Every great startup begins with a great idea. But ideas are just ideas. Startups need to turn them into products that users will love for the first step to success. That’s why the product development cycle is the most exciting stage of your startup’s life. When it’s done right.

Here’s a quick A-Z on starting up your product development cycle properly:

1) Build the dream team

Every captain needs a crew. Even if you have the best idea, you’ll still need a kickass team to help turn that into reality. How do you find the right people, though?

Start with a question: what and who do you really need? From this one question, you can determine the people you want to have on your team. Building your dream team isn’t like an open call for volunteers. You’ll need a stringent screening process to ensure aligned goals and visions. Look out for the qualities you need – skillsets, experience, passion and attitude.

In addition, the structure of the team is important to your product development success. For starters, here’s a good guide on how you can structure a consumer-driven product team.

2) Determine your metrics

Not every product is created the same. A food delivery startup is wholly different from an SaaS provider. Each startup’s KPIs vary from one another. Like building your dream team, creating the perfect set of KPIs for your startup starts with asking the right question: how do you want your product to succeed?

At the earlier stages of your product development, creating the best metrics is crucial. Attaching the wrong metrics to your young product may influence how it grows, for better or for worse.

Luckily, thought leaders in the startup scene have developed trustworthy frameworks that help teams assess their product. Notable examples of these are the HEART framework and PULSE metrics.

3) Keeping clean codes

With startups coming out left and right, you might be tempted to push your product out as fast as possible. Besides the obvious quality issues, rushing your product can have consequences deeper into its heart—its code. Keeping code clean is a tougher challenge that all developers face. It takes time, effort, and a whole lot of coffee.

But it’s not just about poring over lines and lines of code to check for errors. Keeping code clean means keeping it easily readable and accessible for both the original developer and any succeeding developers who will handle the code in the future. In this state, software can be easily patched should any bugs pop up in the future. Having a clean code will ensure that your product is always up-to-speed and up-to-par for your customers.

4) Protecting your users

Crafting an enjoyable user experience is one thing; creating a safe one is another. With controversies on user privacy rising to the fore across the software industry, the race to secure software is on. More and more users are realizing the value of security. Creating secure software no longer plays second fiddle to the actual product experience itself – and integrating information security is best done during the development process.

Want to know more?

These are just the tip of the iceberg – there’s so much more to learn about the various facets of product development.

If you’re a product manager or developer wanting to learn more about the topic and how to create a product users will love, head on over to Tech in Asia Jakarta 2017’s Developer & Product Stage where speakers from Grab, Go-Jek, UrbanIndo, KODEFOX, Ematic Solutions, and Blackstorm will share their expertise and insights.

Also, don’t miss out on your final chance to save 10 percent off your tickets! The code is tiajkt10 and will only be valid for one more day until October 13, 11:59PM (GMT +7). Or if you’re not yet ready to commit, drop your details below to get our latest conference updates via email.

This post How to jumpstart your product development cycle appeared first on Tech in Asia.

JustCo co-working space, Singapore. Photo credit: DIA Brands.

JustCo, a Singapore-based provider of shared workspaces, has just closed a series B funding round in which publicly traded Thai property developer Sansiri was the sole participant. The investment amount was not disclosed, but the Singaporean company said it now values itself at US$200 million post-money.

JustCo currently operates four shared offices with a total floor space of 180,000 square feet in central Singapore. The series B funds will be used to open its first venues outside of the city-state, with spaces planned for Bangkok, Ho Chi Minh City, Jakarta, Kuala Lumpur, and Manila.

The plan is to have a total of 30 shared workspaces totaling 1 million square feet in operation across Asia-Pacific by next year.

The firm currently offers a range of membership options at its Singapore locations. At the lower end, a US$72 per month basic package comprises a hotdesk, business address, and attendance to events and networking sessions organized by JustCo. For US$591 a month, you get an entire dedicated studio space and 24/7 access of all of the company’s locations.

Significant investment money has poured into the shared workspace industry in recent months, and competition between players in Asia-Pacific has become increasingly fierce.

With a current valuation of US$1.5 billion, China’s UrWork has been busy expanding beyond its home soil, opening its first foreign location in Singapore back in July and strategically investing in Indonesia’s Rework last month.

This has brought UrWork into a direct rivalry with US-based WeWork, which received US$500 million in funding from SoftBank and Hony Capital in July to expand its Asian presence, and recently acquired Singapore-based competitor Spacemob. WeWork has since launched lawsuits against UrWork in the UK and the US, accusing the Chinese company of infringing its trademark rights.

While use of co-working spaces is typically associated with startups, research from Colliers International suggests that corporates are also increasingly making use of such venues – indicating the opportunity that exists for operators like UrWork and WeWork.

Converted from Singapore dollar. Rate: US$1 = SG$1.35.

This post Singapore co-working space JustCo hits $200m valuation after closing series B appeared first on Tech in Asia.

The Park N Parcel team. Photo credit: Park N Parcel.

Online shopping is quickly turning into a favorite hobby for many people in Singapore these days – 73 percent of adult Singaporean internet users shopped online in 2016 and spent close to US$2.2 billion in online purchases according to a study by PayPal. Several startups that deal with logistics and package delivery have jumped on the opportunity.

Singapore’s Park N Parcel falls into the latter category and it’s going all sharing economy on the problem of missing your delivery.

In busy Singapore, people miss a ton of deliveries because they’re not at home when their package arrives. That’s how Bryan See Toh, co-founder and CEO of Park N Parcel, first came up with the idea for the startup. His fiancee, a flight attendant, had deliveries constantly diverted to her aunt’s place where she could pick them up whenever she was back home.

Together with co-founders and longtime co-workers Erik Cheong and Tan Gan Hong, he decided to give everyone an “aunt” who could pick up deliveries for them.

A parking spot for your parcel

Shoppers find available “parkers” (as Park N Parcel calls them) on the startup’s website, where they’re displayed after a multi-step vetting process. Once matched with a parker that’s closest to them, they can use their details as the shipping address on their online order. When the parker receives the item, the shopper is notified and can then go and pick it up.

The shopper pays an extra fee (around US$1.80) to get access to the service. Parkers get a cut of that fee for their participation, and a review system helps spot any parkers who aren’t helpful. Park N Parcel has received more than 6,000 applications from aspiring parkers across Singapore since starting out in January, but has only approved 1,200 of them, mostly in residential addresses.

Park N Parcel decided to give everyone an ‘aunt’ who could pick up deliveries for them.

Cheong estimates that on average, a parker receives 10 parcels per month. The actual number depends on their location – if a parker is located close to a hub, like a train station, they can receive up to a hundred parcels per month while others may receive only a few, he says.

The solution of drop-off locations for parcels isn’t new. Singaporean logistics startup Ninja Van, for example, has Ninja Collect – a service delivering items to either partner businesses that act as recipients for deliveries, or drop-off lockers. SingPost has its own lockers called POPStations, where people can pick up their parcels at their convenience.

