Banking On Millennials And Video, Zilingo Lands $17 Mn In Series B Funding To Capture Southeast Asia’s Fashion Market

Southeast Asian fashion marketplace Zilingo has raised $17 Mn in Series B funding round. The investment was led by Sequoia Capital India & Burda Principal Investments.

Tim Draper, founder of DFJ also joined the Series B funding round along with the family office of Manik Arora, who was the founder of IDG Ventures India. The participation in Series B funding represents Arora’s first investment in Southeast Asia and one of Draper’s early investments in the region too. Existing investors, Venturra Capital, SIG, Beenext, and Wavemaker joined the recent Series B funding round as well.

Zilingo was launched in late 2015 by Ankiti Bose and Dhruv Kapoor, after spending almost a year in the local markets of Bangkok, Singapore, and Jakarta. Based on their research, the duo pegged the opportunity in the Southeast Asia’s fashion market at $20 Bn with a large chunk of the market being disorganised, unaggregated and offline. Thus, they decided to create a tech-enabled platform to get small brands an online presence and at the same time allow consumers personalised recommendations-based search. The startup is currently headquartered in Bangkok with its tech team operating from Bengaluru.

Prior to raising the Series B funding round, the company had raised $8 Mn Series A funding in September 2016 and $2 Mn Seed funding round in 2015, taking the total funding raised by Zilingo to $27 Mn.

“We have been extremely impressed with Zilingo’s growth and focus on strong unit economics. We believe there is a massive opportunity to build the leading fashion marketplace in the region and are very excited to join their journey,” says Albert Shyy, Principal at Burda.

Shailendra Singh, Managing Director, Sequoia Capital (India) Singapore Pte. Ltd. adds, “It seems only yesterday that Zilingo started with a seed round from Sequoia India. It is terrific to see how they have progressed towards building the leading fashion and lifestyle ecommerce company in SE Asia. We are thrilled to continue to partner with Ankiti, Dhruv and their young, high energy team.”

Zilingo: What Changed For The Southeast Asian Fashion Startup From Raising Series A To Series B Funding

When Zilingo raised $8 Mn in September last year, the founders’ aim was to gain market share in Singapore and Thailand. Also, there were plans to expand to Indonesia and get more sellers across the region to use its seller centre. As claimed earlier, Zilingo was operationally profitable and the founders were on the lookout for more partnerships and innovations to further improve their unit economics.

At that time, the founders also revealed their inclination towards employing artificial intelligence (AI) and investing in interesting applications of augmented reality (AR) plus alternate payment methods to keep themselves way ahead of the curve in the coming months.

Well, it seems that both Ankiti and Dhruv have been able to achieve their targets. Today, after almost 20 months of launch, and 12 months of raising Series A, the Zilingo founders claim to have grown over 1000% with a 25% month on month growth with a lot more tech added to the platform, thereby enticing both the consumers and the sellers.

Let’s have a look at the key growth numbers and statistics first.

As Ankiti shared with Inc42, “We invested in AI not just in product surfacing and recommendations but also in personalisation. We also use AI to make lives of sellers easier by easing the process of uploading and managing their products. It has had a good impact on our conversion rates on the user side and reduced churn on the merchant side. On new payment methods, we are using over five partners to now ensure we do not just COD, card and netbanking but also payments at kiosks, easy bank transfers etc. In a market where non-card transactions are huge, this gives us an edge over competitors.”

Zilingo now intends to use its Series B fundraise to strengthen its position in Indonesia and expand its supply base. “Our focus on building an extensive seller ecosystem catering to fashion sellers across Asia makes us a favourite with thousands of private labels and merchants, who are our real growth engine. With this new round we aim to fortify our fashion supply from across Asia and meaningfully expand in Indonesia,” she added.

Zilingo Services And Tech Stack For Sellers

Zilingo is a tech heavy platform wherein at each step a technology has been implemented to suit the needs of both consumers and the sellers.

Katana: Zilingo’s Proprietary Ecommerce Backend For Sellers

As we explained in our earlier coverages, Katana help sellers deploy in-house technology to any number of regions, languages, currencies, on any platform in real time. It offers cross-border logistics framework to help sellers move out of traditional boundaries and grow anywhere in the ASEAN region. The platform further enables sellers to list their products on its mobile marketplace, along with multiple value-added services.

Seller Services: From Working Capital Loans To Ecommerce Training, It Covers All!

As Ankiti believes, their strength comes from the thousands of small and medium enterprises that use the Zilingo platform to sell their merchandise online. “Most sellers can’t afford working capital loans, photoshoots, cataloguing, video production, warehousing or packaging because their volumes are low. However, through Zilingo’s seller platform, every small seller can get rates that are 15-20% more competitive,” she added.

Zilingo currently provides its seller a stack of nine value-added services that allow them to embrace the digital economy – a big goal for Zilingo – which ultimately makes them a preferred partner for most SMEs.

Zilingo On the Consumer Front: Placing Its Bet On Video Tech With ‘The CloZet’

By September 2016 when Zilingo raised its Series A funding, the founders have already introduced the features such as dynamic recommendations, wish-lists and social shopping. At the same time, founders also came up with a visual recommendation engine and visual search features powered by Mad Street Den’s Vue.ai platform. This allows consumers to upload the snaps of products and find similar recommendations on the basis of colours, styles, and patterns.

However, Zilingo team is majorly engaged with young millennial customers. As shared by Ankiti, “Over 85% of our customers are under the age of 35 and a majority of them are between 18 and 26 years of age. This audience is individualistic, looking to make a statement and easily bored. Catering to this audience and being relatable to them as a brand is key to our growth.”

