Fashion is one of the first things that comes to mind when thinking about online shopping and nowadays, there are plenty of brands and retailers to choose from.

Yet, did you know around 60% of all Southeast Asia’s fashion and lifestyle retail is attributed to small vendors who sell at places like Bangkok’s Jatujak market, Platinum outlet mall, or Singapore’s Haji Lane?

In Indonesia, it’s even more – 85% of retail is thanks to small shops and resellers and what’s even more surprising is that most of these sellers are not taking advantage of the internet revolution.

This is exactly what Ankiti Bose realized on a trip to Bangkok a few years back and together with Dhruv Kapoor, the duo built Zilingo in 2015. The company is a fashion and lifestyle marketplace focused on helping small sellers in Thailand, Singapore, Malaysia and most recently, Indonesia, expand their customer reach.

Bose shares with ecommerceIQ how her marketplace competes in an already saturated online fashion market in Southeast Asia and what her newest B2B venture is all about. 

“Businesses first”

While most companies create a product for the end user, Zilingo was specifically built with the sellers in mind in order to help them create virtual storefronts and overcome the difficulty of managing large order volumes and fulfillment.

“I realized all these sellers had smartphones and probably a few had Instagram, Facebook shops or Shopee accounts. While it is a great way to be discovered, there’s a lot of noise and complexities to running a business on these platforms. We knew that writing some Magento code wouldn’t solve this problem; we needed to educate them,” says Ankiti.

Part of the reason why current ecommerce platforms such as Shopify don’t tempt small sellers to open online shops is simply because they’re in English.

Understanding that English proficiency levels vary widely across Southeast Asia, Bose aimed to build a localized backend system that allowed sellers to easily track analytics, manage inventory and schedule order pick-ups. The mobile-first site was good to go within five months.

When a buyer purchases a product on the site, the seller is notified on his app to confirm the order and provide a slot for a product pick up. Zilingo’s logistics partners, integrated in the system, then go to the seller’s shop to pick up the item and deliver it to the buyer. The company doesn’t hold any inventory itself.

Zilingo marketplace was built with the sellers in mind to make it easier for them to create an online store and help them track analytics, manage inventory and schedule order pick-ups.

For these services, the e-marketplace charges sellers 15-20% commission on their products plus a per-order fulfillment fee. According to Bose, businesses don’t mind paying the commission if they get more orders as Zilingo helps them to be discovered by buyers.

“Our seller churn is less than 7% annually meaning sellers don’t drop off once they see the value of the platform,” says Bose.

The less than two year old marketplace has managed to secure 2,700 sellers all trying to capture the attention of 1.1 million users, of which 2% are active buyers. All of this could be the reason why Zilingo managed to secure a $8 million Series A in September 2016.

New ventures

Thailand is Zilingo’s biggest market in terms of sellers and buyers; Singapore follows very closely. While around 80% of the company’s gross merchandise value comes from these two countries, Zilingo is also present in Malaysia and launched in Indonesia in the first week of February. The company also ships to other markets such as Hong Kong, Australia and United States.

“Customers from Korea, Hong Kong, Australia or the US have become an unexpectedly fast-growing part of our business,” says Ankiti. “Probably because the only supplies that were available to these buyers were typically from China and while prices were cheap, the product would arrive completely different from what was expected.”

According to Bose, Thailand is an exceptional market to find a great price versus quality and relevance balance. “If there is something on a catwalk in Milan, it will take three seasons to become available in Indonesia, but it would probably be on hangers in Bangkok the next week,” says Ankiti.

Not only are individuals exploring the Thai fashion scene, Zilingo is also seeing increased interest from businesses – wholesalers and resellers from far-flung areas who are trying to buy in bulk.

“We have many requests to buy 10, 20 or maybe 100 items so we decided to create a separate platform called Zilingo for Business where they can get a better rate from the seller,” says Ankiti. “This also keeps our cohort analysis clean.”

Marketing to millennials

Zilingo is a mobile-first platform. Bose shares that while the marketplace is available on desktop, 98% of its users are on mobile and 83% of users are millennials. Being a millennial herself, Ankiti figured early on she needed new ways to get the attention of buyers.

Zilingo is a mobile-first platform and 83% of users are millennials.

“Other marketplaces are trying to sell to me in a way that I don’t naturally consume media anymore. Majority of my phone time is spent on Instagram Stories or Snapchat and sometimes Facebook. We decided to go big on video and build a Snapchat presence and give sellers an opportunity to position themselves on these channels,” explains Ankiti.

She calls this approach “content on steroids”.

The way it works is that users see products in a video that they can click on to go to the product discovery page. From there, it’s only a few clicks to purchase.

The marketplace does allocate a large budget for digital marketing, but Ankiti ensures it’s spent efficiently thanks to her past experience at Sequoia and Mckinsey.

“Facebook is our most optimized marketing channel and although we’re spending, we recover it back within nine months. For international orders from US or Australia, the cost is covered on the second transaction,” reveals Ankiti. “VC money is quite valuable to us.”

Behind the scenes tech

Besides marketing, technology is the other big expense on Zilingo’s budget. Of around 70 employees across four countries, 25 are engineers based in Bangalore and Singapore. Their efforts are focused on applying machine learning to product discovery and image recognition technology to improve the company’s online shopping experience.

While running operations in several countries, Zilingo is keeping it light. The company has around 70 employees across four countries, 25 of them are engineers.

The Zilingo app lets a customer snap a picture of a blouse or dress and browse through similar items available on the platform. The company recently featured an article on the top 15 looks from the Golden Globes Awards and the video resulted in an 80% higher click-through-rate than any other content on the site.

The development of product discovery technology is even more important for markets such as Indonesia.

“I think people often underestimate the importance of technology required to do very relevant targeting when you have a market that wants both Western and Muslim wear. Either you have to separate the products or you have to have great machine learning that tailors content to somebody who wants to buy only hijabs and not bikinis,” says Ankiti.

The challenges faced by everyone

Zilingo is not an exception to the pain points logistics and payments poise to ecommerce in Southeast Asia. In Zilingo’s case, they might be even more profound as the company does not have its own warehouse and items must be picked up from 2,700 sellers.

“There was a time when one of our sellers from Taiwan would ship to Thailand and deliver the product sooner than an upcountry seller shipping to Bangkok. At that point we understood we had to do something,” says Ankiti.

The marketplace is open to working with logistics companies both large and small and is constantly on the lookout for new partners. It has managed to reduce delivery time in Thailand from 5 days to 2-2.5 days, yet its priority is to get it down to 1-2 days.

Payments are the second problem as cash-on-delivery and money transfers through bank branches, ATMs and payment kiosks are the preferred payment methods.

“The problem with these payment methods is converting orders to real transactions. Cancellations are common when people have to go to ATM or a branch to pay for the items,” says Ankiti.

“Marketplaces run on fintech and logistics companies. At the end of the day it doesn’t matter how great the product discovery is if the delivery experience sucks. You will hate the marketplace. It’s no wonder why so many of the successful internet companies in this region are C2C marketplaces – the problem is between the buyer and the seller,” says Ankiti.

We hear you Ankiti.

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