Lapasar started operation in January 2018 with a goal to democratize corporate purchasing. We noticed how consumers were making merit-based purchasing decisions on platforms like Lazada and noticed that corporate purchasing is not the same. High-level corporate purchasing involved many steps, bureaucracy, and generally lacked transparency. Lapasar was created with an aim to provide corporates with a Lazada-like platform to make their purchasing process super efficient, simple and transparent.
Once we launched in January 2018 providing a platform similar to Amazon for Business in Malaysia, Telekom Malaysia was the first client to hop on and pilot the concept which was largely a success. Savings were created, purchasing time was cut short by 80% and soon, other clients such as Tenaga Nasional, PwC, UEM Group, DRB Group, Plus, Malaysian Airports, and most recently PETRONAS jumped on the bandwagon. Lapasar is actively onboarding new corporates and our pool of corporate merchants and products is growing on a daily basis. The categories that these corporates buy on Lapasar ranges from office supplies, pantry supplies, tools, IT Supplies, safety equipment, furniture and anything an office or business may need.
We have saved almost 30 large corporations in Malaysia not only money on products but also massive man-hour costs. In total, Lapasar has processed close to 100,000 corporate purchases to date and is still growing rapidly. Earlier this year (2020), we decided to expand the business line and add in a new category which is FMCG distribution.
Lapasar’s core competency is to digitize primarily traditional businesses, deal with the trade of fast-moving items and we specialize in Business to Business transactions. When we took a hard look at our core competencies and evaluated which category had most opportunities, we decided to get into the FMCG space particularly connecting mum and pop stores to brand owners or distributors and bringing them online. We are targeting the general trade sector which mainly consists of small independent retailers who are not part of large chains or supermarkets. This space happens to have the most opportunities for growth and digitisation.
We are raising funds to grow particularly that part of the business - the FMCG segment.
The general trade sector is extremely underserved. A vast majority of the 60,000 independent grocery stores nationwide do not get served by the brands or distributors directly and have pain points such as inconsistent pricing resulting in fluctuating profits, unavailability of stock due to allocation to larger marts and chains, no delivery services, no information on goods and no financial services provided.
Lapasar’s value proposition is to offer a smooth ordering process, delivery services, availability of stocks - while maintaining reasonable price points. Not competing on price allows us to earn sufficient margins to build a sustainable business while solving real pain points without compromising growth. It is important that we are chasing sustainability while also chasing crazy growth.
We are using technology in three areas:
- Transactional tech - ensuring a smooth, scalable, non-human-reliant ordering process. This is a key differentiating factor from traditional players.
- Operational tech - for optimum efficiency, as used by large distributors, logistics players or ecommerce players such as Lazada - to leverage on the economies of scale effectively
- Financial tech - for the time being, the focus is on data collection. We have secured Financial partners to offer financing to our independent retailers - we aim to run a pilot end of Q1 2021.
Since our launch in Jan 2018, we have grown to a monthly revenue of appr. RM5m in October 2020. Our margins are averaging at 5-6%. Before launching and investing in our wholesale segment mid-2020, we were profitable on a net level for several months.
In June 2020, we launched the FMCG segment of the company and have seen unprecedented growth in that area. Our FMCG business is growing at 50% month on month and will surpass the corporate business by the end of Q1 2021. Similar players in the region are companies like Telio in Vietnam or Gudang Ada in Indonesia.
For the new FMCG category, we are targeting 60,000 independently owned retailers across Malaysia. The total immediately addressable market size is RM60 billion.
We are operating like an e-distributor, earning a gross profit on the sale of the products. Similar players around the region which raised funds for similar business models are often criticized for grabbing market share by selling products below cost. We don’t agree with that strategy and from the start, focused on making sufficient gross profits. The gross loss in the first weeks was due to supply shortage which we covered by buying more expensive products, in order to keep customer satisfaction high. At the moment, we earn 3%+ on each sale and are confident to bring that to 10%+ within the next 12 months.
Within FMCG, we are currently in the market segment of fast moving packaged food and beverage products. We sell items of first-tier brands, e.g. Nestle, as hook products and items of 2nd tier brands as items to earn margins on.
In Indonesia, there are several large players we know of, most notably Gudang Ada, Ula and Ralali. Locally, key competitors are traditional distributors and physical wholesalers - who are currently serving our target market. In terms of tech players, we view Potboy and Wosco as our direct competitors. Locally, no tech company has established themselves as a winner in the FMCG space yet and we see a huge opportunity there.
We aim to raise RM 10 million to aggressively onboard 10,000 retailers as our customers within the next 24 months, bringing us to monthly revenues of RM 40 million (equivalent to close to RM 500 million annualized). That will allow us to use our RM 10 million funds raised purely for market acquisition and growth.
We have financing partners, most notably Aspirasi under Axiata, in place to fund our cash flow needs for e.g. inventory purchases.
Within 24 months, we aim to be the clear number 1 in the FMCG space in Malaysia, with 10,000 actively buying retailers across the country. Financially, we aim for a break even within 18 months, which puts us into a strong position for a future fundraising round and expansion into the next country.
Our last round of investment was a Seed Round of RM2,000,000 in May 2019. It allowed us to scale up the corporate side of the business which became profitable May 2020 onwards, while we still have about one third of the Seed Round funding left unspent.
Lapasar’s founder and CEO, Thinesh Kumar, has sold his previous company, a medical device trading business, to a competitor, in order to be able to kick-start Lapasar in 2017. He has over 10 years of experience in running his own business. Here one of the latest interviews on Thinesh's vision of Lapasar: https://www.facebook.com/watch/?v=2640156609569562
Lakshman Das, the COO of the company & Thinesh’s brother, is spearheading any new business development initiatives. Dannis Raj is the tech co-founder of the company and has worked with Thinesh for more than 7 years. Noomi Fessler was part of the investment company (NEXEA) which wrote the first investment cheque for Lapasar. She joined in 2018 as a full-time member of Lapasar and leads the Finance team and part of Operations.
Over the past 2 years, we have built up a strong & stable team of 50+ people, many of whom are truly inspired by the vision of Lapasar. In the last 6 months, our focus was on building a second layer of management and leaders within the company. The second layer, combined with a rigorous implementation of processes, allowed us to scale to our current level quickly.
Video interview about our new business segment:
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