Cheong feels Park N Parcel’s solution has a place in the market nonetheless. For one, it gives users a drop-off point no farther than 1 kilometer from where they are, while lockers tend to be around 2.5km away. The startup also believes this fosters a sense of community between people who live close by.

The team is now rolling out an additional service called Park N Deliver, which helps users send items from one point to another using on-demand drivers. The aim is to serve small businesses or individuals that sell online.

To gain more momentum, Park N Parcel is exploring partnerships with small and medium-sized logistics companies as well as ecommerce platforms.

The former face problems like no access to drop-off lockers, limited resources, and high costs of re-delivering parcels, according to Cheong. For the latter, an additional option for delivery doesn’t hurt their business. For example, the startup collaborated with online marketplace Carousell, whose sellers often meet buyers in person to hand them their items.

“We are all solving the same last-mile problem, but with a different approach,” Cheong says.

Park N Parcel picks “parkers” through a multi-step vetting process and trains them on handling packages. Photo credit: Park N Parcel.

Looking to Asia by way of Israel

Park N Parcel seeks to prove the concept in Singapore, hoping to expand the service to other countries as well. Potential candidates include Thailand and Japan.

It recently won first place in the Singapore branch of Start Jerusalem, a startup competition organized by Israeli embassies around the world. The winners get to travel to Jerusalem for five days to learn from prominent figures of the Israeli startup ecosystem.

The Singaporean arm of the competition was organized by the embassy of Israel in the city-state in collaboration with social entrepreneurship incubator ImpacTech, which has offices in Singapore, Thailand, and Japan. Park N Parcel beat five other startups to clinch the win.

“Park N Parcel demonstrated a practical and innovative solution for a problem that has always been time-consuming,” says ImpacTech co-founder Yoav Elgrichi. He adds that the startup has “a positive impact on society by providing additional income to an aging population that now can turn their homes into neighborhood parcel collection centers.”

The startup has raised a seed round from angel investors and NUS Enterprise, where it was incubated. The amount is undisclosed, but the round values Park N Parcel at US$2.2 million, says Cheong. He adds that the firm is currently in talks with an international logistics services company for investment and collaboration.

Cheong claims the company received an average of 80 parcels a day during its first quarter. He doesn’t disclose any revenue figures but says they have since seen a 400 percent growth on the number of parcels and a 330 percent growth on the number of users.

This post Singaporean entrepreneurs tackle last-mile delivery with neighborhood spirit appeared first on Tech in Asia.

Wang Xiaoyu. Photo credit: Castbox.

From Xiaomi to Musical.ly, Chinese tech companies are riding a global wave of hipness and success.

Wang “Renee” Xiaoyu wants to surf that wave.

She’s the founder and CEO of an app and community for fans of podcasts and spoken word content. Castbox was inspired by Wang’s stint at Google Japan two years ago (which came after two years at Google in Beijing), where, as an expat, she struggled to find stuff to keep her entertained.

“I’m not a big fan of music. I like spoken audio. So I wanted to listen to audio to keep informed or kill time,” she tells Tech in Asia. That was “the moment” she decided to create something – and thereby quit corporate life and all the perks of Google to begin her first startup.

Aside from being a good way to stream podcast-land favorites like This American Life, Serial, and TED Radio Hour, the app allows users to upload their own content. “We’re like the Youtube version of podcasts – the Youtube of audio,” Wang says.

The app has already gone global, with 7 million users in 135 countries. 30 percent of them are in the US – but none are in China.

Big backers

Like Musical.ly, which is made in China but a huge hit primarily with North American teens, Wang wants Castbox to be a worldwide app – even if that means her home nation is left out of the fun.

Castbox doesn’t have Chinese servers, so its streaming service is unusably slow on China’s borked internet, which throttles outside connections.

“We were inspired and learnt a lot from [Musical.ly],” says Wang. “And we have two investors in common.” Indeed, Qiming Venture Partners and IDG Capital have backed both the Chinese startups.

Wang’s startup is announcing today that it has secured US$12.8 million in series A funding – co-led by those two big names – and also revealing that it earlier attracted US$3.2 million in seed funding.

The US team with some members of the China crew. Photo credit: Castbox.

It has already grown to 35 staffers – 30 in China, with the rest in the US.

Original content

With all that cash in their pockets, the team will now focus on two things.

“Original, exclusive content will make our app more attractive, so we are co-producing some content with producers in the United States – which is why I’m in San Francisco now,” she explains.

Ira Glass, the buttery-voiced godfather of podcasting. Photo credit: The Public.

Stitcher, arguably Castbox’s closest rival if you ignore the badly struggling Soundcloud, made the same move into originals back in April.

The second thing is working with content producers on cross-promotion within the Castbox app.

The team is today rolling out an ambitious new podcast search engine that scans and analyzes the words spoken within all its audio content, giving people a way to find content that goes beyond the often perfunctory text descriptions that podcast and audiobook creators come up with.

Coming later this month is a Netflix-style subscription. Until then, Castbox makes money from display ads plus its VIP membership within the Android app.

Aside from Android and iOS, the app is available on Amazon’s Echo.

This post Ex-Googler gets funding to build another global smash in China appeared first on Tech in Asia.

Singapore skyline. Photo credit: fazon / 123RF.

US-Singaporean venture capital firm Wavemaker Partners has closed a US$66 million fund for Southeast Asia – its second focused on the region.

The new vehicle – which exceeded its initial US$50 million target – has been backed by Singapore sovereign fund Temasek Holdings, the World Bank’s International Finance Corporation, and veteran investor Tim Draper, among others. AddVentures, the corporate venture arm of Thai conglomerate Siam Cement Group, also announced an investment in Wavemaker this week.

Wavemaker has already made follow-on investments through the new fund. Those went into financial services platform Coins, which raised a US$10 million series A round earlier this year; online payments specialist Red Dot Payment, which closed US$5 million in series B funding last month; and fashion marketplace Zilingo, which recently got US$17 million for its series B. The firm said that three more series B rounds are expected to close before the end of the year.

Previous Wavemaker exits include mobile advertising startup Art of Click, which Philippines mobile tech company Xurpas purchased for US$45 million last year, and chat app Pie, which was acquired by Google.

Wavemaker is the third VC firm to have completed a significant fundraising in Singapore this week, as investors see fit to bet big money on Southeast Asia. Temasek affiliate Vertex Ventures closed its third Southeast Asia-focused fund at US$210 million with backing from Temasek, Thailand’s Kasikornbank, and Taiwan’s Cathay Life Insurance.

This was followed by Vickers Venture Partners’ announcement that it had closed a US$230 million fund which will be split between Southeast Asia, China, and India, as well as “deep tech” investments in North America and Europe.

This post Wavemaker raises $66m in oversubscribed Southeast Asia tech fund appeared first on Tech in Asia.

Photo credit: Roy Price’s Twitter.

