Some startup ideas are sparked because of problems the founders themselves faced.
For Isaac, his startup journey began with a batch of pink e-cigarettes that he received for selling online.
That wouldn’t normally be an issue, except that he had ordered them in black and blue instead.
He thought if he faced this kind of situation, he probably wasn’t alone. Other micro-entrepreneurs could be dealing with the same, or worse.
Coincidentally, his elder brother—who owns several offline retail shops—was also looking for ways to go online and venture into ecommerce.
“We came together and did something to solve a bigger problem instead of just selling our own products to consumers,” said Isaac.
Bringing Tech To Dropshipping
They envisioned a platform where online sellers can source products to sell online. Besides providing products, they would also provide complete product details such as product images, descriptions, and recommended selling price and order fulfilment (pick, pack and deliver to buyer).
It was only later that the brothers found out that this practice is known as dropshipping.
Dictionary Time: Dropshipping is the process of providing goods by direct delivery from the manufacturer to the retailer or customer.
Dropshipping is not a new concept. Isaac acknowledged that there are many competitors in the market in Malaysia. Most of them are sellers who have extra stock and use dropshipping as one of their B2B sales channels. They also found that in Malaysia, most dropship companies focus on single product vertical, especially fashion.
“We needed to be larger than them by number of products as well as types of products,” said Isaac.
Another thing they realised? The business model needed to be more technology-focused, instead of just a conventional “buy low sell high” trading business.
To address these, the brothers established OGN Online Sdn Bhd in June 2014, along with the brand Kumoten.
The Painpoints Of Sellers And Micro-Entrepreneurs
Kumoten is run by three brothers: Isaac, the CEO; Yew Meng, a Director; and Yew Hwa, the CTO.
Their target audience is people looking to get into a slice of the ecommerce pie, or those looking for a second income stream.
It is very easy (and almost free) to open a seller account in a marketplace like Lazada, 11Street, Lelong.my or Shopee, but getting products to sell is both costly and risky.
Manufacturers or suppliers won’t sell single units at wholesale price, so sellers need to buy in bulk. If the seller is not good at promoting the product, it will be difficult to sell everything.
Most sellers use their own savings to buy stock. Some even borrow to buy, and this becomes a problem when what they buy doesn’t sell.
Besides the product cost, there are other costs such as shipping, storage, manpower, transportation to send the parcel to courier company, packing cost, warranty (which overseas suppliers don’t handle) and so on and so forth.
That’s not factoring in things like writing product descriptions and taking photos, managing inventory, and even having a good product assortment to attract more buyers to the store.
This makes handling an ecommerce shop on the marketplaces a huge endeavour, not a simple part-time job.
Kumoten is looking to address all of these problems on their platform.
“We help micro entrepreneurs and sellers start earning income from Lazada or Shopee easily and without risk of keeping inventory by automating the entire dropshipping process,” said Isaac.
They have more than 100,000 SKUs from multiple categories and are fully integrated to major marketplaces in the country including Lazada, Shopee, Lelong.my, and 11street. They also work closely with shopping cart platforms like Sitegiant and Easystore.
Dictionary Time: A stock-keeping unit or SKU refers to a specific item stored to a specific location.
The Ins-And-Outs Of The Platform
Kumoten monetises in several ways. According to Isaac, currently most of the margins come from product sales. Their margins are included in the product wholesale price.
Corporate clients also subscribe to the service via API integration. These are clients who wants to start their own marketplace and need customised access to Kumoten’s product data and fulfilment service.
Kumoten’s new freemium service “AutoSync” helps sellers select and sync to Lazada and Shopee. The first 600 items (10 items daily for 60 days) will be free. Sellers can continue with the AutoSync feature by subscription at the end of the free trial.
On the seller’s end, no payment is made to Kumoten until they get a confirmed sale, where they pay only for the item sold.
Another advantage sellers get from using Kumoten is getting wholesale price even if they’re only listing one unit.
Isaac summed up their partnership with sellers as, “Basically, the sellers’ role is in sales and marketing, which includes customer service. Kumoten takes care of the product sourcing and fulfilment.”
Kumoten currently has about 40,000 users on board, and Isaac said that they’ve been seeing double digit month on month growth since 2017 (with slow months like February and GE14 being exceptions).
Some of their success stories include part-timers and housewives achieving 5-figure monthly sales.
They’ve also spent over RM500,000 over the years to develop and improvise the platform, with more investments planned for innovations to keep the barrier of entry high. They also credit Ganesh Kumar Bangah along with Commerce.Asia and GrowthX, a growth hacking program from Silicon Valley, for helping them grow.
To this day, the team takes great pride when sellers tell them that they’ve successfully gotten their first paychecks from Lazada or Shopee.
“It is a joy to see people from all walks of life, the retirees, single mothers, and others are benefiting from Kumoten.”Isaac of Kumoten
They’re also working with some members of the deaf community to train them to sell online.
Kumoten are planning on scaling what worked in Malaysia to some key markets within the region.
“We hope to be a strong dominant player in this industry in SEA and some key emerging markets within 5 years. By then, we want to be the leader that shape future commerce.”
As for anyone considering becoming a micro-entrepreneur or thinking to set up shop on an online marketplace, Isaac had some insight to offer.
“Most people feel that to sell things online, you need to sell things at very low price. But, being in business, your goal is to make good profit. If you sell cheap, you need to sell in a lot to earn a decent profit. The operation cost is often overlooked. And unlike the international FMCG companies, many SME do not know how much inventory value they have.”
He advocates the “hypermarket strategy” instead, where it is crucial to have a lot of products from different categories like a hypermarket.
- You can find out more about Kumoten on their website here.