How This Online Marketplace Is Changing The Face Of Cross-Border Commerce In Asia
Travel was not the only sector disrupted by Covid border problems as retail equally faced bottlenecks in logistics, causing skyrocketing costs in goods and fulfillment. The World Trade Organization observed a 5.3% decline in world merchandise trade during the height of the pandemic and is expected to still be hindered as a result – though Asia will continue to drive export growth.
Supply chain snarls have also brought on difficulties to acquire stock and update inventory as sourcing traditionally through offline channels and events had been suspended. In the past, retailers have had to travel far and wide to source unique products and aspiring local brands back to their domestic markets. However, sourcing for new products amid the global pandemic when borders are closed, limiting factory and tradeshow visits has obstructed retailers from discovering new brands. Despite so, independent brands and factories have gotten creative through alternative modes, such as content on TikTok to emphasize brand discovery. Despite so, the lack of goods in local markets paired with suspended travel took consumers spending abroad, drying out local businesses.
All these factors combined with slim margins have been increasingly less viable for retailers to spend their precious time and cash sourcing goods across borders. In response to the challenges birthed Peeba, a Hong Kong-based business-to-business (B2B) wholesale platform wherein replacement of trade shows, the company digitized the antiquated wholesaling process. The platform helps retailers source local goods from around the world, where notable clients such as DFS Singapore, Slowood in Hong Kong and Marais in Taiwan have been using the platform to discover new brands in an effort of bringing in niche brands and unique product offerings to uptick local appetite.
Fighting Cash Flow and Inventory
Retailers have had to bend through the drastic shifts in consumer spending, purchasing behaviors, and fluctuating trends – making it difficult to appease, with new products that fit. To localize merchandise and product choices, Peeba’s platform uses AI to understand retail trends and provide recommendations based on other local sellers’ purchases and trends locally to match data from other brands and retailers. This also helps brands to navigate the complexities of Asia’s fragmented marketplace, including regional logistics, local languages, currencies, regulations, and business practices in each region.
Where mom-and-pop shops are often limited with choices of brands available given inflexible MOQ requirements, are now able to experiment with new product lines through the platform’s consignment terms, allowing the return of unsold goods within two months to encourage and test new product offerings. Retailers normally would also need to purchase goods in advance where unsold goods can affect a company’s cash flow and storage being an issue.
Meanwhile, shipping costs can represent up to 20% of inventory costs for retailers, especially with prices skyrocketing amid Covid, leading to consumer price inflation. Community group-buying has since exploded in China as neighbors and peers bundle orders together to achieve buyer’s price in meeting MOQ (minimum order quantity) pricing to save on shipping costs. Taking this concept, Peeba is currently trailing a wholesale group-buying model to lower shipping costs drastically and to help retailers increase their margins. This has leveled the playing field for small and medium-sized (SME) retailers who individually have limited bargaining power to access unique brands, and lowering the costs of cross-border shipping without putting the risk onto the brands or their margins.
Sell Now, Pay Later
In a bid to protect retailers’ margins, optimize their cash flow and streamline new brand discovery, the ‘Buy Now, Pay Later’ model that first arose in the consumer retail space is making its way over to the B2B wholesale context. Translating that model for B2B wholesale, Peeba is implementing a “Sell First, Pay Later” model in Asia (also referred to as consignment).
In collaboration with payment infrastructure company Choco Up, merchants can purchase goods at zero upfront cost, as the partners aim to promote the development of retail and wholesale within Asia. The company uses machine-learning to automate credit checks and credit risk analysis to vet its 25,000 retail users. This has lightened the burden for many retailers, with a more flexible cash flow they can allocate resources to wages and rent.
Peeba is unlike Etsy, Wish or Shopee, where most sales are directed to consumers with no focus on resellers in mind. The ‘Sell Now, Pay Later’ model benefits retailers with favorable payment terms and minimizing risk on unsold goods. Using cutting-edge technologies and supply chain expertise to solve many of these problems, the B2B retail wholesale market is seeing a wave of innovation that aims to help retailers survive and thrive amid the ongoing pressures of the pandemic.
As of current, Peeba is the sole operator extending this trend to APAC, spearheading its financing model in what CEO Jacky Lai describes as the company’s plan to “attack the cost structure of B2B retail wholesale in Asia.”