The news (extracted from The New York Times):

• Amazon has suspended the head of its fast-growing movie and TV show business, Roy Price, after the producer of one of its most popular serialized prime video shows The Man in the High Castle accused him of unwanted sexual advances.
• Hollywood producer Isa Hackett, daughter of novelist Philip K. Dick whose work inspired the show, detailed her “shocking and surreal” experience in an interview with The Hollywood Reporter yesterday. “You will love my dick,” Price is alleged to have lewdly propositioned her in a taxi after a Comic Con dinner in San Diego two years ago. Earlier at the party, he allegedly accosted her and whispered “anal sex.”
• Hackett confirmed the details in an interview with The New York Times and said “I just wanted to get that out.”

Why it matters:

• Tech companies have been forced to deal with a toxic culture of sexual misconduct in a male-dominated ecosystem. An exposure by Susan Fowler in a blog post ultimately led to the ouster of Uber co-founder Travis Kalanick as CEO.
• 500 Startups founding partner Dave McClure was another high profile executive who had to resign as general partner of the VC firm following a series of sexual harassment charges, including a blog by Malaysian entrepreneur Cheryl Yeoh.

This post Brief: Amazon suspends top exec after sexual harassment charge by Hollywood producer appeared first on Tech in Asia.

Test kit for Imagene Lab’s product suite called Ori.

It takes surprisingly long to fill a plastic tube with spit. Finally, I’m ready to put the lid on the tube and slide it into an envelope that comes with the test kit.

It’s my first personal DNA test, and I’m doing it with Singapore startup Imagene Labs.

Once the startup has analyzed my genetic code – it takes two to three weeks – I will receive personalized wellness recommendations: What foods to avoid, what products are good for my skin, and how I should exercise.

“Precision wellness” is how Imagene Labs director Jia Yi Har describes her work.

Personal DNA tests became popular in the US with companies like 23andMe and Ancestry.com, who tell you about your genetic heritage. The results are mostly fun discoveries – perhaps you have an unexpected strand of Native American ancestry in your family tree.

Imagene Labs takes it further. Its main product, Ori, is a DNA testing platform and subscription business in one. Once Ori knows the genetic properties of your skin, digestive tract, and muscle tissue, it concocts tailor-made products that you can have shipped to your home.

The skin serum comes in a slender white bottle with your name on it. This stuff is made to perfectly balance your skin type.

Then there’s a food supplement, a mixture of granules in different shades of green. It contains nutrients and vitamins which your body tends to lack due to genetic predispositions, all in the right percentage.

“The exercise you have to do yourself,” says Reza Harith, who joined Imagene’s team after working as a brand manager at a fitness studio chain.

The Ori results come with exercise recommendations, put together by fitness experts based on what your DNA says about your muscle growth capacity, metabolism, and other factors.

Ori’s products: A skin care serum and food supplement.

Price drop

Creating DNA-based products and services became possible because the cost of DNA sequencing has gone down, Har explains.

The Human Genome Project, the first effort to fully identify and map human DNA, was completed in 2003 after more than a decade of research that cost billions of dollars. “It only costs about US$1,000 and takes considerably less time now,” says Har. “Everything about the process, the sequencing itself, the chemicals used, the processing power required, all of this has improved, resulting in the price drop.”

Another key innovation startups like Imagene Labs rely on is Illumina. The process allows researchers to isolate specific locations in the genetic code. These are called SNPS – pronounced snips.

“We know which particular locations are proven to contribute to the traits we are interested in,” Har says. Imagene includes only those snips in its analysis that have “thousands of published scientific studies” backing up their correlation with certain traits.

Photo credit: University of Michigan School of Natural Resources & Environment

To make that more concrete: One of the genes tested in Ori’s fitness analysis is called IGF2. It’s proven to be associated with muscle soreness. My particular variation of this gene puts me into “90th percentile” of the average population – in other words, I have a higher than average likelihood of feeling sore after exercise.

With Illumina, Imagene can focus on pre-selected snips. This doesn’t only make it faster, it also helps avoid ethical and legal complications – if a startup had your full genome, it could potentially also know about critical diseases.

Using DNA for medical diagnostics is its own discipline with a slew of regulations, explains Har.

Imagene’s parent company, Asia Genomics, is in this business. It runs medical diagnostics like prenatal tests, which look for abnormalities in babies before they are born. They are distributed through clinics and administered by professionals. Everything needs to be certified.

Focusing on wellness means Imagene Labs isn’t bound by the same requirements. Its association with Asia Genomics gives it a huge leg up because it can share the parent firm’s professional lab facilities and team resources.

Asia Genomics has so far raised US$12 million from investors like Formation 8, Raffles Venture Partners, Spring Seeds, and some angel investors, Har says.

Extreme personalization

Asia Genomics started in 2014, and Imagine Labs spun out in 2016 as an attempt to spark consumer interest in DNA-based personalization.

Ori was first available in Singapore, then in Malaysia, Thailand, Hong Kong, and Jakarta. There’s also a second full lab in Beijing.

Imagene Labs team. Tech in Asia spoke with director Jia Yi Har (3rd from right) and marketing manager Reza Harith (2nd from right).

Asia is a good place to start with these products because people are generally willing to experiment when it comes to wellness and beauty, Harith says. He is establishing relationships with spas and fitness centers as distribution channels for Ori.

“Intravenous vitamin drips, chemical peels, and fillers – in Thailand and Malaysia, it’s common to try these,” he says. While Singaporeans tend to be more skeptical about new trends, they do often get on board later once fringe trends trickle into the country from its neighbors.

Even though DNA sequencing prices have gone down, Ori is still an investment many will think about twice. Just one of the tests, the skin test, costs US$184. This comes with a 30-day supply of your personalized facial serum. After it’s done, you can get a new bottle for US$89.

The number of tests run since Ori’s launch in 2016 is “in the thousands,” Har says. There’s not been a clinical trial on the effectiveness of recommendations and products provided, but client feedback, she adds, has been encouraging.

Imagene Labs is at the cutting edge of the DNA personalization trend. Only a few other startups, mostly US-based, are exploring the opportunities.

There’s Habit, which combines DNA analysis with a subscription-based food delivery program, and DNAFit, which is similar to Imagene Labs’ Fitness component.

Science is not yet convinced that DNA-based fitness and wellness has massive benefits over regular practices.

An article by Vox quotes John Mathers, the director of the Human Nutrition Research Center at Newcastle University, on his interpretation of Habit’s product. His group had done research comparing different types of personalized dietary advice to a control group.

Those that received personalized advice did perform better, but “there was no evidence that including phenotypic and phenotypic plus genotypic information enhanced the effectiveness of the [personalized nutrition] advice,” Mathers said.

In other words, DNA-based personalization was not doing significantly better than other forms of personalized advice.

No going back

But with falling costs and fast-developing tech, Har believes it’s only a matter of time until there are products that make the jump from the fringe to the mainstream.

“There’s no going back,” she says. “Precision medicine has started. President Obama set up an initiative in the US to sequence the population, looking for insights that help lower healthcare costs. Other countries are following suit.”

That’s the medical side, she points out. “The wellness market is actually three times larger than the medical market.”

