As part of the Next Unicorns panel at Nexticorn 2018 on October 13, President of Salestock Jeffrey Yuwono poured out years of experience and knowledge about the challenges faced by a fashion e-commerce start-up. After going through an exhilarating series B round, Jeffrey now imparts useful insights about fashion e-commerce and his latest marketing initiatives Coba Dulu Baru Bayar, which will possibly revolutionise the online fashion industry.
What are the challenges in funding?
We faced two main challenges in raising our US$27 million Series B last year: the first was the gap in funding available for companies too large for early stage VCs and too small for private equity funds, which is where we were with our Series B. Our solution was to raise from several early-stage VCs, each with a ticket size they were comfortable with. This took more time, and the upside is we benefited from multiple points of view and a wider network. The Nexticorn programme is about helping promising start-ups in Indonesia bridge that gap. The second challenge is that e-commerce was not a hot sector in 2016 and 2017. There were many questions as to whether e-commerce start-ups could be viable when Tokopedia, Lazada, and Shopee raised billions and spent it. So we had to work hard to explain why we are different, and why we have a clear path to profitability and success.
What about hiring? It seems like plenty of start-ups faced the same drought.
Hiring great people is always tough. Fortunately, we have a great reputation among the start-up community for hiring and developing the best talent, and good people often want to work with other good people. Having an already-strong team is our secret to hiring.
Let’s talk about your start-up culture. What works for you and what doesn’t?
We want people to work with passion, speed and spirit of serving. There is a strong bias for action and results. Our decision making is highly data driven, so analytical skills are important. Sale Stock is the kind of place where an entrepreneurial mindset—one in which people want the ownership to drive initiatives—trumps a bureaucratic one, where hierarchies are set and there is red tape. People who prefer large, established, hierarchical, and slower-paced companies may struggle at Sale Stock.
With a huge amount of pressure from different directions, how do manage your time?
There are always more things to do than time and resources allow, so being clear on the company’s direction, strategy, and priorities is critical. That clarity needs to be supported by a management process with well-defined agendas, the tracking of initiatives, the measuring of KPIs, and constantly adjusting resources.
How do you see and manage competition?
Other e-commerce companies spend a lot of money on advertising and subsidies at a scale we cannot afford to match. As a result, our share of voice will always appear small. To compete, we must innovate and find meaningful differentiation.
To differentiate ourselves, we also try to uniquely solve big problems in fashion through our new solution, “Coba Dulu Baru Bayar”, a programme in which the courier waits 15 minutes while a customer tries the clothes they ordered at home (or the office bathroom). If the clothes are to the customer’s expectations—they fit well and they look good—the customer can then pay and keep the items. If the clothes fall short of expectations, they simply return them to the courier: no questions asked, no payment required. This solves the biggest question in shopping for fashion online: “do the products fit?”
Coba Dulu Baru Bayar is risk-free shopping. We are the first to offer it in Indonesia, and this programme is now available in nearly 400 cities nationwide.
We sell to the everyday woman in Indonesia, and this means an affordable price point. However, most products at the Rp50-200k level have very little quality control, if at all. In the offline world, this is OK because customers can touch and feel the clothes before they buy. In the online world, however, inconsistent quality is a deal-breaker because buying a Rp100k blouse from a random online merchant is literally like gambling. You don’t know what you’re going to get. To solve that problem, we make our own clothes. More than 85 per cent of our apparel revenue is private label—we are the largest online fashion label in Indonesia. The retention rate of the products we make is far higher than those we buy and sell from wholesale markets.
How do you improve customer trust amid large competitions?
In addition to Coba Dulu Baru Bayar and better quality through private labels, we also offer 24/7 customer service via chatting. It’s important for Indonesians to feel like they have someone to talk to before they buy, to get advice on what they should get, or to ask about the status of a delivery. Our customer service team is best-in-class. We also offer 30-day money-back guarantees. If customers are not satisfied with our products for any reason, they simply return them to get their money back. We will even pay for return shipping. That’s how confident we are with the quality of our fashion.