This Indonesian ecommerce site helps retailers ship away past season’s goods fast

Although Indonesia’s fashion ecommerce industry has a few players dominating the scene – like Zalora and Berrybenka – that still isn’t stopping former Rakuten Belanja Online director Tesong Kim from entering the battlefield. He launched flash sales site VIP Plaza back in February this year, and in only six months he has some figures to show off – like 42 percent repeat orders and 2.5 million monthly pageviews.

Faster turnaround

When I first met Kim a couple months ago, he had already partnered up with 200 fashion brands for VIP Plaza. Now the site has 60 more brand partners, including some big names like Adidas, Nike, Puma, Lacoste, and Guess. Kim says VIP Plaza is able to pull this off by solving the old collections problem that fashion labels always face.

The fashion industry moves fast. Even before the current collection is out of season, brands have already launched new collections. This creates an inventory problem. Brands usually cast off their old collections to department stores using a consignment model to create more space inside the warehouse to store the newest stuff. The department stores (partners for traditional consignees) hold the goods for three to six months to sell it in their store. After the period ends, the brands will receive revenue from the sold goods and take back leftover items. That consignment model can solve the space problem, but the downfall is that it takes quite a long time for brands to get revenue from the consigned product lines.

VIP Plaza can shorten that consignment period. The company only holds the goods for two to three weeks, which is much less time than a department store. If VIP Plaza receives the goods today, the next day they will do a photo shoot for the products in-house, and the day after that at 10am they will post the collections on their website and offer limited, 10-day discounts. After the sales period ends, VIP Plaza will transfer the generated revenue and return the leftover clothing to the brand.

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Daily habit

Inside VIP Plaza’s hidden shop-house in the Roxy Mas area of Jakarta, the startup’s 75-man team gets down to business. You can see an overstuffed warehouse, a simple photo studio, and an office space. This is where everything happens – from storing the consigned goods from brands, taking photos of the products, to sending the items to customers. Co-founders Tesong Kim and Yoga Sugeharto watch over the team.

Delivering new collections every day is VIP Plaza’s key strategy to challenging the other ecommerce players in the country. The company will always post new fashion items at 10am with up to 80 percent discounts, with loyal customers eagerly anticipating new products at around the same time. VIP Plaza currently has between 200 to 300 product lines available, and its peak traffic comes in between 10am to 11am every day because of this system.

Equipped with seed funding from CyberAgent Ventures, VIP Plaza wants to grow the team from 75 personnel to 120 by the end of the year. “Every three days we hire one new employee,” says Kim, smiling. After only selling women’s fashion in the last few months, VIP Plaza has recently expanded into men’s clothing, with other categories like beauty and cosmetics, as well as home furnishings on the horizon too.

Kim and Sugeharto have already rented a 3,000-square-meter building to serve as a new warehouse. The duo’s ambition is to make VIP Plaza the number one online discount retailer in Southeast Asia.

VIP Plaza’s main rival in the flash sale ecommerce sector in Indonesia is BrandClozet, which also launched in the same month.