Don't just look at the hard numbers: Rakuten Ventures
By Goh Thean Eu October 18, 2016
- Entrepreneurs should be focused on understanding the culture, not just the hard numbers
- Malaysia has what it takes to be the next digital economy powerhouse in Southeast Asia
MORE often than not, when an e-commerce or mobile commerce company pitches its ideas and shares its optimism for the business -- the company will likely compare Malaysia's e-commerce industry with the likes of China and Korea.
Currently, China's online retail spend is almost 10% of total retail spend. In contrast, Malaysia's online retail spend is merely about 0.5% of all retail spend, and it is only expected to hit 5% by 2020.
Statistics and estimates like these usually draw one conclusion -- the country's e-commerce industry has a lot of untapped potential.
To tap into this potential, entrepreneurs may end up being too focused on building a payment gateway, or payment mechanism, that is low in latency or low in costs. Such a focus may not be the best strategy.
"I think one thing we need to understand and tend to neglect is culture. If you look at Korea, Japan and China as role models, then you may be looking in the wrong directions. Those are aberrations.
"Those are modern societies built on a fundamental level infrastructure built on trust," said Rakuten Ventures managing partner Saemin Ahn during his recent visit to Kuala Lumpur.
"In Malaysia, I think we still want to look at a person's face when we buy a product. I think that's ingrained in the culture."
He added that Malaysia and most other countries in Southeast Asia tend to trust and make transactions in different ways.
"With a culture that is more diverse, we have to understand that we will trust in different ways; we make transaction mechanisms in different ways. I think a lot of people ignore that fact and only looked at the hard numbers," said Saemin.
Game plan for Carousell
Rakuten Ventures is one of the key investors in e-commerce player Carousell. The e-commerce startup recently secured an additional US$35 million (RM147.6 million) in funding -- led by Rakuten Ventures, together with Sequoia Capital, Golden Gate Ventures and 500 Startups.
According to Carousell in a statement, the recent funding is one of the largest reported Series B rounds raised in the mobile classified space. The funds raised will accelerate Carousell's growth into new markets around the world and bolster its product and engineering teams.
Saemin said that it is important for the company to make cash on delivery (payment method) more seamless.
"That's very important for culture. In many ways, we need to look at how to make cash on delivery more seamless in Malaysia. Once we start to see the change in culture, we will then move with the actual demographic and scale of consumption," said Saemin.
He added that Rakuten Ventures is currently focused on helping Carousell to build a sustainable business and a good product.
"For us, we are looking at what the co-founders want to do. In the end, Carousell is built on the passion and vision of the founders. As long as we can look towards the same road to success, we will be very happy to be with the company," said Saemin.
As for a monetisation strategy, Saemin said that it will mainly depend on how the markets grow and evolve.
"In the long-term, on the whole, we still need to see how the market plays out. There are some marketplaces in the world that are driven by regular listings, while some markets are driven by premium listings. We want to see where the balance is," he said.
Malaysia can be the next digital economy powerhouse in SEA
Meanwhile, Saemin said that Malaysia has what it takes to be the next digital economy powerhouse in Southeast Asia.
"Just looking at the specifications. It (Malaysia) should be the next Singapore. There are 19.8 million debit cards and credit cards in the country. More than 18 million smartphone users. These numbers are amazing.
"That is something everyone should look forward to as a role model right now," said Saemin.
"If this digital economy has 10 wheels, then Malaysia has nine out of the 10 wheels to develop a great digital economy."
However, the journey for the country to become a digital economy powerhouse may not be easy. Saemin stressed that one of the key pillars the Malaysian government should look at is developing technical talent.
"It needs to find ways to get all the engineering talent to come back to Malaysia, and to look at how to develop technical talent from the very start," said Saemin.