What Reebonz’s and Zalora’s funding rounds mean for e-commerce startups in Asia

The biggest news last week for Southeast Asia’s startup community would undoubtedly involve the USD 40M that luxury e-commerce company Reebonz raised from MediaCorp, Infocomm Investments, and a slew of other investors, as well as the fresh USD 100M round that Zalora, another fashion e-commerce outfit, has managed to cobble together.

Together, both developments hint at rising investment confidence in the region’s e-commerce’s prospects.

Reebonz, in particular, is a fast rising player that has expanded far beyond its humble Singapore beginnings. The luxury online store recently opened a flagship outlet in Sydney. It has launched localized sites in New Zealand, Australia, as well as South Korea, and is currently shipping to 22 markets in Asia, Europe, and North America.

For entrepreneurs, the ascendance of both companies has several possible implications:

1) Investors could become more willing to invest in e-commerce or e-commerce related startups.

While uncertainty surrounds how Zalora and Reebonz will play out, expect investors, especially in earlier stages, to be more open about putting money into e-commerce startups. Those that funded the two companies are mainly institutional investors and venture capital firms — so smaller players with less cash might follow their lead.

I also think that we’re just seeing the beginning of the institutional investor’s involvement with startups in the region. Singapore Press Holdings has been investing in and acquiring startups, and I expect that trend to continue. I think MediaCorp would soon follow suit too. SingTel has already indicated that it is earmarking  a further USD 1.6B for startup acquisitions.  I believe going forward we’ll start to see even more large corporations emerge to make bets in the tech startup space.

2) Merely selling stuff online is no longer enough

Starting just another fashion e-commerce venture from scratch right now would be suicidal, unless you’re MediaCorp. Entrepreneurs will have to think hard about what verticals are untouched by e-commerce, and whether it makes sense or not to enter into these verticals. Prescription eyewear could be the next big thing here, and that is an area that is pretty much untouched in Asia. A startup from Hong Kong is attempting to sell buttons, 15,000 types of them, and that might work since competition in this space may not be as fierce.

There’s also probably a lot of opportunity in solving the problem of online fitting. One major variable cost in fashion e-commerce is the amount of money wasted on returned goods. Anyone that can fix this and license it to online sellers might have a lucrative business on their hands. A pre-launch Singapore startup called Get Fitted is already working on a solution.

3) Rocket Internet’s rise is good for the startup scene

Too much has been said about Rocket Internet’s evils and how they’re ripping off people’s ideas. But in the Asian context at least, I think Rocket Internet’s involvement on balance is turning out to be a net positive. As mentioned, the ludicrous amount of money pumped into Zalora and Lazada generates buzz for the startup community here.

Rocket Internet is also becoming a bootcamp for entrepreneurs: Many Rocket staffers have left the entity to start their own ventures. It could also be a customer providing sources of revenue for cash-strapped startups.

Altogether, I think these developments represent a significant short-term boost for e-commerce startups in the region, never mind whether Rocket Internet’s ventures will become sustainable long-term businesses. Assuming Asia continues its upward trajectory in e-commerce adoption, there are still plenty of opportunities for up-and-coming enterprises to leave their mark.