Retail as we know it has been creeping towards a slow quiet demise for some time now. It’s death knell was not marked by a clamorous church bell but in abject silence. A silence bereft of the sound of foot fall and absent of shoppers’ clamourings. Online shopping or e-commerce has defied its initial detractors and has quickly become the preferred mode of making purchases within the last ten years. The desire for instant access at any hour has fuelled its growth and as of 2017, the industry racked up US$2.3 trillion in sales world wide, with two-fold growth expected by 2021, to reach US$4.5 trillion.
Original Featured Image: Unsplash
With a highly developed Information and Communications Technology (ICT) infrastructure Singapore has wholly embraced this trend to become the regional leader of e-commerce penetration. The country has projected 2019 full year revenue of SG$4.99 billion and an annual growth rate of 15%, past 2022, to reach SG$10 billion. It then comes as little surprise that Singapore has positioned itself as an emerging technology hub, attracting the lion’s share of the world’s top technology firms and creating a fertile ground for incubating some of its own tech talents. Amongst these, the island nation can tout a number of stellar start-ups as home-grown: like Grab, Sea (formerly known as Garena), Carousell as just a small sampling.
As a tech start-up, Carousell can be said to have already achieved success. However, like a good fisherman, it was thrown back for the potential to snag a bigger fish. The end-game for most start-up entrepreneurs is to labour tirelessly and relentlessly for several years while looking for an investor to cash out with a huge buyout pay cheque. When founder, Quek Siu Rui, was presented with just that, to the tune of a US$100 million dollars he turned it down, opting to continue nurturing his creation personally and that has us cheering for the company even more. It is a spirit that harks back to the country’s tough pioneering origins. “Carousell’s purpose is to be more than just a transactional platform”, shared Mr. Quek. “Our end goal is to grow a community of millions of people around the world who share our belief that changing the way we consume things can make life more meaningful.” The company is now worth more than US$550 million, and has expanded to seven countries, including Australia, Hong Kong, Malaysia, Indonesia, and Taiwan.
The faith in the company isn’t just shared between its founders. Carousell’s investors include Rakuten Ventures, Sequoia, Golden Gate Ventures and 500 Startups and to date, after several funding rounds, its backers have pumped in a total of US$182 million. However, the company has been slow to turn a profit. In 2016, the company’s revenue was negligible, while its loss before tax was US$22 million. In 2017, revenue was reported at US$1.73m revenue and US$29.8 million loss in 2017 even as monetization began. 2018 closed with US$7 million in revenue but with a bottomline still in the red at US$25 million.
Despite embarking on monetising efforts in 2017, results still seem slow to materialise. At present, Carousell is still prioritising expansion over profit while still biding its time before rolling out more concerted monetising efforts. The online classifieds industry is inherently one that requires sufficient scale which comes along with high margins, especially in marketing and staff costs. 2019 kicked off with a round of hiring, set to strengthen the management team – readying itself for the coming challenges. Colin Bryar former advisor at Amazon and Tan Su Lin ,formerly at SPH as deputy chief marketing officer and senior vice president of sales strategy and operations join CFO Rakesh Malani (ex-Komli Media) and executive leader Winnie Khoo (ex-Property Guru and AliBaba) to round off a highly capable leadership team.
In addition to beefing up internally, Carousell has also been securing critical external partnerships. As of 2018, UOB has been working with the company to provide car financing services.To enhance it’s online payment system with the ability to facilitate transactions through debit card, credit card or bank transfers, DBS, Stripe and Visa collaborated to create Caroupay.
When it comes to the crunch, though, it is ultimately profitability that decide the company’s fate. It determines whether the company’s business model is sustainable and it also decides whether new or larger rounds of funding can be raised. At its disposal are a couple of options. The most straightforward would be online advertisements. Other avenues have been to offer premium paid features such as ‘Bump’ and ‘Spotlight’ which enhance the visibility of items listed for sale for a limited amount of time such as a 1 or 3 day ‘Bump’. These are further enhanced by daily picks and recommendations to buyers of listed items matching their profile. With almost a decade in operation, a significant amount of data must have been accumulated but, raw data in itself is just a garbled mess. Starting in 2017, Carousell Pro offers sellers a platform to analyse their marketing efforts and gain access to insights, especially for those in the property and automotive industry.
For the moment, it seems Carousell is on the right track and timing its monetising efforts, refusing to rush into it too fast, too soon. If past experience is anything to go by, the founding partners do have a reason for trusting their instincts and their investors do seem to agree. Beyond funding and keeping the faith, there is one recent investor that stands out from the pack and may have the potential to make all the difference – OXL Group. As the world’s largest operator of classified sites, it is also one that has figured out how to be profitable. Perhaps Carousell could better find its own way to monetisation through its new investor. It would seem that to discount the company of any success at this time would be premature. �P