\ This article totals 5991 words, expected to read 8 minutes /
In 2017, more than a decade after going to sea, Andy Li officially left the big factory where he once worked and chose to start a business.
In that year, he founded Silot in Singapore, focusing on the To B business of AI-enabled banks, which was favored by many mainstream banks, and many leading banks in Southeast Asia and Japan became his customers. But Andy has been thinking about how to go from behind the bank to the front of the stage to go deep into the scene and directly serve southeast Asian small and medium-sized enterprises.
However, the epidemic came, and the crisis came in the eyes of many people, but Andy felt that the real time had come, Fintech must combine its own scenes, the epidemic brought such an opportunity, and after communicating with investors, it was decisive to decide that it was time to enter To C. In 2021, his team launched the social e-commerce APP KAYA in Indonesia, accumulating millions of users in half a year, ranking in the top ten of the e-commerce list.
However, things are not so easy, and the Southeast Asian e-commerce market in 2020 has long been a red sea. In Indonesia alone, Tokopedia, Shopee, Lazada, and Bukalapak have firmly held the top seat in the local e-commerce market. However, in the past two decades of going to sea, Indonesia, a geographically highly dispersed country, is the most typical decentralized economy. E-commerce giants have been working for many years and cannot completely fill the needs of local users, and the depth and breadth of goods are still the pain in the hearts of e-commerce practitioners. In the long-tail market, there is still an infinite market space, online retail penetration rate of less than 10%, most netizens still love offline shopping, traveling together to visit the market is an indispensable part of life in Southeast Asia.
Kaya main page / Provided by Andy
New opportunities for e-commerce in Southeast Asia
Zhixiang Network: Did you think about doing e-commerce when you first started your business in 2017? What was the Southeast Asian e-commerce market like at that time? Is it a good time for e-commerce to start a business? How is 2021 different compared to 2017?
Andy Li: Actually, when I left Garena in 2012, I thought about doing e-commerce, but the demand for supply chain and traffic demand for e-commerce is very large, I made games before, I can only meet the front-end operation, e-commerce has a lot of more complicated things, at that time I felt that I could not get it.
In the past decade, in fact, in Southeast Asia, a variety of e-commerce was born, such as Zalora, Lazada, EZbuy, etc. At that time, e-commerce actually met the difference between 0 and 1, when e-commerce was the same as in the early days of China, the rich market was satisfied first, first do not consider sinking, do not consider the wider coverage. However, after these years of development, e-commerce has long become the Red Sea market, in addition to fighting traffic, brands, users, has already begun to fight the supply chain. Like Indonesia from the data point of view, Tokopedia is about 45 million monthly active, Shopee 41 million, the head of e-commerce has almost 40 million monthly active cases, in fact, the coverage of the population are covered. When I communicated with my peers, everyone also reported that it was not easy to buy new traffic, and the traffic pool was highly covered, and only active could be bought.
In this case, Indonesia's e-commerce penetration rate in the early stage of the epidemic is about 6% to 7%, and now it may be close to 10%, which is much different from China's 30% penetration rate, so it actually means that if the C-end can't buy new traffic, the penetration rate is still so low, indicating that many people's consumption is still offline.
However, when the online retail penetration rate is still relatively low, I think there are still good opportunities for e-commerce entrepreneurship, such as DTC or community grouping, and there are also people who do local 2B supply, which are all done.
Zhixiang Network: So what kind of route are the local e-commerce giants trying at the moment, and once they try these directions you said, where are the opportunities for entrepreneurs?
Andy Li: Their attempts are all about taking the branding route, taking the Tmall route, one direction is to go to branding, one is to go to community. In fact, these are two different routes, and it is difficult for them to try both routes at the same time. The need to support large sellers is that you gave me traffic, I immediately fulfilled the contract, immediately make money, this is the easiest way to improve GMV, at present all the head e-commerce are busy doing this, this thing is also the most promising and most profitable.
