Sale Stock raises US$27mil in funding
By Yunnie Marzuki August 22, 2017
- The Series B+ funding round was jointly led by Golden Equator Capital and Gobi Partners
- Funds will be used in strengthen domestic position, accelerate drive to profitability
INDONESIAN eCommerce startup Sale Stock raised US$27 million in its Series B+ round jointly led by Singapore-based Golden Equator Capital and Gobi Partners. Other investors are SMDV, Alpha JWC, Convergence Ventures, Korea Investment Partners and MNC Media.
According to Sale Stock founding chief executive officer Lingga Madu, the funds will be used to further strengthen Sale Stock’s position as the market leader in Indonesia and accelerate reaching profitability in the near term.
“We see the value Sale Stock brings to Indonesia’s eCommerce space – its tech-driven platform successfully reaches Indonesia's fast growing and relatively untapped middle-class markets in tier 2 and tier 3 cities. Seventy percent of Sale Stock’s customers in these cities are making their first eCommerce transactions, demonstrating the company’s unique advantage and potential for growth in Indonesia’s fast evolving digital economy,” said Golden Equator Capital managing partner Daren Tan (pic) in a statement.
This investment also marks the first investment from Golden Equator Capital’s ‘Technology and Innovation Fund II’, a targeted US$100 million fund.
“Following the success of the first Technology and Innovation Fund, we are looking to invest across the Southeast Asian region in verticals where we can add strategic value — addressing bottlenecks or pain points.
“For example, Indonesia’s fragmented geography poses ongoing challenges to eCommerce and logistics, providing an opportunity for tech startups to solve and disrupt how products can now reach new customer bases in the most efficient manner,” he continues.
Tan also tells Digital News Asia (DNA) that this is not Golden Equator Capital’s biggest investment in a single company but it is the largest investment round they are co-leading and it reflects the conviction that they have in Sale Stock.
Sale Stock currently carries over 15,000 stock-keeping units (SKUs) and receives thousands of orders daily, making it the largest fashion-related vertical eCommerce platform in Indonesia in terms of daily orders.
“Sale Stock has demonstrated impressive growth, with their average revenue per user (ARPU) growing 49% over the last 12 months. Sale Stock’s basket size grew 26% over the last 12 months,” explains Tan.
Competition and challenges
Based on Similarweb.com site rankings, Sale Stock is ranked (455), which is far from Zalora (179). When asked about the confidence Golden Equator Capital has in Sale Stock in view of this ranking, Tan says that Sale Stock serves a different profile of customers compared to Zalora, focusing on consumers in tier 2 and tier 3 cities in Indonesia.
These customers are characterised by having limited access to the internet, and a greater preference for mobile shopping and purchasing through social messaging or social media platforms.
“Given the characteristics of Sale Stock’s customers, which represent Indonesia’s fast-growing middle class, the company’s marketing strategies and customer acquisition channels are highly localised to the Indonesian mass market.”
Tan says that the Sale Stock website’s user experience and interface are tailored for mobile web browsers not apps or desktops as data is relatively expensive in Indonesia, and consumers avoid apps which require downloads or websites that require a lot of data to load.
“Sale Stock’s local expertise means that they are in a strong position to solve problems unique to Indonesia’s market,” he adds.
Tan also says that Sale Stock will ramp up its marketing budget next year, after improving profit margins and reduced the cost of goods and delivery this year.
“In view of their sound business plan and strong execution, Sale Stock is on track to be profitable late next year. We’re confident that they will continue to grow and gain market share.”
In terms of challenges in the Indonesian eCommerce space, Tan believes that regardless of the increasing presence of regional and global ecommerce players, Indonesia continues to face challenges in eCommerce and logistics.
“We foresee the emergence of a few dominant eCommerce players in the region who can overcome these challenges, with room for startups specialising in vertical marketplaces to grow and find exit opportunities.”
Tan says there is always the risk that one of these horizontal eCommerce players will spend immense, even unsustainable, sums of money on marketing to gain market share in the short term.
“Given the growing excitement over Indonesia’s eCommerce space, there have been major horizontal eCommerce players in the region who have been spending huge sums on marketing to acquire customers.
“Despite this risk, we believe that Sale Stock will be able to withstand the tide due to its strong penetration in tier 2 and tier 3 cities as well as their sustainable operations,” he concludes.