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In the ever-evolving world of e-commerce, the emergence of giants like Amazon has made it increasingly challenging for startups to overturn the dominance of established platforms. The nature of such platforms is that their larger scale offers greater convenience to users, creating a self-reinforcing cycle where more users attract even more users, making it difficult for new players to disrupt the market.
However, there still exist niche markets where startups can find their footing. By addressing specific customer problems and resolving inefficiencies that larger platforms overlook, these startups can establish themselves as vertical platforms, potentially surpassing existing giants.
SECAI MARCHE is one such startup striving to become the No.1 e-commerce marketplace in the Asian market and beyond.
Founded in 2018 by Ami Sugiyama and Shusaku Hayakawa, SECAI MARCHE is a B2B online platform that connects farmers directly with restaurants in Southeast Asia. This innovative approach addresses the significant pain points in the supply chain for perishable goods, ensuring that fresh and high-quality products reach their destinations efficiently.
Why are these Japanese founders challenging the fresh produce e-commerce platform business in Malaysia and Singapore? What exact problems do they aim to solve for suppliers and consumers through their platform?
Asia Tomorrow met with the two founders to learn about their experience of going from zero to one in the Southeast Asian market, the challenges they faced in acquiring their first customers as a B2B business, and the strategies and prospects of growing as a technology-based platform.
(Ami Sugiyama) SECAI means ‘global’ in Japanese. MARCHE is ‘market’ in French but it’s also a commonly used term in Japan as well. So SECAI MARCHE means ‘global market’ where you can find fresh products from all over the world.
Having started in 2018, we become a B2B online platform in Southeast Asia to connect the farmers to the restaurants. As we already see established a logistics network and fulfillment* solution for the perishable products in Japan, now we would like to bring this to the Southeast Asia market as well to contribute to the consumers(ex : the restaurants) as well as the farmers there.
*Fulfillment : The process of receiving, processing, and delivering orders to customers. This typically includes warehousing inventory, picking and packing products, and shipping orders.
(Ami Sugiyama) We are actually focusing on the supply chain. So in 2018, we started to build the new value chain to connect the farmers and then the restaurant. We had some farmers in Japan and Malaysia to work with and then some consumers (ex : restaurants and retailers) a bit later. So now we are directly connecting the farmers and the restaurants which is our value proposition.
(Ami Sugiyama) I think it will be better to tell you more about our behind story. Before SECAI MARCHE, which is the supply chain business, we worked at a consulting company which helped to export agriculture products from Japan to Singapore.
Even before that, actually Shusaku Hayakawa used to be a farmer and technical engineer. So he understood the pain point of the farmers. I used to run my own cafe and restaurant in Malaysia so I knew the pain point as the restaurant runner. So we decided to open the supply chain business to solve both sides of the challenges.
(Ami Sugiyama) During 2013~2014, we decided to start SECAI MARCHE in order to solve the challenges from the consumer point of view at first because I was already running my own restaurant.
At that time I didn’t know about the entire supply chain of Southeast Asia or so but I knew that I have big problems with finding the providers.
In conclusion, we couldn’t find the ideal product if we relied on the traditional supply chain so we decided to found SECAI MARCHE.
(Shusaku Hayakawa) From the farmers' side, now thanks to the e-commerce players, the farmers can sell their products directly to the consumers (usually restaurants) in Japan. In addition, we have logistics service available so it’s easy to keep the quality of the product to sell to the consumers.
However in the Southeast Asia market, I found that e-commerce is relatively not reliable. For example, when we want to buy the perishable items, it doesn’t come, which means that even though there’s an icon, it doesn’t work. It’s because there is a lack of a logistics system in place to transport perishable goods quickly and efficiently. As a result, farmers can't conduct their business easily.
So for the farmers, I saw the big gap between the rise of e-commerce and the farmers who can’t get the benefit from it. As I hoped the farmers could use this opportunity, I also decided to start the business with Ami Sugiyama.
(Ami Sugiyama) The Japanese government is supporting the export of agricultural products at the moment. Therefore, of course we have our own network with the farmers but also, we have a partnership with the government as well as the stakeholders who are involved in the agricultural products export business.
In the Southeast Asia market such as Malaysia and Singapore, we went directly to visit the consumers and the farmers to find the markets. We had explained our business model and values to persuade them. We had done this as an initial strategy until we acquired the first 100+ customers.
(Ami Sugiyama) Yes. To find the local (Malaysian) farmers, since we are foreigners (Japanese), we didn’t know anything about it.
To find the local restaurants (consumer side), we found the influential chefs on Facebook and Instagram, and we talked to them and asked them to introduce others too.
(Ami Sugiyama) Some of them were like that for sure. But the nature of the Southeast Asia market is that they are fond of Japanese. So before they were suspicious, they asked us about what we were doing and so on. Thanks to that, we could have the chance to explain more about our values and persuade them better.
In the first year, I carried 20kg of corn around the restaurants and gave some samples to them, store by store. So with that kind of presentation, we could show what we are trying to do. And most of the consumers were keen to support us then. The restaurants who received our corn samples are still working with us and we still talk about this event even after 5~6 years. 😂🌽
(Ami Sugiyama) Gladly, we are not carrying the corn bag anymore.😁 We have our own sourcing teams in the production areas to nurture our relationship with the farmers. And also we have the marketing and sales team for acquiring the buyers and onboarding the restaurant customers.
Now we have these online and offline activities as well as onboarding, cross selling, upselling.
(Ami Sugiyama) It’s basically the sales margin model. We purchase the products from the farmers according to the orders we receive from the restaurants. So most of the purchase depends on the orders. And then we place orders to the farm and purchase, deliver the ordered stuff to the inventory. We receive 20~30% as a sales margin.
