As published by: Tech in Asia
Zaapi, a new ecommerce enabler targeting Southeast Asia’s small businesses, has raised a US$4 million seed round led by Flourish Ventures, Global Founders Capital, and Partech.
The round also saw participation from 1982 Ventures, Kaya Founders, Iterative, XA Network, and Sketchnote Partners.
The new funding follows the company’s US$500,000 pre-seed round, which was backed by Flash Ventures and was raised in March 2021. The previous round enabled the company to launch in Thailand – its first market – five months later, where it is currently serving 10,000 merchants across more than 70 cities.
Though registered in Singapore, Zaapi says most of its resources is in Thailand, with its team operating remotely.
The company says it will use the fresh capital to scale its product and tech team in the first half of the year before growing its commercial team in the second half of 2022. While the firm looks to gain a strong foothold in Thailand, the company says it may expand to a second market by the end of the year.
“Other companies have the tendency to put numbers and growth ahead of the product considerations. We want to make sure we don’t make that mistake,” says Zaapi co-founder and CEO Wilfried Buiron in an exclusive conversation with Tech in Asia.
Currently, Zaapi has a mobile app that enables merchants to create an online store and start selling within seconds. It also provides features such as inventory management, discount management, customer relationship management, and payment integrations.
Moving forward, the company will also develop activation tools for small businesses to acquire customers and traffic. This will include social commerce features like live commerce and chat commerce.
Ideal entry point
The vision for Zaapi, Buiron says, is to eventually become a full-stack digital solution for small businesses across Southeast Asia.
To achieve this end goal, picking the right starting point is key. And Buiron, who also owns a direct-to-consumer brand, is confident that he has chosen a strategic point of entry, both in the company’s sector as well as the geography it operates in.
Observing the strategies for regional and global peers, Buiron says that there are broadly three approaches to accessing the MSME market. One is the B2B procurement model championed by the likes of Udaan (India) and Ula (Indonesia). Another is the bookkeeping model employed by Khatabook (India) and BukuWarung (Indonesia), while the third is the approach of Shopify or India’s Dukaan, which helps offline merchants sell their products online.
Zaapi has chosen the same model as Dukaan, whose co-founder invested in Zaapi’s seed round. This decision, Buiron says, was largely spurred on by the advent of Covid-19, which has made the historically “challenging sell” of selling products online easier for small businesses in Southeast Asia.
“It is a use case that is extremely timely and one that has proven itself across all markets in the world who are ahead of Southeast Asia when it comes to ecommerce,” he says.
Buiron acknowledges that he is not the first in the region to tap into this opportunity. In Indonesia, for example, BukuWarung and fellow MSME online ledger startup BukuKas have rolled out their ecommerce enabler solutions, while in Vietnam, seed-stage startup SoBangHan has also launched a similar product.
However, Zaapi’s laser focus on small businesses will hold it in good stead amid regional competition, Buiron says. The company intends to “go much deeper” than other players – many of them treating ecommerce enablement merely as a small part of their large suite of products.
Additionally, Buiron believes Zaapi will also benefit from its decision to turn to Thailand as its launchpad. Many other startups have gone to Indonesia, the region’s largest market, to kick off their businesses.
Thailand is not only Southeast Asia’s second-largest ecommerce market, but it is also a relatively wealthy country, which bodes well for Zaapi’s basket size and margins. It is also a market where competition is “scaled back,” with few challengers in the ecommerce enablement scene.
“It should also be noted that Thailand was the first market for Lazada and Zilingo. So there is a history of ecommerce startups launching in Thailand and doing very well,” Buiron says.