Consumers in Asia spend massive amounts on beauty products. Ori’s skin serum is so far its best-selling product.

The Asia-Pacific beauty and healthcare market amounted to US$98.5 billion in 2015 and will grow to around US$127 billion by 2020, according to Statista. Globally, Asia Pacific makes up the largest share of the market.

The cosmetics industry is in constant need to innovate, Har says. This has led to an immense variety of ingredients, design, and marketing messages. And according to Har, beauty brands have been watching Imagene Lab’s work with great interest.

As for my Ori test results, I found many interesting recommendations that often matched what I already knew about myself. The most helpful advice, perhaps, was in the nutrition analysis, which found a high genetic predisposition for COQ10 deficiency – a coenzyme that provides energy to cells for growth and maintenance. Instead of buying Ori’s own supplement mix, I chose to get my own and follow the dietary recommendations. Which in my case, means adding plenty of liver and kidney to my diet. Yum.

Converted from Singapore dollar. Rate: US$1 = S$1.35.

This post I had my genes analyzed for ‘precision wellness.’ Here’s how it went. appeared first on Tech in Asia.

On September 27 & 28, the fourth edition of Tech in Asia Tokyo hosted 1,548 founders, corporates, investors, developers, industry experts, and other members of the tech community for two days of power-packed talks, workshops, and networking.

Two of Japan’s top 10 funded companies – Raksul and Freee – shared how business traditions in Japan are creating opportunities for startups. Industry experts discussed the impact blockchain tech is having on the local financial services industry, as well as Japan’s quest to become the world’s blockchain capital. We also debuted our Startup Strategy workshop series to help startups hone their skills – from lean economics, to branding and UX – to grow their business.

Some of our attendees took to Twitter to share the latest happenings and up-and-coming startups that they discovered.

If you haven’t had time to catch up on all the action from Tech in Asia Tokyo 2017, here’s a nifty infographic, courtesy of our friends at Piktochart.

(click to view enlarged image)

Up next: Tech in Asia Jakarta 2017

Our fourth edition of Tech in Asia Tokyo could not have been made possible without the combined efforts of all our attendees, volunteers, speakers, sponsors, and partners. While we prepare to come back bigger and stronger next year – mark your calendars for November 1 & 2 as we host over 5,000 individuals from the tech community at Tech in Asia Jakarta 2017.

Psst, don’t miss your final chance to score 10 percent off Jakarta passes when you get yours before tonight, October 13, 11:59PM (GMT +7).  The magic code is tiajkt10. 

This post Tech in Asia Tokyo 2017 by the numbers [INFOGRAPHIC] appeared first on Tech in Asia.

About a month ago, I was in New York visiting a tech-savvy friend. The living definition of “early adopter,” his entire home is voice-controlled with Amazon Echo, from his lights to his air-conditioner to his dishwasher. He seems to have a detailed opinion on just about every trend in consumer technology, and at work, he specializes in optimizing user experience for a fast-growing tech startup.

We have remained friends after meeting a few years ago in Beijing, when he was studying Chinese at Beijing Foreign Studies University. Since he returned to the United States, we mainly keep in touch through WeChat, but if it were up to him we would probably use a different messaging app.

Looking at the problem WeChat is having in its expansion overseas highlights broader trends that encompass Chinese internet companies when they globalize.

“The more I work in app design, the more frustrated I am using WeChat, because I keep noticing more and more flaws in it. Especially considering how many users they have, they really should offer a better user experience than they do,” he explained to me.

Indeed, he’s not the only one who has trouble using WeChat, and it has shown in the failure of the app to catch on with those who are not Chinese or communicating with Chinese people regularly.

For those of us who live in China, using it becomes so natural that we often don’t notice some of its flaws, like a fish that doesn’t realize it is swimming in water, since it has never left the river. But outside of China, WeChat is like a fish out of water. Here are a few of the key issues that may provide some insight as to why WeChat is struggling outside of the Chinese market:

Local storage

All message history in WeChat is stored locally on your device. This means that when you buy a new phone or log in to WeChat from a new device, your previous messages must be transferred manually. If your phone is lost or stolen, losing all that data can cause a real annoyance. WeChat claims that this is for privacy reasons, but that leads me to my next point…

Security, privacy, and transparency

Unlike many other messaging apps, WeChat does not provide end-to-end encryption. Instead, they employ transport encryption so that the message is encrypted between the user and WeChat’s servers.

When end-to-end encryption (e2ee) is used, the message is scrambled from the time it leaves the sender’s device to the time it arrives at the recipient’s, and only the recipient’s device possesses the digital “key” necessary to un-scramble the message. For messaging apps like WeChat that do not use e2ee, a second “key” is held in the company’s servers, allowing them to decrypt messages that use their platform. While even e2ee is not 100 percent unhackable, when it is not used, there is an additional point of vulnerability where the message’s security could be compromised. The more keys there are, the more ways there are for others to get in.

The lack of end-to-end encryption could make WeChat messaging more vulnerable to hacking for corporate or personal reasons.

What is perhaps more concerning is the lack of transparency from Tencent about issues of privacy and security regarding WeChat. In contrast, Facebook’s annual Global Transparency Report provides figures of the number of requests for information it has received from governments on a country-by-country basis, for the benefit of those concerned about surveillance. The figures relate to its products and services including Messenger and WhatsApp. Facebook claims to offer no “back door” into their end-to-end encrypted WhatsApp messenger, and despite public pressure from Brazilian authorities and the FBI, there has been no evidence to suggest that they offer such a “back door.”

Facebook has also been open about its use of Signal encryption protocol for both WhatsApp and Facebook Messenger’s “Secret Conversations” feature, an open-source protocol which is reviewed by cryptology experts. Facebook has published whitepapers as well, providing technical specification for how the encryption protocol is deployed.

In contrast, Tencent does not regularly publish a transparency report and does not have a policy of disclosing requests for personal information. They have provided little-to-no details regarding what encryption protocol they use for messaging, so it is nearly impossible for the average user to know exactly how secure their data is when using WeChat.

A recent update to the app’s privacy policy explicitly states that it will “retain, preserve, and disclose” users’ personal data to “comply with applicable laws and regulations,” indicating that Chinese security and law enforcement officials can likely gather private user data systematically and en masse. This is nothing new for most who closely follow the Chinese internet, and the governments of the US and other foreign countries are known to use social media apps for surveillance as well.

See: Chinese tech companies are feeling the heat from censors

What is possibly a greater concern is the security risk posed by outside actors. The lack of end-to-end encryption could make WeChat messaging more vulnerable to hacking for corporate or personal reasons.

And then there is the consistency of Tencent’s security claims themselves. On WeChat’s official site, it claims that due to their enablement of transport encryption and use of local storage, rather than their own servers, they are unable to view the content of users’ messages:

“WeChat securely encrypts your sent and received messages between our servers and your device ensuring that third parties cannot snoop on your messages as they are being delivered over the internet. We do not permanently retain the content of any messages on our servers whether they are text, audio or rich media files such as photos, Sights or documents. Once all intended recipients have received your message, WeChat deletes the content of the message on our servers and therefore third parties including WeChat itself are unable to view the content of your message.”

