Shopping online can be a gamble - particularly so in the apparel space. There’s no guarantee of the product’s quality. And it’s hard to tell how something fits, or if it will look good on you.
Indonesia’s fashion e-commerce platform Sale Stock aims to remove that doubt entirely by introducing the ‘Coba Dulu, Baru Bayar’ (Try First, Pay Later) service. With the service, customers are allowed to try on the clothes for 15 minutes after the courier has arrived at the destination. If they don’t like the product, customers can return it to the courier. If they are satisfied, customers can pay on the spot.
Yes, we are encouraging customers to return items that they don’t like
“Yes, we are encouraging customers to return items that they don’t like,” says SaleStock President Jeffrey Yuwono when probed on the viability of the model. “Now, this scares off a lot of e-commerce players, Iike how do you deal with the cost? But we are confident in the quality of our clothes.”
Jeffrey admits that product returns are higher with the programme. He, however, believes that that the convenience of the service will give it an edge over its competitors.
“If you have happier customers, it means they are more loyal, and end up buying more,” says the 38-year-old, Jakarta-based entrepreneur. “So, we really believe, at the end of the day, you got to make customers happy, and figure out a way to minimise cost.”
Founded in late 2014 by Lingga Madu and Ariza Novianti, Sale Stock aims to make affordable but fashionable clothes available to the middle and lower classes of Indonesia's population of 260 million people.
Jeffrey, then based in Singapore, joined a year later. By then, the Stanford MBA and Duke University grad has had experience running a few tech start-ups.
“The average Indonesian have has two choices when it comes to fashion. They can either buy from the local pasar (market) - which is affordable but the fashion isn’t that good, or you can buy at your local mall but it is really expensive. We are talking about 20 to 30 percent of (an average Indonesian) income, for one dress. So, we break that dilemma,” says Jeffrey.
“For the very first time, our customers can buy fashion that socialites are wearing in Jakarta at affordable price.”
Sale Stock has done over four million sales orders up till end of March.
“As a fashion destination, we are in the top five (in Indonesia). But in terms of single seller, we are the largest.”
Coba Dulu, Baru Bayar
Without disclosing figures, Jeffrey says the company has been able to double its revenue since they raised USD 27 million Series B+ funding in August 2017 - just about the time Sale Stock pushed out its Coba Dulu, Baru Bayar service in Greater Jakarta Area.
The service has since been rolled out to 360 cities nationwide, 4600 kecamatan or sub-districts, with coverage up to 95 percent of Java, Kalimantan, Sulawesi, Sumatera, Bali and even up to the Maluku Islands, and Papua.
Whilst Sale Stock is the first e-commerce retailer in Southeast Asia to have introduced the service, the concept is a common feature among clothing subscription services such as US-based Trunk Club, Stitch Fix and MM.LaFleur and Gwynnie Bee.
In June 2017, Amazon Prime Wardrobe announced a similar program, with a minimum selection of three items. But Amazon had deep pockets and a vast distribution network of fulfilment centres’; something which Sale Stock did not enjoy at first.
We Are Cheaper Than Lazada, Shopee
Jeffrey says it was incredibly challenging to deepen the group’s logistics network in Indonesia - an archipelago of more than 17,000 islands - whilst keeping a lid on cost and sticking to the company’s mission to ‘serve the underserved’.
For some of our fashion peers, maybe 20 percent of their revenue is from outside of Java. For us, it is like 60 percent of our revenue
“How do we sell clothes that are only 10 dollars to people who are earning 300-400 dollars a month, and who live far away?
That was a big area focus for us and that is why we invested in forty distribution hubs,” says Jeffrey.
“We have some really strong third party logistics partners and we have been able to reduce that cost quite substantially. But it was a huge challenge,” he adds.
According to Jeffrey, over half of its revenue are derived from customers located outside of Java.
“One thing that makes us different is the majority of our revenue is from outside of Java. For some of our other fashion peers, maybe 20 percent of their revenue is from outside of Java. For us, it makes up about 60 percent of our revenue.”
“As you can imagine, this program is incredible for our customers, especially those with limited income levels. So, they no longer feel like they are gambling when they buy online,” says Jeffrey of the ‘Try first, buy later’ service.
Jeffery also seeks to quash the assumption that cheap clothing are of low quality. Sale Stock designs and manufactures its own label, thus allowing for stricter quality control on a majority of the clothing it sells.
“So what that means is (we produce) clothing which are of a higher quality than what’s available in the market for this price segment. So, if it is an eight dollar blouse, manufacturers typically don’t do any quality control.”
“But when we make our own stuff, we have six layers of quality control - two in the design sampling process, two at the factory level and another two at the warehouse,” says Jeffrey, adding that about 70 percent of its total revenue is generated from sales of its own clothing.
“I think that is the other thing that makes us different.”
Next, the group is looking to expand further into the beauty products segment. “This is a very big opportunity to introduce cosmetics that have an international level of quality but local pricing and halal.”
When asked about expansion plans, Jeffrey only disclosed that Sale Stock’s ambitions are ‘greater than Indonesia’.
“Indonesia is large enough for us to go deep in the next few years,” says Jeffrey. “ We are already growing so fast. I think it is better to do fewer things well, rather than overstretching and burning out.”
Jeffrey Yuwono - Lessons From Being An Entrepreneur
