Meet N Squared, a mobile app startup founded by Yahoo Taiwan’s ecommerce architect

Taiwan’s ecommerce industry might seem too small or insular for investors to take notice, but look carefully and you’ll see that it’s changing quickly. Giants from the Web 1.0 era are racing to stay relevant in an era of smartphones and social networks. Meanwhile, behemoth messaging app Line has expressed interest in tackling peer-to-peer ecommerce, which could also affect the fortunes of incumbents. And as mobile devices that track one’s location grow more powerful, many are wondering how to bridge the gap between physical storefronts and virtual ones.

N Squared is one startup that’s looking to capitalize on these trends. Co-founded in 2012 by Steven Ho, former general manager of Yahoo Taiwan’s ecommerce division, the company’s 91App helps online merchants set up mobile storefronts quickly.

91App basically offers a set of front-end templates and back-end levers that let vendors manage sales through a mobile app. Merchants can upload product descriptions and pricing, and choose from a number of payment and shipping options to ensure that money and packages each go in the right direction.

91App-powered storefronts are aggregated on 91Mai, a consumer-facing mobile app that lets people discover new products and shops.

Ho says that 91App monetizes by charging merchants subscription fees, with the lowest starting at NT$29,900 (about US$ 942) annually. Depending on sales, it also imposes referral fees on purchases, which range from 2.5 percent to 5 percent.

Taiwan and the marketplace conundrum

91App’s premise is not new, of course. It’s basically an app-centric, Taiwan-oriented version of Shopify, the Ottowa-based startup that helps merchants build online storefronts. Shopfiy launched in 2004 as an ecommerce-focused website builder, but has since evolved to become a “Wordpress for sellers”-type platform that’s likely valued at nearly US$1 billion. Its users include many vendors who eschew garden-variety ecommerce properties like Ebay or Amazon Marketplace for standalone virtual real estate. While those marketplaces will always attract eyeballs, a Shopify pitchman might say, independent web storefronts give vendors greater control in management and more opportunity for brand loyalty. The tradeoff, of course, is sellers will have to spend more time and money driving traffic to their pages.

Shopify isn’t entirely absent from Asia. It has feet on the ground in Singapore thanks to a partnership with Singtel. Last September, Shopify CEO Harley Finkelstein told Tech in Asia that the company has more than 1,000 paying vendors in the city-state. But the firm has no further plans to move beyond Singapore and Malaysia – possibly because marketplaces like Tokopedia and OLX remain fresh concepts in Southeast Asia.

Taiwan, meanwhile, might be a market in Asia where Shopify’s premise makes sense. For one thing, the island’s ecommerce industry is well out of infancy, but growth is still on the upswing. Taiwan’s Institute for Information Industry says that total revenues from business-to-consumer and peer-to-peer shopping sites hit NT$764.5 billion (US$25.5 billion) in 2013. That figure is expected to jump 15 percent this year to NT$879.4 billion (US$29.3 billion). In the US, meanwhile, Forrester expects ecommerce revenues to hit US$294 billion in 2014. On the back of our envelope, Taiwan’s ecommerce revenues are one tenth of those of the US, despite a disproportionately lower population and lower average household incomes.

More importantly, online marketplaces have dominated Taiwan’s ecommerce industry for more than ten years. Yahoo Taiwan and PCHome, the island’s two ecommerce titans, each added ecommerce extensions of their portal properties in the early 00’s. To date, they both offer three tiers of online shopping – a curated and internally-managed business-to-consumer tier, a storefront marketplace business-to-consumer tier, and a peer-to-peer listings site. Successful as these companies are – PCHome just hit a US$1 billion market cap on Taiwan’s stock exchange – Ho believes that vendors are starting to feel fatigued by the pitfalls of online marketplaces.

Yahoo and yonder