However, it is difficult to see how exactly this works. In an April 2017 report, the University of Toronto’s Citizen Lab disclosed the results of a study which found that WeChat not only censored topics, but did so dynamically, in response to sensitive events. For example, they found that messages in both English and Chinese referencing a crackdown on human rights lawyers beginning on July 9, 2015 (referred to as “709”) were not sent to the recipient, with no notification given to the sender. If WeChat is unable to read the content of the messages, how are these messages deleted?

Recent regulations released on September 7 also officially made creators of online groups responsible for the content of their forums, and police disciplined 40 people in one group for spreading a petition letter and detained one man for complaining about police raids. If WeChat is unable to read and store the content of messages, how exactly does this happen? Are there whistleblowers in the group chats?

For those inquiring about their privacy and security policies, WeChat’s official site offers an email address for the office of a “privacy officer:”

However, if you try to contact that email address with any questions, you’ll receive an auto-reply like this:

When you try to go to that page, you’ll see a drop-down menu from which you can select a series of options to report or ask about, none of which refers to their encryption. You can report security violations or abusive content, but there’s no option to ask them about their policies.

When I submitted my questions, I never received a response. But it’s OK, I understand. They probably can’t afford to hire people to do this work. They only made US$6.2 billion in net profit last year.

Its attitude towards privacy and security ranked them dead last, with a score of 0/100 in a 2016 report by Amnesty International evaluating the messaging apps of 11 top technology companies on their approaches to encryption and human rights.

Source: Amnesty.

With such a lack of transparency about privacy and security, it creates an information vacuum, to be filled by theories and rumors. It seems just about everyone I talk to in China has a different theory, or a piece of gossip about how the information they share on WeChat is surveilled, stolen, or otherwise used. This creates an atmosphere of mistrust around the app, where no one seems to quite know what information is vulnerable on the app that many of them use more than any other.

While the average person may not care much about security, techies like my friend do, and it’s usually by first reaching a critical mass of these users that an app can cross the chasm into mainstream use globally.

Localization

It’s one thing to lack support for certain features outside of the country and clearly indicate so, but in most parts of WeChat’s interface, they seem to just ignore the fact that people in other countries may try to use their app. Worse, when they try to make an effort, like supporting international credit cards, they add unsupported interface elements like a friend of mine encountered when trying to add a credit card.

While many Chinese people will sign up for public accounts under their own names in order to publish content to subscribed followers, this requires a Chinese ID card number, and therefore people who are not Chinese citizens are unable to register for personal public accounts. It is possible to create a corporate account for a foreign business by providing appropriate documentation, but even in that case, not all accounts are created equal. While Chinese public accounts can be viewed by both Chinese and non-Chinese users, foreign public accounts can only be viewed by non-Chinese users, making the vast majority of WeChat users inaccessible.

See: WeChat’s global expansion has been a disaster

In addition this, the ecosystem which supports WeChat so effectively within China is mostly nonexistent overseas. Few retailers outside of China accept payment via WeChat, and apps like Mobike, Ofo, Dianping, and Didi, which work so seamlessly with WeChat, do not yet have a strong overseas presence. Using WeChat outside of China is like putting a shark in the jungle: it simply doesn’t have the environment in which it is designed to thrive.

Other nuisances

Push Notifications: Wechat seems to only provide push notifications for new messages when the app is open, unlike apps like Facebook Messenger that alert you whenever you receive a message, regardless of whether the app is turned on.

This means that if you haven’t opened the app for a few days or since a restart of your phone, push notifications aren’t delivered reliably. For those in China, where checking WeChat is something people do constantly, this is less of a big deal. However, for those who use WeChat as a secondary or tertiary messaging app (like most non-Chinese WeChat users), this can mean going for days without realizing that they have received a message. On many phones this can be changed by adjusting the notification settings, but this is not something all users are aware of or think to do.

Lack of a “follow” vs “friend” option: For well-known or public figures who would like to use social media to reach followers who they do not know personally, Facebook and Linkedin offer a distinction between “liking” or “following” and “friending” or “connecting.” WeChat doesn’t offer this, so for those who would like to follow someone they don’t know personally, they either have to get their approval to add them on WeChat, or use Weibo, which has a lower number of frequency of users.

The 5,000-friend limit: For those who would like to use WeChat as a more public platform, they are limited to 5,000, hampering the reach of an individual account. While it seems like it could be an easy money-maker for WeChat to charge a fee for a higher contact limit, they do not offer this option.

Lack of embedded video: In the past few years, Facebook and Twitter have enabled embedded video into users’ news feeds, allowing users to watch videos as they scroll without having to click on a link and go to a separate site. This has been a catalyst of the pivot to video transformation currently underway among media firms. As of now, this pivot does not seem to be happening in China at the same rate, and this is likely because WeChat does not allow videos to be embedded and shared on “friends circles” very easily.

Final thoughts

Make no mistake: WeChat’s wide functionality within China is absolutely incredible. The app has revolutionized how people in China live their lives in only a few short years. As someone who lives in China, I use it more than anything else on my phone.

Looking at the problem they’re having in their expansion overseas, however, highlights broader trends that encompass other Chinese internet companies when they globalize: mainly, just how different the internet ecosystem is in China versus elsewhere in the world, and the widely different cultural and political expectations that global markets have for apps that play such an intimate role in their lives.

This post Outside of China, WeChat is a fish out of water appeared first on Tech in Asia.

All businesses – big or small – should be keenly aware by now that innovation is key to survival in this digital age.

Just as how startups are looking for ways to disrupt the market, corporations too are looking outwardly for ideas on how to address their business challenges. One such avenue is to source for ideas and solutions from the startup community that’s best known for their disruptive technology. At the same time, startups could also benefit from enterprise partners by gaining access to the required connections, resources, and capital.

Evidently, collaboration between the two could be an ingredient for success – and Deloitte, together with Tech in Asia – wants to be the catalyst.

Introducing Deloitte SPARK

This month, Deloitte Southeast Asia’s innovation arm will be launching SPARK, a three-city tour set out to ignite innovation within the region by forging meaningful partnerships between startups, corporates, and investors.

Jakarta will be their first stop on October 24, and the city’s tour will bring together more than 100 senior managers, directors and C-level executives from startups, corporates, and investors in the same room.

Key stakeholders of Jakarta’s startup ecosystem will also be engaging in a panel discussion about the local community’s challenges and solutions. Additionally, attendees can expect to discover up and coming startups in the region.

The launch event in Jakarta is free to attend, but on an invite-only basis. Interested participants can sign up via the button below – registration closes 18 October. Successful applicants will be notified via email by 20 October.