The upfront investment is also very huge, not just any player can do, and like the Indonesian giant competition pattern has been formed, Bukalapak has gradually transformed to supply small B, Tokopedia and Gojek merger, I think there will be a long period of time to digest, and Tokopedia is also taking the branding route before, and in the Indonesian mind, Shopee and Lazada are taking the cross-border route, they have different groups of people. TikTok takes the social and interested route, but there may be a big problem. Douyin really works in China because of the emergence of super-large Vs like Wei Ya and Luo Yonghao. The appearance of the big V is also equivalent to the support you give me traffic, I screen good brands, good products, and have a strong enough ability to perform, their expectation is that this event will sell a small number of SKUs are all explosive products, that is the happiest, the most painful and worst case is that you have to talk about a number of products, and then each product does not sell much. In Indonesia, the standard can be sold directly a lot of such a situation is relatively rare, may not be as big as China to do, Indonesia is difficult to give birth to a big V like Li Jiaqi, Wei Ya, small and medium-sized V will be more, long-term development may also change.
Zhixiang Network: Is it possible that several giants monopolize e-commerce in Indonesia?
Andy Li: The consumption upgrade in the Chinese market has emerged with the rapid growth of GDP, and Southeast Asia will not have gdp growth as high as China, and the community differentiation is also more serious. Taking Indonesia as an example, Indonesia's credit card share is about 5%, and the online penetration rate of e-commerce is also about 6% to 7%, which is actually similar, which means that e-commerce still meets the needs of rich people, because the poor cannot apply for credit cards, the economy and finance, including consumption scenarios, are linked to each other, and there will be some commonalities and connectivity. I think that in the next few years in Southeast Asia, the competitive situation is how to compete online and traditional offline, and everyone in e-commerce is thinking about how to make the online cake bigger first, and the goal is not the current small cake. Therefore, from various data, it can be predicted that the growth rate of online GMV in the next few years is very fast.
Zhixiang Network: In your opinion, what are the characteristics of Southeast Asian markets such as Indonesia?
Andy Li: Indonesia is the largest SMB market, and the Indonesian supply chain is actually very fragmented. Geographically itself is very decentralized, with 17,000 islands, which is said to be actually more. Secondly, the real transaction scene is very discrete, many things rely on imports, after the import of layers of distributors laid down, there are always some non-standard supply chains to meet the needs of the long tail. The problem of decentralization is that demand and supply are actually very scattered, many transactions are more in the same city or regionalization, and each place has established its own small trading circle, which is very different from China, you go to Jingdong to buy something tomorrow and send it to your home.
The Philippines is more similar to Indonesia, and Thailand is more similar to Vietnam. First of all, Thailand's logistics efficiency is relatively high, the difference between Thailand and Indonesia is that Thailand has a strong supply chain, compared with Indonesia, the quality requirements for services are not the same as Indonesia, including this per capita GDP and so on are different points. But the same point is that the night market cultures of the two countries are very similar, and there is a strong demand for long-tail goods and this social shopping experience.
Singapore is another form, that is, small, the same city, the quality of goods is high, like Singapore's market in the first-hand e-commerce may be more demand for more fast and good province, and this place performance efficiency is relatively easy, for foreign goods are more open, and like Indonesia to some e-commerce cross-border parts are banned.
Decentralized long-tail market
Zhixiang Network: In addition to mainstream e-commerce, in Indonesia, how big is the market for this long-tail demand that you mentioned?
Andy Li: It's hard to say how big the long-tail market is, in the mode of shopping malls and Shopping malls, it is very easy to calculate how much their GMV is, and the same is true for online e-commerce, but the night market is such a thing, I have not heard of which market is charged by GMV, the most stall fee, right? It is easy to perceive that bazaars have existed in Southeast Asia for several years and are widely accepted.
In Indonesia, we have a great demand for standard products, but the current demand can not be satisfied very well, due to supply chain, economic structure, fulfillment logistics and other issues, we have turned the demand to non-standard products. So under this premise, how big is the market for long-tail demand, from the C-end point of view, it is definitely larger than the standard market, and I estimate that the difference is about 25% and 75%, which is about three times that of the standard market, which is in the Indonesian market.
