TAIPEI -- Taiwan's online retail platform Citiesocial, which is gaining traction for its supply of quality items for everyday use, is seeking to expand into other parts of Asia with the proceeds of a recent fundraising.
The company, which sells items such as water bottles and kitchenware from emerging brands, raised $2.75 million in early January in a Series A funding round led by the Taiwan fund of Chinese e-commerce conglomerate Alibaba Group Holding.
Citiesocial founder Eric Wang said he was planning to use the funds to bolster services and technology to help rising designers of quality everyday goods grow their presence in Asia.
"In the first half of this year, we will announce a series of strategic partnerships with large [e-commerce] channels in China, Japan, and Korea...to execute sales in these geographies," Wang said in an interview with Nikkei Asian Review on Jan. 11, adding that he was not necessarily looking to bring his site directly into overseas markets.
The Taipei-based startup has firmly established itself in the Taiwanese e-commerce market, which is worth more than 1 trillion New Taiwan dollars ($34.28 billion) annually. Citiesocial prides itself on its careful curation of branded goods, which allows it to differentiate from major online retail platforms that often offer a familiar range of items from mainstream brands.
Revenue for all of 2017 was $20 million, and its monthly sales are now 130 times what they were at the beginning of 2014. It boasts 600,000 customers and a staff of 42, including Wang.
Wang has been positioning his startup as the "Asia launchpad" for up-and-coming designers, who have sometimes benefited from fundraising platforms Kickstarter and Indiegogo, and helping some 2,800 relatively young brands with marketing and after-sales in Taiwan and Hong Kong.
"We curate goods globally to sell at least in Taiwan and Hong Kong, [targeting] taste-conscious consumers," Wang said. "A third of our revenue comes from goods that no-one else in Taiwan and Hong Kong sells."
"We are always looking to bring in new and fresh and exclusive content to market. Or we [have to] differentiate on price and convenience but it's difficult for us to go head to head with [major online retailers, like Singapore's Garena-backed] Shopee, Alibaba or [Alibaba's] T-mall," he said.
Average order value on Citiesocial is about $75, Wang said, with average price per product $60. He said the current customer demographic leant slightly toward a more mature, well-educated male consumer.
One of its top performing brands is British maker of men's accessories Vanacci, which relies on the Taiwanese startup for 25% of its total revenue, according to Citiesocial. Recently, Citiesocial sold over 1,000 travel jackets from Baubax, a Kickstarter graduate.
Yet Wang's venture into the startup world was more of a coincidence than a calculated move. A native of Taiwan, Wang spent 18 years in the U.S. before coming home to start his own venture.
A friend who worked at a venture capital firm set up a clone of online voucher marketplace Groupon in Australia as a side gig. While Wang was working in New York for global professional services company Towers and Watson, he saw his friend's side-business booming.
Inspired, Wang returned to his home country to set up LetsGou, another Groupon-like startup, in 2010. He injected some $700,000 into the company between 2010-2014, partly out of his own pocket and some from external investors, and LetsGou gradually morphed into its current form as Citiesocial.
Fragmented local market
While he was dimly aware of the fact that Taiwan's economy had been barely growing and wages had been stagnating when he first started out as an entrepreneur, Taiwan's highly fragmented e-commerce market allowed Citiesocial to be able to pivot many times in seven and half years with only $700,000. Elsewhere he would have burned that money within the first six months, Wang said.
"We stumbled upon [Taiwan] because we knew nothing. In hindsight it's a blessing in disguise to have had so much flexibility to try many business models," he said.
The rise of Citiesocial and other startups in Taiwan reflects the fact that young entrepreneurs are looking for different opportunities outside of the island's world-class hardware industry. Its hardware and chip industry now account for more than 40% of exports for the trade-reliant island.
However, since the beginning of 2000 when internet companies took off, there were almost no new internet startups in Taiwan, according to a 2017 survey by BusinessNext, a Taipei-based publication covering entrepreneurship.
It was after 2010 -- when the app industry began to emerge and flourish amid growing adoption of smartphones -- that a new round of tech startups appeared in Taiwan, even though many of the island's hardware companies, traditionally known for their strength in making PCs and related peripherals, missed out on the growth of mobile phones.
Most products from the latest round of Taiwanese startups are related to software engineering and e-commerce platforms and some most popular segments including artificial intelligence and big data analysis, said the BusinessNext survey.
According to BusinessNext, some notable local tech startups that raised more than $100 million in 2017 include Gogoro, a maker of smart electric scooters; Appier, an AI consumer data analytic company; M 17, an E-sports team; and Perfect Corp, an augmented reality application provider specialized in viritual makeup.
Nikkei staff writer Cheng Ting-fang in Taipei contributed to this story.