Speakers

• William Utomo, COO at IDN Media
• Eddi Danusaputro, CEO of Mandiri Capital
• Dr. Ir. Hari Santosa Sungkari, M.H., Deputy Chairman of Infrastructure, Bekraf

Event details

Date: 24 October, Tuesday
Time: 6pm to 10pm
Venue: Decanter, Plaza Kuningan, Jakarta

This post Deloitte launches innovation tour to foster engagement between startups and corporates appeared first on Tech in Asia.

Alibaba this week announced a big push to do more research and development, ploughing US$15 billion into new innovation over the next three years. Here’s how that stacks up to what Amazon is already doing:

Data: Bloomberg; Bloomberg Gadly

Artwork by Tech in Asia’s Andre Gunawan.

The brewing Amazon-Alibaba battle:

• Alibaba sees rocketing global revenue as Lazada grows
• A peek inside Amazon’s huge warehouse in Singapore
• Winners and losers in Amazon’s entry into Southeast Asia

This post Amazon vs Alibaba: the R&D spending war appeared first on Tech in Asia.

What if you built an ecommerce site and then nobody used it? That happened to Jack Ma and Taobao.

This post Video: How Jack Ma kept Taobao alive when nobody was buying appeared first on Tech in Asia.

What’s your greatest fear? What’s your best hiring tip? And a few more questions for these three tech experts.

This is part of our coverage of TIA Tokyo 2017.

This post Video: Is it hot in here or are we seriously grilling these tech experts? appeared first on Tech in Asia.

…and it’s called Robutt. Seriously.

This post Video: Ford made a robot butt appeared first on Tech in Asia.

We’re only a few days away from the world’s biggest shopping bonanza, when hundreds of millions of people in China jump onto the web and buy billions of dollars worth of stuff in a 24-hour period. It’s way bigger than America’s Black Friday and Cyber Monday – combined.

In China, this shopapalooza is called Singles Day. It’s on November 11. Alibaba’s marketplaces have discounts and pretty much every rival site has sales too. It’s the craziest day in China’s huge ecommerce market, which is tipped to hit about US$1.2 trillion in spending during the course of this year.

How did China’s Singles Day start out? How on earth did it become so massive? Our comic explains all.

This post was first published November 2015, then updated a year later. On November 7, 2017, parts of the text and graphic were updated again with the latest data.

This post What you need to know about China’s biggest online shopping day appeared first on Tech in Asia.

ShopBack’s head of international expansion, Josephine Chow.

ShopBack, DocTalk, and AnchorDX are among the startups that secured funding in Asia today.

Ecommerce

ShopBack gets US$25 million in latest funding round (Singapore). Japanese credit card issuer Credit Saison led the round, with SoftBank, Singtel, and Intouch joining in, among others. The startup, which provides a range of special offers for online shoppers, will use the funds to hire personnel and launch new features. (Tech in Asia)

Gaming

Razer aims for US$528 million IPO (Singapore/Hong Kong). The gaming peripherals maker, which recently unveiled its first smartphone, will float on the Hong Kong stock exchange next week. (Reuters)

Razer CEO Tan Min-Liang on stage at Tech in Asia Singapore 2017. Photo credit: Tech in Asia.

Life sciences

AnchorDX closes US$28 million series B round (China). Local firms 6 Dimensions Capital and Sijia Jianxin Fund led the investment in the precision medicine startup, which develops DNA sequencing technology for use in cancer diagnoses. (China Money Network)

Healthcare

DocTalk raises US$5 million in first institutional round (India). The Y Combinator-backed startup has developed an app that allows doctors to keep in touch with patients, avoiding the need for follow-up appointments, which are often unnecessary and resource-intensive. The round was led by Khosla Ventures and Matrix Partners. (The Times of India)

Internet

Photo credit: Luis.

Indonesia drops WhatsApp ban threat (Indonesia). The country’s communications ministry threatened yesterday to ban the Facebook-owned messaging app within 48 hours if it didn’t block what it deemed to be “obscene” GIFs from third-party sources such as Giphy and Tenor. However, the ministry said today it has withdrawn the ultimatum after receiving a response from Facebook. (Reuters)

Investors, accelerators, and incubators

Broadcom bids US$130 billion for Qualcomm (Singapore/US). If the acquisition goes through, it would almost certainly be the biggest tech industry deal in history. However, it needs to gain regulatory approval from governments around the world before it can be completed. Singapore-based Broadcom has already stated its intention to domicile in the US, partly to overcome regulatory issues there relating to one of its pending transactions. (Bloomberg)

This post Asia tech news roundup – Nov 7 appeared first on Tech in Asia.

Photo credit: Freddie Collins / Unsplash.

Lending startup WeLab is flush with cash today after announcing US$220 million in its latest funding round. It operates WeLend in Hong Kong and Wolaidai in mainland China.

Online shopping giant Alibaba is among the investors, throwing in cash from the Alibaba Hong Kong Entrepreneurs Fund it set up in 2015.

The startup – with 25 million users and US$28 billion in processed loans – works entirely online, via a mobile app. It gives consumers access to the kind of relatively small loans that it would be unusual or difficult to obtain from your bank.

“In 2017, we have been focusing on growing the business,” CEO Simon Loong tells Tech in Asia. “Our loan business has grown six- to sevenfold in the first half of 2017 compared to the first half of 2016. This is in addition to the six- to sevenfold growth the company has experienced in the full year of 2016 compared to the full year of 2015. We are also delighted to announce that the business turned profitable this year.” No absolute numbers were disclosed.

Simon Loong. Photo credit: WeLab.

On its Wolaidai service, loans tend to range from US$450 to $7,500. The delinquency rate, or being late to repay, is two to three percent.

See: How fintech startups are using big data to solve China’s huge credit gap

Like many such startups, WeLab delves through some unusual – and rather intimate – data in people’s lives in order to asses their credit worthiness. It uses a mix of facial recognition, text and image analysis, and monitoring online behavior to asses people. “Our quickest approval is only 1.7 seconds, and we process a new user every 1.3 seconds,” Loong adds.

Tech-savvy salaried workers aged between 20 and 35 are its main customers, explains the boss.

Big rivals

“For this round of strategic financing, it was important for us to have participants that would help scale our business to the next level,” says Loong. The money “will be invested into research and development for big data, credit risk management technology, product development, expand business scale, explore new business models, and speed up overseas expansion in 2018.”

It’ll be up against an array of loans startups riding the fintech boom across the planet. Kabbage recently pocketed US$250 million to expand into Asia, for example, while the pioneering Lending Club is already a US$2.2 billion business.

In mainland China, the competition is – perhaps needless to say – especially fierce. Dianrong is arguably the biggest indie startup in the lending space, while Alibaba, via its Ant Financial unit, is the biggest name from which people can borrow a few bucks over their phone.

WeLab has now raised US$425 million in total, with this latest injection described as its series B+. Credit Suisse, China Construction Bank (International), and International Finance Corporation are among the other participants in this round, which is a mix of “equity and debt strategic financing,” said WeLab in a statement.

Updated 3 hours after publishing: The original article got the number of users wrong. That’s now fixed.

This post Alibaba funds lending startup WeLab to help it break out of China appeared first on Tech in Asia.