Thus, last year only Zilingo announced its plans to focus towards adding in-app/in-product video content, blogs, and dynamic videos, to provide users with much more engaging content. This made them add over 60,000 new styles every week, do daily trend-analysis and alter their feed by their users’ preferences. “We also ensure that we provide guidance to our top sellers on upcoming trends so that they are ready to splash their Zilingo storefronts with the latest fads before they become boring. This sort of collaboration across thousands of merchants and brands gives us an edge over other players,” added Ankiti.

Taking a step ahead, just two weeks before announcing their Series B funding, Zilingo launched The CloZet – a video player that enables viewers to shop the products shown inside the video – within the video itself.

In the CloZet library, a user can find videos showcasing the various looks and fashion trends with popular fashion diva’s and professional models. As the video plays, a user can find the links to the brands and products shown by the model right in the video itself, thereby increasing both user engagement and the probability to purchase.

“Driving hyper-engaged ecommerce in a world that loves Instagram stories is a tough one. We say, challenge accepted!” chukled Ankiti. She further added,

“Video as a format has worked excellently for Zilingo, and we’re ahead of the curve in our industry in the way we’re using video to transform the shopping experience. We’re collaborating with our sellers and content producers across the world to create exciting, shoppable content.”

The Southeast Asia’s Ecommerce Landscape: Battle Goes Fiercer Between Local And Foreign Players

As stated by Marc Woo, Google’s head of ecommerce, travel, and financial services in a recent interaction with Bangkok Post, “APAC accounted for 40% of global ecommerce sales in Q1 2017, but the vast majority of those sales went to larger or more mature markets in the region, particularly China, but also Japan, Australia, South Korea, and India. That leaves Southeast Asia as the next frontier for ecommerce in the region.”

A joint report by Google and Temasek Holdings has touted ecommerce in Southeast Asia to be a $88 Bn market by 2025, growing at a CAGR of 32%.  Also, the Southeast Asian countries such as Indonesia, Singapore, Thailand, Myanmar, and Malaysia are going through a rapid shift in infrastructure, consumer choices as well as entrepreneurial mindset. As per recent reports, about 200 Mn people in Southeast Asia have some form of internet access, and this is further expected to reach 600 Mn by 2025.

Further, with Alibaba picking up Lazada, establishing Alipay and Ant Financial into the region, plus Amazon Prime’s launch in Singapore, ecommerce in Southeast Asia has become undoubtedly a new battleground for both local and foreign ecommerce players. This is somewhat similar to India where both local players like Flipkart and foreign nemesis like Amazon are fighting head to toe for the top spot.

Even bigger and established players have not been able to defend themselves against the wrath of these players. This included Rocket Internet backed Zalora (acquired by Thai retail conglomerate Central Group), Cdiscount Thailand, part of French retail conglomerate Groupe Casino (acquired by local Thai company), Singapore-based  RedMart (acquired by Lazada), Ascend Group’s iTruemart (Shutdown), Japan’s ecommerce juggernaut Rakuten (sold its Thailand business to original founder), and the list goes on.

As revealed in a recent 2017 trend analysis report by aCommerce, the Southeast Asia’s ecommerce is moving towards Ecommerce 2.0 mode, “where firms will base their competitive advantage not on traditional economies of scale but on a mix of what Bonobos’ founder Andy Dunn calls proprietary pricing, selection, experience, and merchandise.” And with this shift are rising high the local ecommerce players like SaleStack, Pomelo Fashion, Berrybenka, Zilingo and more.

Zilingo: Current Positioning And The Strategy To Fend Off Competition

Ankiti accepts that the market is challenging and it’s difficult to survive. As shared by her during an earlier interaction, “Flourishing within the current ecommerce market is challenging and, off-late, this market has seen a few markets with sustainable business models with many going extinct rather painfully. To date, we have just aimed to build an ecommerce company that can actually focus on positive unit economics, growth and quality at the same time.”

While many ecommerce players can be counted as a competition for Zilingo on the consumer side, Ankiti believes that on the sellers’ side the market is still underserved. She further claims that the majority of sellers on Zilingo have come online for the first time.

As Ankiti commented about the current positioning of Zilingo in the Southeast Asian market,

“Ecommerce companies are still trying to build trust with consumers and sellers in this market and a lot depends on high-quality logistics and payments and that would remain our and our entire industry’s challenge as we try to gain more customers and retain the ones we have. But we have been growing well and we have gone from a lesser known startup to one of the largest fashion & lifestyle sites by sales in the last 12 months.”

She further added, “For instance, if talked about the Indonesian market, Zilingo is the only fashion marketplace aggregating thousands of merchants and private labels there. We are growing 85% month on month and already have a sizeable customer base and revenue from Indonesia. Since we are the only such player in our vertical and provide unparalleled seller-side services, it gives us an edge over competitors.”

Ankiti seems more than willing to encash upon the available opportunities in Southeast Asia’s fashion ecommerce landscape. However, the challenges parallel to them cannot be ignored. Zilingo, similar to the other local startups has to work hard on maintaining its unit economics against the players with a heavy war chest like Alibaba and Amazon, who possess brand name among consumers and have a big list of sellers as well. Also, with expansion in multiple countries, comes the responsibility to handle millennial workforce and to build out products for different markets with different cultures, languages, and currencies. With the recent Series B funding, how this fashion startup will ride it’s way ahead on the path of innovation and tech, will be worth watching.