At the time, his optimism was well placed. Daily deals platforms like Groupon were faltering, the future of Singapore e-commerce early entrant Lazada was uncertain amid rumours of a potential Alibaba acquisition, and upstart Shopee – launched earlier that year – was little more than a Carousell copycat.
Qoo10, the daddy among them, was founded in 2010 – Lazada came along two years later – when the Singapore e-commerce industry was in its early stages. And yet, five years later, it still stood out. It was cool, innovative and ambitious, even building its own logistics arm, Qxpress, signalling a long-term commitment to Singapore’s emerging e-commerce market.
The company had quickly become a darling on the scene, appealing to both buyers and sellers with a user-friendly platform, aggressive marketing, an efficient loyalty programme and a focus on low prices and variety.
But ever since Shopee and Lazada started firing up their growth engines, Qoo10’s glory days were over. The hammer in the coffin was the Singapore High Court ordering Qoo10’s liquidation early in November, highlighting a stark reality: Once a promising player in Singapore’s e-commerce scene, Qoo10 now joins the list of fallen early movers.
It is the end of an era and a cautionary tale. But it is also a reminder of the dynamic, ever-changing nature of the e-commerce industry in Singapore.
Bright beginnings
When Qoo10 was founded, it was well positioned to capitalise on Singapore’s nascent e-commerce opportunities. At the time, Amazon and eBay dominated the West, while Alibaba’s Taobao was already fairly established in China. These platforms gained some traction in Singapore with cross-border shoppers.
Locally, companies like 65daigou (later Ezbuy), also founded in 2010, helped consumers access Taobao goods, and start-ups like RedMart were beginning to explore niche markets like grocery e-commerce.
Qoo10’s ability to seize trends early on was a significant strength. It launched campaigns that resonated with consumers, engaged sellers effectively, and built a reputation for offering great deals. Its investment in Qxpress streamlined logistics to ensure better service.
Perils of the first mover
In the technology ecosystem, being an early mover can be as risky as it is rewarding. Late movers can learn from their predecessors’ successes and mistakes and adapt quickly. First movers often become too entrenched in existing processes to pivot effectively, especially in fast-evolving industries like e-commerce.
Qoo10 faced a similar fate. While it initially succeeded by focusing on selection, price and savings, Shopee entered the market in 2015 with superior execution across these same areas.
Shopee’s gamified shopping experiences, coupled with targeted promotions like free shipping and seller engagement strategies, resonated deeply with consumers. Shopee began to capture the mass market, squeezing Qoo10’s relevance.
Lazada solidified its position with consumers as their preferred platform for branded goods, and Amazon also claimed a premium segment, both areas Qoo10 found itself ill equipped to serve. As a result, Qoo10’s position in the market eroded, slowly – then quickly.
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Momentum matters
As Shopee and Lazada gained traction, Qoo10 struggled to compete for resources. Bright university graduates flocked to Shopee, drawn by its rapid growth and ambitious vision. Investors favoured Shopee’s bold strategies over Qoo10’s seemingly more stagnant approach.
This wasn’t unique to Qoo10. Early movers here like Ezbuy and RedMart also failed to deliver on investor expectations. Foodpanda, once dominant in food delivery, steadily lost ground to Grab, which started its delivery services six years later but benefited from better execution and integration into its ride-hailing app.
For Qoo10, the loss of momentum to Shopee probably sealed its fate. Without a differentiated value proposition or extraordinary leadership to execute a turnaround, its decline became inevitable.
A perfect storm
While Qoo10 initially captured consumer attention with its deals and variety, cracks began to show in how it managed relationships with both consumers and sellers. Sellers increasingly faced delayed payments – in early 2023, reports surfaced of sellers not being able to withdraw their earnings.
This eroded trust and prompted many to shift their focus to competitors, who provided not only faster payment cycles but better tools and support for sellers, enabling them to scale their operations effectively.
Qoo10’s reliance on its digital tokens, known as Q*coins, also became a double-edged sword. While these tokens, which acted as a form of currency on Qoo10’s platform, encouraged loyalty and repeat purchases, consumers became increasingly frustrated with the tokens’ lack of transparency and usability.
Many consumers struggled to redeem the tokens or found them to have limited value, especially as competitors rolled out simple, gamified reward systems and enticing cashback schemes. As a result, Qoo10 gradually lost online shoppers to platforms that provided clearer value propositions.
Qoo10’s financial mismanagement further deepened its troubles. Reports of fund misuse and mounting debts undermined its ability to invest in critical areas like marketing, technology and logistics – areas where its rivals were pulling ahead. Shopee, which was buoyed by heavy investments from parent company Sea Group, executed aggressive marketing campaigns and built an ecosystem of gamified shopping experiences that kept users engaged.
Qoo10’s failure to modernise its platform and innovate beyond its early successes left it stagnant. The logistical advantages of Qxpress, once a key differentiator, became less compelling as competitors developed more robust delivery systems.
This combination of poor financial management, declining consumer trust and seller dissatisfaction created a perfect storm for Qoo10.
An unpredictable landscape
The demise of Qoo10 underscores how precarious a lead can be in the ever-changing e-commerce industry. Indeed, while its internal woes were significant contributors to Qoo10’s downfall, it was the relentless competition in Singapore’s e-commerce landscape that played a decisive role.
With Singapore having a small consumer base relative to other South-east Asian markets, and one that is highly discerning yet price sensitive, I believe that while its e-commerce industry may be open to a disruptor, it has room for only a few dominant players.
And as the bar of offering a drastically better value proposition becomes higher, it will be more difficult for new entrants to the industry to break through.
So far, consumers have enjoyed the benefits of the e-commerce evolution – better selection, faster delivery, improved quality and greater savings – as platforms vie for their attention.
But a market dominated by a few giants could theoretically reduce competition over time, potentially leading to less innovation and higher prices.
The future of e-commerce in Singapore remains unpredictable for now. But history has shown that the industry thrives on disruption. Whenever the dominant incumbents start to slack off, new players will find cracks in the wall to redefine the game with fresh approaches and unique value propositions.
Today, the e-commerce landscape continues to shift. Shopee’s logistics arm, SPX Express, is poised to overtake J&T Express as the largest logistics provider in South-east Asia, solidifying its dominance.
Meanwhile, Temu, the global offshoot of Pinduoduo, is rapidly expanding in the region and may soon set its sights on Singapore, bringing with it a model of aggressive price competition and hyper-localised offerings. Cross-border platforms like Taobao are also gaining momentum.
The next wave of disruption is always just around the corner. Ultimately, the market’s capacity for fresh competition will depend on whether newcomers can differentiate themselves and avoid the pitfalls of past players.
Li Jianggan is CEO of Momentum Works, a Singapore-based venture builder and research firm.
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