(Ami Sugiyama) We have several KPIs. They are revenue, the number of customers, the average of the value, as well as the frequency of the orders. And then the key metrics are logistics cost, operation cost because we provide the transportation from the farm to the consumers.
(Shusaku Hayakawa) To make the fulfillment system, we got support from the logistics and warehousing companies. As a startup, we couldn’t invest that huge amount of money so we were focusing on building the system first while we communicated with the third party companies. Partnership was the key.
Now we have raised 5~6 million USD and most of it is used for engineering. It’s not for the warehouse.
(Shusaku Hayakawa) Now we are working with 5~6 small to medium size companies. Of course, Southeast Asia has big logistics companies but they trade big units as they are controlling the containers. So we couldn't work with them at first. However, now we have 1000+ customers and we are covering 2000 boxes per day, and we have started to work with the bigger companies as well.
(Shusaku Hayakawa) Our engineering team is mainly building the cloud system for the third party companies to use our system when they connect the items from farmers to the restaurants. The small logistics companies use excel but now we need to use this specific software making the third party companies use our system well.
Basically it’s a logistics software. Most e-commerce companies are only making the commerce system. It’s focused on taking the orders. But we have to deal with the heavy business part - logistics. So we invest in this software.
And the reason why we are using this software is to earn the trust from the partner companies and to track the time to ship out the items. So our system is optimized to deliver things like tracking the trucks who can move the items at the specific points. Plus we can figure out who can deliver the more perishable ingredients as well. So we aggregated the agricultural delivery data too.
(Shusaku Hayakawa) Yes. We are calling that ‘AI demand forecast system’. Its purpose came from the demand side. Because restaurants can’t wait for the date to get delivered which means the chefs need the items in one day.
But from the farm to the table, we need to take time. As Ami mentioned earlier, SECAI MARCHE purchases the products from the farmers according to the orders we receive from the restaurants. And then we place orders to the farm. It takes 2~3 days. Normally, the restaurants can’t wait.
Therefore we are trying to deliver within one day which means that we should forecast like ‘OO restaurant will place an order for XX items (ex : kg) on (some date)’. In order to build this prediction system, we are using the commercial AI engine with our own data. We have 5+ years of 1000+ customers’ behavior, order pattern data so the engine can work better in order to get precise forecast. Then AI can analyze data.
(Shusaku Hayakawa) SECAI MARCHE has data like ‘how the farmers grow the products’. When we send money to the farmer producing this item, then we can get the profit. We can share the money out of it as well.
In the near future, we plan to gather financial data as well. Ultimately, we are considering offering microfinancial services, such as lending money to farmers.
Currently, farmers produce items without knowing future market predictions. They just have to produce the items first. If demand decreases, prices drop, which can harm the farmers a lot. However, with accurate predictions, farmers can prepare planning to gain profit and borrow money for it.
Having started as a supply chain company, SECAI MARCHE has gathered data from the farmers, the restaurants and other sources. With this information, we can make predictions to scale both our business and farmers’ one effectively.
(Shusaku Hayakawa) For us, B2C business is still difficult to predict. When we work with the restaurants as a B2B partner, we can forecast what they are going to need in the future. But it’s hard to predict the mass consumers’ needs at the very first point. However, with the logistics system and data we acquired from B2B, we are open to the B2C sector as well at some point.
Currently, B2C companies have the prediction system but I think we are making this AI system especially for the perishable items which can be the competitive edge compared to them. So for us, to start B2C, it will be better to work with the companies who are already in the B2C market.
We have already started working with some of last mile logistic service companies. They are executing the grocery delivery service which buys the food from supermarkets and delivers it to individual consumers. They don’t have the farms to get their products and we have that network. Thus, we are working with them to expand our 4000-farm products to the B2C market.
Like this case, as we have the network with the farms, we can make synergy with the B2C mobility or e-commerce companies such as GrabFood, Ninjaxpress(Indonesia) and many more in the Southeast Asia market. It's especially a good market for last-mile startups. So we would like to work with them to expand to the B2C sector.
(Shusaku Hayakawa) Yes. We are now covering the vegetables, various types of meat, dairy products, seafood and processed food. And we will expand to the drink category as well. Sourcing team is busy tackling all the categories we are planning to cover.
(Shusaku Hayakawa) We are currently seeing stronger performance in Singapore than the Malaysian market. SECAI MARCHE has more products than 5 years ago when we started in Malaysia. We started our business in Singapore with 3000+ products.
Also, we have the knowledge to grasp the wants and needs of the customers which has led us to execute better sales. We have sold many items to high-end Malaysian restaurants, and the chefs from those restaurants are connected to Singapore as well because they are geographically close. So it’s been easier for us as the chefs and the product communities are connected between those two countries.
Also the trait of the Singapore supply market is positive for us. As Singapore imports a lot in general, mostly from Malaysia. In contrast, they don’t know where in Malaysia, which makes the Singaporean stakeholders have a hard time to find the direct product from the farms. So SECAI MARCHE can be the platform for them to connect directly to the farmers in Malaysia.
Cost might be also less if they can import products from Malaysia directly to Singapore. These are our competitive edges to be stronger in the Singapore market.
(Shusaku Hayakawa) For the short-term goal, within five years, we want to be the No.1 B2B online platform in the Singapore and Malaysia market which means 30~40% of the supply chain market share.
For the long-term goal, we want to be a better player than Amazon in Southeast Asia. We would like to cover all the products with better logistics, better quality, better timing and better price.
Interviewed by Jinny Kim (underdogs)
Transcribed by May Jang
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