Sansan COO Rio “PopEye” Inaba, speaking on stage last week at Tech in Asia Jakarta 2017. Photo credit: Tech in Asia.

The news (via Nikkei Asian Review):

• Goldman Sachs has invested US$17.6 million in Sansan, a Tokyo-based startup that digitizes business cards to create a professional social network, the US financial services giant said today.
• Today’s investment brings Sansan’s total disclosed funding to almost US$98 million, according to Tech in Asia data. The startup closed its series D round in August, securing US$38 million from investors including the Sumitomo Mitsui- and Toyota-backed Future Creation Fund, and Salesforce.  

Why it matters:

• According to the The Nikkei, Sansan will use the funds to fuel its expansion into India initially, followed by Indonesia and other Southeast Asian markets. Goldman Sachs also has “an eye toward earning investment returns when Sansan goes public down the road,” the newspaper said.
• The US firm also announced that it will be pumping US$876 million into Japan-related investments over the next couple of years – meaning that other local startups are likely to benefit.
• Goldman Sachs said it will invest in “promising startups” and “support their long-term growth.” It will also devote some of the capital to teaming up with Japanese companies on joint acquisitions of foreign businesses.  

Converted from Japanese yen. Rate: US$1 = ¥113.89.

This post Brief: Biz card digitizer Sansan gets $18m from Goldman Sachs appeared first on Tech in Asia.

Chinese ecommerce giant JD relies on around 65,000 employees for its last mile delivery service. Photo credit: JD.

Inside a warehouse in the southeast corner of Beijing, a crane-like robot patiently picks up packages from pallet to container. Red banners are strewn across the top of the wall, inscribed with slogans like “Innovation never rests” and “We advance towards smart logistics.”

This is JD-X, the logistics lab of Alibaba’s ecommerce archival JD. Launched last May, the R&D unit has teams in China and Silicon Valley, and develops a wide range of applications and tech: anything related to the movement and processing of packages – autonomous drones, delivery robots, and unmanned warehouses.

Right now, it’s very hard to recruit workers to work in the warehouse and for last-mile delivery.

“Our goal is to develop ‘dark warehouses,’” Huang Fengquan, head of planning for JD Automated Warehousing Solutions, told media during a tour of the lab’s facilities on Monday. Like ‘dark factories,’ dark warehouses refer to completely autonomous facilities where robots work alone in the dark, completing tasks formerly done by humans.

Automating the logistics sector is a global trend, but in China, the stakes are especially high as the country’s population rapidly ages and labor costs rise. In particular, the one-child policy has whittled down the number of available young workers. According to China’s National Bureau of Statistics, the number of workers between 16 and 59 years old plunged by almost 5 million in 2015. As the labor pool shrinks, demands for better benefits and higher wages have also risen.

“Right now, it’s very hard to recruit workers to work in the warehouse and for last-mile delivery,” explained Beth Bao, director of strategy at JD Logistics. That’s actually a more crucial factor than cost at the moment, she said.

“The wages are going up [like] in the United States,” she continued. “I’ve talked to a lot of partners in the US, they also see the labor shortage. It’s very hard for them to get workers to work in those environments.”

Logistics as a service

A live stream of Kiva-like robots moving inventory shelves in JD’s unmanned Shanghai warehouse. Image credit: Tech in Asia.

Globally, growth in the ecommerce industry has also galvanized companies to automate fulfillment centers. In 2012, Amazon paid US$775 million to acquire Kiva Systems, whose Roomba-like robots can carry inventory shelves across warehouse floors. In October, JD announced its first dark warehouse in Shanghai – a massive 16,000 square meter facility that has the area size of around three football fields.

Warehouse automation could also optimize workflows and boost efficiency – a top priority for China, whose costs from the logistics sector amounted to 15 percent of its GDP last year. It’s a huge market, said Bao, explaining that JD Logistics – a newly minted business group under JD – aims to be a one-stop shop supply chain provider that serves businesses outside of the ecommerce industry.

“We’re providing the whole supply chain service to brands, which means from warehousing to transportation, to last-mile delivery,” she said. “We can also provide predictive analytics for the brands because we own the customer information. We know where they are and what they like.”

On the data analytics side, JD competes with Alibaba, whose logistics arm Cainiao provides merchants with online and offline inventory management. Cainiao, however, works with third-party delivery companies, whereas most of JD’s couriers are full-time employees. To deal with peak periods, such as the upcoming Singles Day shopping bonanza, JD has also taken on temporary couriers as part of its merger with Dada, a crowdsourced delivery network.

Once its logistics technology matures, such as its package-picking robots, JD can offer that as a service to clients as well, Bao said.

See: What you need to know about China’s largest shopping holiday

JD’s automated sorting center in Kunshan. Photo credit: JD.

Robot vs Man

However, developing smarter warehouses won’t be cheap. In fact, increasing automation in fulfillment centers may not result in immediate cost benefits in the short term, especially since automation is still limited to certain tasks and products. For instance, JD’s Shanghai warehouse only handles certain electronics like smartphones, a more standardized vertical than something like apparel.

And while labor costs may be rising, human workers are still relatively cheap and sometimes more cost-effective, especially in developing countries like India.

“In the US, the labor cost is very high – US$15 to 18 per hour – but the capital costs are low, because the interest rates are also very low. In India, the capital costs are high, the labor cost or the variable cost is relatively lower,” Amazon India VP Akhil Saxena told Tech in Asia during a tour of the company’s largest fulfillment center in India.

He added, “So, the arbitrage is to say at what tipping point or at what ratio between automation and manual does it make sense to build a very large building and put a lot of Kiva robots here.”

See: No robots, please, we’re Indian – the lowdown on Amazon’s localization strategy

Variety in product size is also a constraint. Heavier goods such as refrigerators require heftier robots that are often slower than their more petite counterparts. Delta, JD’s claw-like robot, is capable of picking up 2,500 to 3,000 products per hour, and can only handle objects that weigh between 50 grams and 3 kilograms. The company’s larger 6-axis robot, which can handle 100 to 160 kilogram items, takes 10 to 12 seconds to move one item.

This is why warehouses may have to be classified by product size, explained Huang in JD-X’s test warehouse facility. “It’s more complicated when orders are mixed,” he said. JD Logistics’ inventory management system has to separate orders into different warehouses before collecting them for delivery.

The JDRover, a last-mile delivery robot. Currently being tested on four university campuses, the JDRover still needs some kinks worked out – the bot ran into the curb shortly after this photo was taken. Photo credit: Tech in Asia.

Still, it’s clear that automation at some level is the future. According to Huang, the company’s smaller Delta robot is 10 times more efficient at picking packages than current warehouse workers.

“Even though [logistics automation technology] will increase costs at the moment, using robots to replace human workers makes financial sense in the long term,” Li Hao, an analyst at iResearch, told Tech in Asia. One day, robots will be able to completely replace human laborers, but it might take more than 10 years because of the investment required for R&D, she said.

