RateS rides coattails of Indonesia’s social commerce growth

  • Singaporeans, Jake Goh, Lim Jing Rong recognised market potential in 2019
  • Positioned as option for those at risk of poverty, comes with supportive ecosystem

Members of the RateS team in Indonesia.IN A country with over 175 million internet users, it is no surprise that there is also a high level of social media engagement in Indonesia. In 2020 alone, the country saw 160 million people using platforms to interact socially and consume products and services.

While social commerce may be a hot trend today, it is hardly new in Indonesia, in fact back in the early 2010s, cosmetic brands, through their agents, were among the first to take to social media and other chat platforms to hawk their goods.

In recent years, the concept of social commerce has expanded, with the emergence of platforms that serve as social commerce enablers, offering services that help users create online stores and connecting them across numerous e-commerce and social media platforms. Each of these platforms, with their own niche, from selling of groceries, Muslim-focused apparel, maternal and baby products and fast-moving consumer goods, fueled the growth of social commerce in the country.

RateS rides coattails of Indonesia’s social commerce growthEnter RateS. Recognising opportunities within the social commerce space, and its growth potential in Indonesia, spurred Singaporeans Jake Goh (pic, left) and Lim Jing Rong to launch RateS there in June 2019.

The duo are no strangers to the e-commerce scene, having started Rate Pte Ltd in Singapore in 2017, as an e-commerce payment startup operating under the brand RateX. Two years later they decided that the time was ripe to venture into other Southeast Asia markets, starting with Indonesia.

However, recognising the untapped opportunities in the social commerce space, they changed their model for Indonesia to an ecommerce enabling platform focused on tier 2 and tier 3 cities whereby RateS operates a platform powered by social networks and personalised digital storefronts. Crucially the founders also recognised the importance of taking away the back-end pain points. It offers centralised procurement, fulfillment, logistics, payment infrastructure, and training in a bid to reduce the barriers of entry to starting a business.

“Our goal is to empower our resellers by removing barriers to them starting their own business by addressing the challenges around storage and expensive shipping costs. Our ecosystem enables our resellers to focus on selling, whilst they leave the hassle of logistics and storage to us,” Jake explained.

RateS claims to have more than tripled its growth in 2020, with the bulk of revenue stemming from membership fees and commission from product sales.

It also secured an undisclosed amount in a Series A round, back in February, co-led by Vertex Ventures and Genesis Alternative Ventures. The bulk of the capital is going towards penetrating deeper into tier 2 and tier 3 retail markets through expanding its current reseller base which covers over 400 cities with a target to increase this to 500 by end 2021.

In addition, it aims to improve the product catalogues as part of future product and platform development.

The platform was developed internally by a Singapore based team of 20 engineers, most of whom are Computer Science graduates from the National University of Singapore, while another 51 staff are spread across various cities in Indonesia.

RateS rides coattails of Indonesia’s social commerce growthGateway out of poverty

"From the onset, our aim was to be the gateway for those at risk of poverty to prosper, by giving them the opportunity, access to resources, and a supportive ecosystem for establishing small businesses. Our collective vision is to revolutionise social commerce through technology, creating digital entrepreneurs and empowering them with tools to conduct their businesses seamlessly and profitably,” Jake said.

RateS has to date helped wives of online ride-hailing drivers, warung owners, and housewives become business owners. It also claims that since joining the platform, sellers have seen incomes increase by up to 50%, typically within three to six months.

How RateS works

The bulk of Indonesian social commerce startups adopt a reseller model, where they actively acquire agents or resellers on their platforms. In this instance, RateS connects suppliers to micro-agents on their app, who in turn take advantage of social media as a popular medium of commerce in Indonesia to sell their products.

Users can set up their own shop on RateS, list items from suppliers and share their shop’s link through channels such as WhatsApp, and Facebook Messenger or take to popular Indonesian forums to sell their products.

“The bulk of our products (household category) are sourced overseas, often directly from the manufacturers themselves, therefore allowing us to provide better product variety and higher margins for our resellers. Our products are typically 30%-50% cheaper than what is available in the marketplace, enabling our resellers to earn up to 30% more for each item sold,” Jake claims.

He declined however to share how it was able to be 30% to 50% cheaper in categories such as groceries, FMCG and digital devices where margins are really low and it cannot match the scale of established market leaders. “We are not able to disclose this, as it is part of our competitive confidentiality,” said Jake.

To make it even more convenient for resellers, the products are shipped by RateS from manufacturers to partner warehouses in cities located in Sumatra, Java and Sulawesi. RateS also provides its own warehouses where products can be stored, ensuring logistics and fulfillment for the resellers are well taken care of.

Teamwork is key

Once users become RateS resellers, they essentially operate as a team, led by the top reseller. Each leader becomes the main point of contact for their communities, where they consolidate orders and often act as educators as well as pick-up points for resellers within their locality.

“This system has proven to be successful as it enables orders to be taken and delivered in bulk, hence is more economical compared to individual deliveries, particularly to remote areas within Indonesia,” Jake explained.

To date, RateS has registered more than 500,000 resellers on its platform and is targeting 750,000 resellers by the end of 2021. No surprise that it experienced a pandemic-induced spike in agent acquisition last year as more people sought new income sources after layoffs or salary cuts. The platform currently registers more than 10 million visitors a month.

Indonesia continues to see strong growth in social commerce. Management consultants, McKinsey, estimated in 2018 that social commerce is expected to grow into a US$25 billion (RM104 billion) industry by 2022, driven by the increasing number of the middle class. “We expect the social commerce landscape to accelerate further and we want to be ready to ride that wave when it happens,” Jake said.

With such potential, there are no plans to expand beyond Indonesia for Jake and Lim who are still running RateX in Singapore as well. “Our focus is 100% on the Indonesian market whereby we plan to go deeper into the tier 2 and tier 3 markets where we see huge untapped market potential.”

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