During the pandemic, almost all retailers in Asia established an e-commerce presence and adopted digital payments. But one thing that didn’t change was sourcing, say the founders of cross-border marketplace Markato. Retailers still need to travel to overseas trade shows, cold e-mail new brands and fulfill orders by filling out forms and purchase orders. Markato wants to change that with a cross-border marketplace focused on independent brands that also lets them manage their Asia wholesale operations in one place. The startup is launching in Hong Kong today with $5 million in seed funding led by Lightspeed, marking the venture firm’s first investment in Hong Kong.
Markato was founded this year by Brian Lo and Martin Li, who previously worked at Deliveroo and Uber respectively. The two told ProWellTech in an email that they believe there is huge potential for the B2B wholesale business model in Asia, the biggest retail market in the world, and were inspired by the success of similar wholesale marketplaces. They wanted to work with independent brands because many lack the time, resources and knowledge to tap into Asia’s retail market.
Lo and Li said independent brands usually have to build local teams or work with traditional wholesalers to overcome cultural and language differences when selling in new markets. Just as Uber and Deliveroo digitized the transportation and food industries, Markato is focused on digitizing the process of getting boutique brands to overseas retailers. Some examples of the brands it works with include ceramic brands Jore Copenhagen and Ini Ceramique, natural wellness line Nala Care, candle studios Ambustum and Stan Editions and jewelry brand Gisel B.
For retailers, Markato gives personalized product recommendations, which makes it easier for them to discover new brands. Then it enables them to buy at wholesale prices from European, American and Australian brands by aggregating volume. Markato offers a 60-day buy now, pay later option and 90-day free returns, making it less risky for retailers to have unsold inventory and making it more likely for them to try out new products. In turn, brands get analytics that help them make decisions on production and pricing, while reducing their customer acquisition and operating costs.
Lo and Li said Markato is able to lower the price of cross-border e-commerce for SMB buyers and sellers by integrating with payment infrastructure that saves on foreign currency and other payment-related transaction costs. It is also able to secure lower cross-border rate costs for marketplace users to reduce shipping, which are further reduced by consolidated shipment volumes.
Markato now has 19 employees and has worked with 200 brands. About 80% of the brands it serves were previously not available in Asia, and 90% are sold exclusively through Markato. The platform has over 4,000 products listed currently, and is planning to grow to 2,000 buyers and 2,000 brands over the next few months. Some of the retailers it currently serves include kapok, Co Ninety Select Shop, TLE Wellness Select Shop and JIA Group.
Markato plans to expand across the region soon, starting with Singapore. The funding will be used to hire for its engineering, product and business development teams, and build out proprietary tech, work on its logistics infrastructure and develop its data analytics.
In a statement about the funding, Lightspeed partner Rahul Taneja said, “We’re excited to partner with Brian and Martin as they build Markato. Their vision to serve independent businesses in Asia and enable access to the best products globally is a compelling one. Early progress on the platform is very encouraging and we strongly believe they are the perfect team to transform retailers’ end-to-end experience in Asia.”