Addressing concerns that humans will be replaced with robots, JD is adamant that its investment in smart logistics won’t affect existing employees. The unmanned warehouse in Shanghai, for instance, is a new facility – not an upgrade of an existing one, said a company spokesperson.

Workers whose jobs are reassigned to robots will also have the opportunity to transfer within the company, explained Li Yuqian, an algorithm engineer on JD-X’s autonomous delivery robot team. Because the majority of JD’s logistics workforce are couriers and not warehouse workers, they would be the most affected by autonomous delivery vans and last-mile delivery robots. However, it’s unclear how easy it will be for blue-collar workers like delivery men to pivot into new careers.

“I think [delivery robots] will replace delivery jobs, but not the delivery guys,” she emphasized. “They are still the employees of JD, because they will work on maintenance or other important jobs.”

This post From dark warehouses to delivery robots, Chinese ecommerce figures out models of automation appeared first on Tech in Asia.

Lazada boss Max Bittner feels no pressure from parent Alibaba to become profitable. The aim now is to grow the opportunity. “Southeast Asia, for them, is hugely exciting. They see as big an opportunity as China and my mandate is to win the market,” said the CEO during a fireside chat at Tech in Asia Jakarta 2017.

Winning involves having massive ammunition in the ecommerce war that has seen players spend huge sums to lure customers to their sites and gain market share. Thanks to Alibaba’s deep pockets, “we match [our competitors] a lot because we can,” Bittner said.

Shopee – Lazada’s closest rival and part of publicly-listed Sea – “will have a harder time continuously raising money,” he argued. “At some point public market investors expect improvements in profitability. The luxury of being us is we’re not exposed to that scrutiny.”

But more than the spending power, he believes their ability to differentiate themselves from competitors is crucial. Lazada is doing this by building out its infrastructure.

The store started out doing direct sales to consumers from its own warehouses – thus, the moniker “the Amazon of Southeast Asia”. In 2013, it added a marketplace for merchants, using its assets to offer merchants fulfillment, which includes things like warehousing, packaging, and shipping. The marketplace has grown to account for a significant part of spending on Lazada.

Lazada has 15 warehouses across Southeast Asia where it’s trying to put a vast array of products, according to Bittner. Of those, three are located in Indonesia, and two more will be launched in the 250 million-strong market by the end of the year. Bittner says the firm is also expanding its last-mile delivery services as “we really believe in the integrated value chain.”

Photo credit: Lazada.

Bittner is angling for what he calls the three Cs. “Capacity – it’s how much volume you push through the system at any given time. Cost – we want to make it cheaper. And capability – which is really the distinguishing factor.”

“Not everyone wants the same things. Some people are okay to wait, some people want it very fast, some people want a certain delivery window like what we do in Singapore with Redmart […] Whether it’s bulky like a fridge that you need delivered or a small thing that’s cheap, it’s about building that whole portfolio of capability,” he explained.

Clashing models

Shopee does things differently. Sea president Nick Nash believes that creating a marketplace purely for merchants not only requires lower costs, it is ideally suited to the rather basic level of logistics development in Southeast Asia.

“Our sellers are highly distributed and decentralized across the region, rather than having to rely on one or a small number of mega-warehouses in larger cities […] The very practical result is a more efficient path from seller to buyer as opposed to the potentially longer transit times under a hub-and-spoke model.”

In industry jargon, it’s the battle between “asset-light” (Shopee) and “asset-heavy” (Lazada) models.

Moreover, Nash contends the asset-heavy approach makes it harder to achieve remarkable product breadth. “The supply chain management alone on the inbound side [from the factory] is almost impossible to manage,” he said on stage at Tech in Asia Jakarta 2017.

Nash views the mix of direct retailing and marketplace as a conflict of interest. “If you’re asset-heavy, your job is to buy wholesale, put it in your warehouse, and then sell one package at a time in great bulk” – putting you at odds with sellers.

Nick Nash (L), group president of Sea. Photo credit: Tech in Asia.

Following Alibaba

Bittner thinks the industry’s biggest challenge lies not in growing merchandise volumes – “we see everyone growing nicely at some point” – but in addressing the region’s overall logistics issues.

“We see logistics as a massive bottleneck […] It’s important that as the market matures, you have a dependable system,” he stated.

In Indonesia, Lazada’s former country boss Magnus Ekbom previously lamented that third-party logistics providers couldn’t keep up with Lazada’s growth. “Indonesia is pretty much running out of logistics capacity,” he said.

The company has relied on logistics companies for its deliveries into customers’ hands – from Ninjavan in Singapore to Go-Jek in Indonesia. In order to better cope with demand, it began investing heavily in its own delivery network. In Indonesia, Lazada now handles the bulk of those deliveries itself.

This investment in infrastructure is something that Alibaba – known for its asset-light Taobao and Tmall marketplaces – has fully embraced.

In September, Alibaba’s logistics unit, Cainiao, pledged to spend US$15 billion over five years to build out a global logistics network. Alibaba is also venturing into new types of retail. Much like Amazon, it’s begun selling groceries online, setting up cold-storage distribution centers across China. It’s also moving into offline retail, investing in electronics and department stores. It’s opened a supermarket chain called Hema, which allows customers to shop, dine, and order groceries for delivery from their mobile phones.

“I think when you are young, tiny, a light model is good. When you are strong, big – think about it – you need heavy things,” Alibaba founder and billionaire Jack Ma said recently. “There is no heavy is good, or light is good. A mix is good. To be efficient, you need to connect light and heavy models together. But with Alibaba’s size today, you should not leave the heavy model to others, it’s something you have to do […] you have to invest.”

Photo credit: Lazada.

A formidable backer

Aside from Shopee, Lazada is competing with the likes of Bukalapak, JD, Qoo10, and new entrant Amazon across Southeast Asia. Another rival, Tokopedia, has recently sold a stake to Alibaba.

Asked how he thinks the competition will evolve, Bittner said “to be honest, I don’t know.”

What’s certain is that “Alibaba [is] here to stay. We’re here to stay. [We’ll focus] on what distinguishes us and we’ll match whatever we can match.”

Lazada is taking stock of many lessons from Alibaba’s playbook.

The duo is working closely to make use of big data to match consumers with the right products, as well as technologies to prevent fraudulent sales on their sites.

“We’re the only platform in the region which actually limits the amount of orders you can do per item. So on Lazada, you can’t just order one item 20 times in one order, you have to come back and order again. That’s how our systems keep track if this is fraudulent behavior,” explained Bittner. “Alibaba has a huge amount of experience in avoiding this kind of behavior.”

The Lazada CEO is also weighing up the possibility of opening a mall in Indonesia, taking cue from Alibaba’s move into supermarkets.

“We’ve got the firepower we need and we have the backing of one of the most profitable companies ever, we’ll do whatever it takes and really win as much as you can,” Bittner concluded.

This is part of the coverage of Tech in Asia Jakarta 2017, our conference that took place November 1 and 2.

This post Lazada CEO: The secret sauce that will help us win Southeast Asia appeared first on Tech in Asia.