Technology).
Meet the OMNi mafia at the headquarter office in San Jose, Costa Rica
Recently, Polymath Ventures spoke to Erik about his stories of founding businesses over the years and to seek his advices on building technology-empowered businesses in the Central American region. Below is the extract of the interview.
Polymath Ventures: Could you share with us the vision and mission of launching OMNi? What brought you to build a company in Costa Rica, which is located in a far-flung continent from your home country?
Erik Cheong: Our team aims to make OMNi the leading super app in the Central American region. So far, we have built a team of over 600 employees and activated four major service modules, namely the fintech, the mobility, the healthcare, and the lifestyle, achieving around 800 thousand downloads in Costa Rica. In terms of downloading, OMNi is already ranked as Top 5 mobile applications in the Central America, competing against Uber, Rappi, and Glovo.
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While I was working on Park N Parcel, I have encountered many Chinese entrepreneurs as well as the corporate executives from the Internet companies in China. My interactions with these Chinese business partners allowed me to understand how they leverage on technologies to vastly disrupt the commercial activities in arenas of E-commerce, financial services, sharing economy, healthcare, etc. My participation in the eFounders Fellowship deepens my knowledge base further and personally, I am also tremendously influenced by the speed of company building in the Chinese style and the Chinese way of viewing companies as inter-connected modules in an ecosystem rather than stand-alone silos.
When I launched Park N Parcel, I could sense the accelerating momentum and increasing intensity of peer competition in Southeast Asia with unicorns emerging in several aspects. At that time, I happened to know my current Costa Rican business partners who introduced me to the huge untapped market in Central America, which could be examined as an integrated market with shared culture and uniform language. Such market characteristics project a great potential of regional market expansion unlike Southeast Asia, where the market is extremely fragmented in terms of economic status, language, and geography. Based on all of these considerations, I’ve decided to give a business trial in Central America.
PV: According to your observation about the Asia and the Central America status quo, what is your opinion about the ecosystem gap between these two markets?
EC: Simply referring to the fintech sector, I’ll say it probably takes 3 to 5 years for Central American countries to reach the current status of the cashless society in China. Our team is working hard to bridge this gap with our payment methods.
PV: Could you elaborate more about the payment service offered by OMNi?
EC: Our fintech team is currently pushing on the B2C QR payment. In Asia, the processing fee charged on the bank card payment is capped at 3% while in Central American countries such as Costa Rica, the payment processing fees charged by the banks and payment processors commonly range from 5% to 13%.
QR payment by OMNi helps the local merchants to save on the transaction fees paid. Moreover, contactless payment is much safer and strongly recommended by the government worldwide to replace paper payment or even card payment. The COVID-19 situation in fact encourages the local residents to adopt OMNi payments such as virtual wallet, peer to peer, or QR, at a faster rate across several geographies. As a next step, we hope we can develop more use cases such as utility bill payment and payroll payment via OMNi.
PV: Undeniably, the pandemic hammered the economic growth globally. Nevertheless, a lot of disruptive businesses — such as OMNi Moni —benefited from the consequences stroked by Covid-19.
EC: Yes, and it is not limited to the payment sector only. Under our Mobility module, we have launched the shared services targets on the last mile transportation for the commuters and students in the city and suburb of San Jose, Costa Rica. In response to the COVID-19 pandemic, the local government published a series of regulations such as the restriction on the taxi services after 10PM on weekdays. Nowadays, we have observed a service peak after 10PM on a daily basis as OMNi Bike is the only biking service provider in Costa Rica, so far free of competition from Uber or Didi.
OMNi Bikes and OMNi EVs displayed in San Jose, Costa Rica
PV: OMNi successfully turned a crisis into an opportunity of growth, that’s impressive!
EC: Timing really matters. During the COVID-19 lockdown, OMNi also launched the OMNi Session under the lifestyle section — an entertainment channel for the citizens who have to stay at home over the past months. So far, we have accumulated millions of views on our OMNi Session, taking the first-mover advantage compared to other similar offerings.
PV: This is really an act demonstrating sharp business acumen. Besides OMNi Session, what other services are also available under Lifestyle section?
EC: We also provided asset-light B2C Ecommerce services via Ingo. Our users can browse the store catalogue on our website, placing orders online and subsequently collecting the goods directly from the stores by themselves or choosing a delivery. We offered the API backbones to connect the shop POS front-ends with our website, enabling the real-time inventory updates for OMNi users.
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PV: You sound like a priest who travelled to the Central America to spread your experience and knowledge of building Internet companies in Asia.
EC: I genuinely learnt a lot from how modern Chinese build the Internet businesses. For instance, I have studied the business case of Ping An Good Doctor, which in turn inspired me to launch the OMNi Healthcare that aims to provide digitally enabled medical services to the community in the Central America in the near future.
PV: It is unbelievable to hear what OMNi has achieved in so many sectors within two years. Along the way, have you and your team encountered any difficulties or challenges?
EC: I find two issues bother many entrepreneurs here. First would be the bureaucracy of the governments. I’ve seen the resistance to innovate or change the old practices and how there’s fear when these authorities are faced with new technology.
The second challenge I found in the Central America is that the local community’s unfamiliarity about Internet business conducts, posing huge friction for us to deepen the market penetration rate within a short time span. Again, I was inspired by Taobao’s create approach, sending salesman to villages or wet market where they teach the farmers how to use Alipay. I also let my sales team head to the local markets, teaching the fruit sellers and coffee retailers how to use OMNi to collect payments. Furthermore, OMNi has launched a 24/7 hotline service, allowing OMNi users to consult anytime when they encounter any problem while using OMNi services. I believe the community education would help the local users to learn about the new Internet services.
An OMNi staff teaching the papaya seller to use OMNi QR Payment in San Jose, Costa Rica
PV: Could you offer some advice to the entrepreneurial community on company-building in the Central America?
EC: I personally believe in two things. The first success factor would be localisation. For instance, during the market research before launching OMNi Bike, I found there was a strong biking culture in Costa Rica while no technology companies were offering the shared bicycle services at that time. This somehow indicates a chance of success if we are the first to bring in the idea of shared bicycles.
Another case of localisation strategy would be how we target our first badge users for OMNi FinTech services. Though the local community hasn’t used QR payments at all, the Chinese migrants in Costa Rica heard about WeChat Pay and Alipay before. Therefore, we decided to push our sales resources to the local Chinese community before influencing the native Costa Ricans to adopt this digital mode of payment.
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Market product fit is such a determining factor for a new venture’s success, especially in its premature stage. Besides localisation, I think branding also plays a critical role. For example, we did spend effort in designing the OMNi logo as well as the color theme of our shared bikes, embedding the sense of high-tech and modernity to attract the young users such as the university students and young working professionals in San Jose.
PV: Insightful sharing! I sincerely appreciate this interview session today as I’ve learnt so much from you.
EC: You are welcome. I hope to have more conversations with entrepreneurs who are also interested in building something interesting in the Central America and Latin America in general. I always believe that discussion breeds excellent ideas.
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This article is produced by the e27 team, sponsored by Polymath Ventures
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