Indian-run Thai e-commerce company Zilingo operationally breaks even

Zilingo boasts over 1,300 sellers, a customer base of 150,000 and more than 500 orders a day

Zilingo, an Indian-run, Thailand-headquartered fashion e-commerce company, said it had operationally broken even and if it continued at the same rate of growth it would be cash positive by the end of 2016.

Zilingo was started in November after a $1.8 million seed investment led by Sequoia Capital. Ankiti Bose, CEO of ZIlingo, attributed the five-month turnaround to high commissions and an e-commerce market that was not crowded. “Our commission is 15-25 per cent and our sellers are more than happy to pay it,” said Bose.

Zilingo boasts over 1,300 sellers, a customer base of 150,000 and over 500 orders a day. The numbers dwarf when compared to the Indian market, but Bose insists profit margins and ticket size make for good reading.

“We have an average ticket size of $40-45 (around Rs 3,000) and users are buying almost one-and-a-half products every time they shop,” added Bose. The number of orders surges to 1,500 during special days. “But even then we don’t discount. As a rule, we don’t do heavy discounts. We may offer, at best, a five per cent price reduction. Our sellers do most of the discounting for us.”

The e-commerce market in Thailand consists of companies championing the inventory-heavy model and Zilingo’s marketplace allows sellers to run discount plans.

“There are several long-tail sellers who want orders and they have margins to discount. Sometimes they have a new collection coming and they need to move stock but sometimes they just want to beat other sellers and be on top of the pyramid,” she said.

This encourages shopping but Bose insists that she isn’t trying to find the discount shopper. “These shoppers will only install your app during campaign days and then uninstall it,” she said.

Zilingo has gamified customer experience by asking customers to rate sellers. “The higher the score, the lower the commission,” she said. In December, Zilingo set up shop in Singapore to target a high-spending, evolved user base. “There are not enough sellers in Singapore and we can give them access to sellers in Thailand. The 18-25 age group in Singapore are big shoppers and costs are really not too much of a worry,” she said. Zilingo charges a premium for opening up a new market to sellers.

Zilingo, unlike its Indian counterparts, stays out of logistics and warehousing. It has best price deals set up with an array of service providers and sellers need to choose among them.

All of this contributes to minimising the company’s costs. The addition of artificial intelligence (AI) to the portal has contributed to stemming the burn. “The AI, designed by Mad Street Den, works in three ways. On the seller side it auto tags the garment picture being uploaded so, say, a green dress doesn’t become a black shirt. In the second, it helps users take a picture of a product they like and the tool scans the database to find its closest match and throws up results. The third is a recommendation engine, which analyses user behaviour and throws up similar products,” she said.

But how does this save money? “We don’t have to employ an army of people to keep tabs on what the sellers are uploading, the AI does it for us,” she said. Bose said the company employed just 36 people, including the sales and technology teams in three countries. “I never understand why others, when they get funding, go on big hiring sprees. Solve the problem with technology.”

“We plan to go to another country this year, maybe Indonesia,” she added. Bose said Indonesia had not been tapped yet and had a burgeoning demand for fashion and accessories.

But for now, Zilingo is focusing on Thailand and Singapore. “In Thailand, we are growing 30% month-on-month. Our only real competitor is Rocket Internet-backed Zalora,” she said, adding, “We plan to be top three in Singapore and Thailand by the time this year ends and with our growth and opening new markets… we should achieve that, no problem.”