Zhixiang Network: Is it because of the epidemic that the form of the market needs to be transferred to the Line?
Andy Li: I think the pandemic is definitely a big reason. Many people start to shop online for the first time, this wave of dividends is in, if I am a small trader, I do not do online, equivalent to I gave up a lot of the market, and my original customers are not on the street, which is a great impact.
Secondly, the habit of C-end is also being established, plus Indonesians themselves love to share and love social, and share what they want. Third, many people will ask sellers why they do not sell on the e-commerce platform, I think that in terms of local education, the difficulty of getting started on the e-commerce platform is still very high for many people, the transaction cost is relatively high, and the requirements for performance and quality are higher, which is more difficult.
So many sellers are not not moving online, they have always been in FB, Ins try to accumulate traffic to sell things, and their own limitations lead to the inability of long-tail sellers to find their own living space in mainstream e-commerce, so slowly everyone is satisfied with the sale and spread of social media.
Zhixiang Network: So what kind of product is the KAYA you are making now?
Andy Li: KAYA is a trading scenario based on social and interest.
People who sell things are divided into three categories, one is the demand for Listing, to divert the flow to the line down to perform the contract, so the value I bring to this type of person is how to expand his audience radius, the traditional offline store traffic is fixed, online may increase the traffic, then more users may become his consumers.
The second category is to hope that online services and performance can be met, and the easiest thing is simple online services and virtual goods.
The third category is a simple C2C transaction, maybe I make some biscuits to sell, and then do some handicrafts, sell new and old goods, etc., in these three categories, in fact, everyone's needs are not the same.
Then at present, we find that these three types are actually integrated, diversion to offline and C2C transactions, in fact, there is a certain overlap, completely depending on the buyer and the seller's own agreement.
These words are actually a bit like trading in the night market, in fact, this mode of buying and shopping is different from the traditional shopping mall. B2C head e-commerce, payment methods and transaction methods are limited. So if you look at it this way, KAYA has a part like 58 city, some like Taobao, and another part of it may look like a public review. In this kind of platform, the user first pays attention to whether the buyer and seller are reliable, his credit score, and his credit system.
Then from the C-end point of view, the traditional e-commerce model is divided into different categories, based on the search model. We're similar to TikTok's distribution model. At the beginning, there was no home page, and the user involved the logic of traffic distribution in the process of screen and screen brushing, and the logic of traffic distribution was strongly related to the social relationship of friends, and the interest and geographical location.
So from the C side, it is probably such a logic, from the B side, it is to open up the credit system and secured transactions, so as to establish an ecosystem.
Zhixiang Network: What is the best selling product or the largest seller on KAYA at present?
Andy Li: We don't focus on the biggest sellers, we focus on the smallest sellers, it's a bunch of ants competing with elephants. When we were doing user research, we found a tailor, and the tailor had only one or two hundred followers here, which looked very unremarkable. When we were researching, we asked him, you send goods all day, but there are not many transactions completed online, to be honest, how many orders can you sell, and whether you can get business through KAYA.
He said that he could get 150 business orders a month through KAYA, he felt very good, more than enough to serve, this is the size of the volume is particularly comfortable for him, and in the process of trading did not pay much money, so he is now from the beginning of the change of clothes and sell simple homemade clothes has gradually expanded to sell children's toys and other things that housewives may also be able to buy by the way.
There are currently hundreds of thousands of such sellers in KAYA. So what we are currently focusing on is not how many closed-loop transactions, we are now talking about how to complete digitalization and online, at least from offline to online, as to whether he is willing to complete the transaction e-commerce from online, which is related to his business.
The long-tail market is particularly interesting, with a mix of goods and services. There are help children to write homework, there are old women to help people to say pro, recently in the user research, the phone is a 15-year-old child, selling some game currency, game point cards, about 20 to 30 orders per month, relying on this to make pocket money, in Indonesia can not find other platforms can let him have such a harvest.
Kaya Seller / Andy offers
Zhixiang Network: Actually a bit of an idle fish feeling?
