3 Tips to Help Southeast Asian Start-ups Expand Overseas
What start-ups need to remember before taking that strategic step outside of home
PHOTO CREDIT: Getty Images
For many start-ups enjoying a good amount of success in their home markets, the logical next step that comes to mind is overseas expansion.
This doesn’t mean attempting to penetrate markets in other continents right away. A start-up can learn by leaps and bounds by simply trying it out initially, say, within the region.
For Erik Cheong, co-founder of Park N Parcel, a Singapore-based last-mile delivery solution, expansion has always been in their plans, eyeing cities such as Bangkok, Hong Kong, Tokyo, and Seoul. It recently announced their joint venture with Thailand’s Box24 in a bid to establish a hybrid collection network with parcel lockers and collection points.
“We select overseas markets based on e-commerce market size, density, and good infrastructure because we adopt a sharing economy model, [leveraging] on unused residential and commercial spaces for parcel storage,” Cheong says.
Peck Ying Tan, co-founder of PSLove, wanted to improve on their product offerings and understand the market better before taking the strategic step outside of Singapore. PSLove carries a women-focused line of products, including MenstruHeat, a heating pad designed to relieve menstrual cramps. It also has a period tracking app that gives users insights into their menstrual health.
“We took a dive into expanding overseas when we started to receive multiple enquiries about our products,” Tan says.
Here are three tips for start-up founders who have their eyes set on being global players:
1. Listen to the market
Prior to expansion, Tan and her team waited for an indication that there was a demand for their products outside the local market.
“We also had to make sure that we were operationally stable locally so as to reduce the risk or kinks that we may face as we expand,” Tan says.
When MenstruHeat first hit the shelves of beauty and personal care chain Guardian Malaysia, it was picked up by an online site that resulted in the post going viral. PSLove’s products were sold out in stores and the team had to scramble to replenish their inventory. They didn’t plan for the unexpected uptick in sales.
“We had to learn it the hard way,” Tan says. “We realized the need for a stable logistics partner, and now we’ve got operations sorted out so we’re better able to handle the increase in sales volume.”
In the case of Park N Parcel, Cheong says the up-and-coming e-commerce market in Thailand places the company strategically at “the forefront of the logistics revolution.” The company is capitalizing on the country’s multi-billion dollar e-commerce industry, driven by players like Alibaba, Shopee, and Lazada. The partnership with Box24 gave the company insight into the Thailand market, which helped them expand and improve their services.
2. Consider a local partner
As a general rule, Tan looks at three things when entering a market: complexity, speed, and ease of communication. These will help them assess whether to work with a local partner or go at it on their own.
When PSLove expanded to Malaysia, the team decided to take a hybrid approach where they entered the market directly, while appointing local partners in their own specialty areas.
“The direct entry gave us speed and flexibility, but [it also came] with operational challenges as we had to learn the market nuances,” Tan explains. “While for markets such as Thailand, we opted to work with a main local partner who could help us navigate the market complexity, language, and regulatory needs.”
Tans says they first do an in-depth market study and on-the-ground trips to have a better sense of the market.
“We also get connected to locals who can share their insights and experiences, and this helps to shorten our learning curve greatly,” she adds.
Cheong says the collaboration with Box24 allows both parties to leverage on each other’s expertise to improve the business and capture a larger pool of customers. With Box24’s existing network, Park N Parcel will have access to over 140 locker kiosks in Thailand, as well Box24’s current customers, namely DHL, Kerry Express, Thailand Post, and SGC Express.
Getting along well your local partner is also essential. “Understand the partner on a personal [level],” Cheong says, “Take some time to talk over dinner and beer.”
3. Set boundaries and expectations
When collaborating with local partners, Cheong suggests setting expectations and boundaries. “[You] need to know what each partner is looking for,” he says. “One might just be in it for the experience, but [is unwilling] to put in the time and money. On the other hand, one may only invest money, but lack the needed skills outside of their own specialization.”
Cheong adds that building a partnership requires work and learning how to give and take. It took them six months before the team decided to firm up the partnership with Box24.
“Know the partner business well enough,” Cheong advises, “such as their unique selling point, strengths and weaknesses.” It helps to be aware of their traction in their primary markets and whether they are funded by any corporation or VCs.
For Tan, “You don’t know what you don’t know—speak with as many people as possible on their experience venturing overseas. And also speak with the locals.”