Carousell’s recent funding round proves that investors still have faith in it. On the other hand, Facebook’s slow progress in launching and popularizing its marketplace is utterly disappointing. Perhaps it has larger fish to fry – still reeling from the aftermath of the Cambridge Analytica scandal.
Bumper crop for Carousell
On May 14, 2018, Carousell announced that it has raised US$85 million in Series C funding, co-led by Rakuten Ventures and EDBI. Surprise came when it announced a new investor coming aboard: DBS.
Following the investment, DBS Group’s CEO announced that they would work with Carousell to offer financial products and payment services. Facing stiff competition from Shopee (who does not charge any listing and commission fees), we would agree this deal could potentially save Carousell.
On top of that, Carousell is sitting on a treasure trove of customer behaviour data, which could prove complementary to DBS’s goal of growing its online reach. What’s more, in countries like Indonesia and Vietnam where most of the population are young and tech savvy but unbanked, this could prove to be a shrewd move by DBS (and Carousell).
A force to be reckoned with
Four months ago some of us were worried that Facebook Marketplace’s launch in Singapore means the end for smaller players like Carousell. Turns out, Carousell is still the preferred platform in many countries; for buying and selling.
Fortunately for Carousell, and unfortunately for Facebook, Facebook’s marketplace, although steadily acquiring new users, is still largely lagging behind Carousell. Amongst feedbacks received: Facebook’s marketplace function lacks the appeal in terms of usability and local preferences.
Of course, it’s still too soon to say if Facebook’s marketplace foray is a lost cause. Perhaps they are just taking their time. For now at least, we think it’s fair to say that Carousell is a force to be reckoned with, and they better play their cards right – because Facebook is not their only opponent in this highly competitive landscape.
Payments is the key to the castle
Tencent is making a killing with Wechat – successfully drawing a lot of sellers previously concentrated on Alibaba’s Taobao platform to sell on the Wechat platform. Its success is mainly attributed to its payment capabilities.
While Facebook may harbour dreams of dominating the marketplace business, it has not fully rolled out its payment offerings. As such, trading on its platform is slow and non-sticky. It’s not all different for other C2C marketplace operators, such as Carousell. Hopefully, Facebook’s hiccup and some good fortunes (such as getting help from DBS) will buy Carousell time to morph its business into a full-fledged platform: encompassing payments, insurance, real estate and financial products.
As players in the industry all start offering “payments” as a business, it is wise to ask ourselves this – how big is the market, and does it justify the investment these players are putting into the business? While it may seem entirely complementary, payments is not for everyone. However, as entrepreneurs we totally understand the rationale behind such moves – to secure higher valuation due to low-growth in core businesses.
For now anyway, we don’t deny that the Carousell story is “romantic”. But we prefer to watch on the sidelines as investors jump onto the bandwagon.
Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.