Andy Li: Yes, the same thing as idle fish is that it's a community, buyers and sellers don't have any definitions, and a lot of things are long-tail non-standard. The difference with China is that the proportion of second-hand goods is very large in idle fish, and our proportion of second-hand goods is very small.
Zhixiang Network: What is your ultimate vision for KAYA?
Andy Li: The final idea is that he might be a synthesis. You see that idle fish is actually a community of interest. The above includes chatting with people, helping to play games, and there are quite a few of them. So this form of words may have a more intertwined situation in our place, so the final thing is to enable these tens of millions of small businesses to move online and get their corresponding customers. From the C-end point of view, it may be an online market.
In addition, in China, dare to say that they do Taobao sellers basically have an annual transaction volume of at least more than 100 million, if not to this level, at most we sell things online. But in Southeast Asia, the so-called big sales, whether cross-border or local, are much less numerous than in China, and the transaction volume currently realized is also much less. The reason is that a lot of money from C-end users is spent on non-standard products.
So in the long run, I believe that over time, Southeast Asia will gradually increase like China's e-commerce penetration, not the way of big B2C or this platform, but to launch these small ants and move them online.
Zhixiang Network: Has there never been a similar product in the Southeast Asian market? According to my understanding, similar products should appear in the very early stage of e-commerce, such as the early development of Taobao?
Andy Li: Yes, after the success of Taobao, it took the branding route to establish Tmall, and because the market in Southeast Asia was relatively blank, everyone went to take the branding route, and no one wanted to sink down to do this thing. There are several points to do a good job of sinking, first of all, to be able to let everyone meet the trust, to meet the transaction, these two points of the words of many companies can not do. Because many people either have resources in the supply chain or resources in e-commerce operations, and the essence of our matter is how to make users trust each other, and how to make everyone's transaction costs low enough.
In the early PC era, some Listing websites had a similar form, but they did not solve the problem of distributing traffic, these websites are now turning to specialization, some to sell used cars, some specialized in real estate, these are their transformation paths, because they have not been able to solve the traffic distribution mechanism and how to close the loop transaction.
How fintech can empower e-commerce
Zhixiang Network: In fact, you just mentioned that doing e-commerce requires very strong operational capabilities, and your team does not have such capabilities, so how does this product solve operational problems now?
Andy Li: Let me give you an example, let's say Taobao has a small two, and the small two is the key to this category. However, what I do should be data-based, how to correlate the relationship between people and people, so when we do finance, we have some patents in the United States and Singapore that do knowledge graphs, which are actually categorized, in the financial field, it is to screen out good people and bad people or people who are suitable for different products, in the field of e-commerce, it is actually to re-match and combine the people and goods yards.
User credits /Andy are provided
Zhixiang Network: So what kind of help has your past experience in fintech provided to the current e-commerce business?
Andy Li: In fact, fintech needs to be combined with scenarios. For example, like Stripe, the first scene to cut into is e-commerce, so that everyone can easily access to collect money, Square is directly offline these scenes, so Fintech company wants to succeed, it must find its own real scene. We used to provide technology and payment engines to banks, and then after we took the payment license, we had to cut into some key scenes, we couldn't do everything, if we did everything, it was more difficult to grab customers to fight a price war. Secondly, many scenarios have been done by other companies for many years and are doing very well, so we need to do scenarios where society has needs and is not well satisfied at present.
We feel that these small and medium-sized sellers their needs are demand online, and after the online how to complete the financial linkage in addition to payment, all kinds of financial needs are also very important, and in the so-called we are C2C transactions, although there are many sellers, but we all regard it as the C-end, that is, a buyer and seller in our there is no clear boundary.
So under the premise of this kind of transaction, then the secured transaction is a very important thing, because in Southeast Asia everyone is missing the ability to identify credit, the credit score of the buyer and seller is also very important, so at present we have launched the credit score, and some financial institutions have begun to cooperate with such a credit score, the buyer and seller can also see each other's credit score, so that everyone can trade more easily and conveniently.