Rakuten's exit from Singapore this month may have left Japan-loving consumers and merchants dispirited, but the overall e-commerce sector here continues to see a future in the business, local players and investors told The Business Times.
HipVan, an online startup for designer furniture, said: "Commerce is moving online and not heading back to brick-and-mortar any time soon, so I don't think we need to be too concerned over Rakuten's exit."
It added that while it is a pity consumers and merchants have lost one option to trade online, Singapore still has plenty of online marketplaces to fill the gap. Qoo10, a pioneer e-commerce site, agreed, saying: "With the exit, there will certainly be a spillover effect benefiting the other e-marketplaces.
Known formerly as Gmarket, Qoo10 said it has 2.2 million users and 500,000 daily unique visitors, making it one of Singapore's 10 most-visited sites.
Its December 2015 sales grew 40 per cent year-on-year, even as sales at physical shops here dipped across most sectors.
Likewise, Singapore-based Lazada, which Rocket Internet founded and envisioned as "the Amazon.com of South-east Asia", reported a three-fold growth in December 2015 sales.
Both are venture-backed by eminent local investors - Qoo10 by Singapore Press Holdings in an US$82.1 million (S$113 million) Series A round, and Lazada by Temasek in a US$250 million Series F round.
Brand differentiation is key to competing with such well-funded competition, said new entrant ShopBack. Believed to be Singapore's first and only native rebates site, it rewards shoppers with cash rebates, a proposition it deems "timelessly attractive".
Honestbee, a homegrown e-grocer, distinguishes itself as a social-impact business: "We want to create job opportunities for our concierge shoppers - students and stay-at-home mothers - through flexible hours and fair pay (up to S$14 per hour)."
Differentiation appears to have borne fruit. ShopBack, which debuted 11/2 years ago and is now a 60-strong team with operations in India, reported for the past year a "seven-figure" revenue and monthly growth of 30 per cent, also bucking the national retail slowdown.
Honestbee, founded in 2014, has raised US$15 million in just its first year; it now has more than 140 employees and 1,200 personal shoppers and "delivery bees" and plans to expand to Kuala Lumpur, Jakarta, Bangkok and Tokyo.
Golden Gate Ventures (GGV), an investor in honestbee's e-grocer peer RedMart, said e-commerce is entering specialised areas such as groceries or furniture.
Consumers are also more familiar with e-commerce and willing to buy more expensive items online, it noted.
HipVan, one of GGV's portfolio companies, added: "The obvious advantage Singapore has is logistics, as it is smaller and denser and infrastructure is more mature.
"The disadvantage is that it's a relatively small market, so for e-commerce companies which usually require a certain scale to be viable, getting to that scale can be quite challenging."
Rakuten, which on Feb 12 announced it would shutter its Singapore, Malaysia and Indonesia marketplaces by March and lay off about 150 employees, could have made the decision based on a routine review that showed these three markets to be its least lucrative, said Chua Kee Lock, chief executive of Vertex Ventures, a Temasek-owned VC firm and South-east Asia's largest.
As an early investor in homegrown luxury-sales site Reebonz (recently speculated to be exploring an initial public offer on Nasdaq) and Indonesia-based online grocer HappyFresh, Vertex is a strong advocate of e-commerce.
As is Rakuten, which told BT that it believes in the "long-term growth" of e-commerce in Singapore, and will pursue C2C (consumer-to-consumer) and mobile business models over B2B2C (business-to-business-to-consumer) models in South-east Asia instead.
Interestingly, its venture-capital arm Rakuten Ventures is an early investor in Carousell - a Singapore-based C2C mobile marketplace - having participated in the latter's US$6 million Series A round in 2014.
The Japan-based company, which had launched its B2B2C marketplace in Singapore in January 2014, will retain its Asian headquarters here, as well as marketplaces across Asia, Europe and the United States.
Asked whether its performance in Singapore had been dismal, Rakuten said it does not disclose country-specific results, but that its moves are in line with a new strategy map.
This article was first published on March 7, 2016.
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