SPECIAL REPORT

The Weight of Success

by Li Haohan
Photography by Chino Sardea
30 Jul 2017

Everyone is watching when and how Carousell will monetize its business and profit from its phenomenal growth

Carousell has recently moved into its new headquarter in Singapore to accommodate the growing team and operation. The company now occupies two floors of an office building in town, where they have laid out offices on the lower floor. On the upper floor are the meeting rooms, a spacious pantry with communal tables, and breakout meeting areas.

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The central section of the room on the upper floor is covered with Astroturf, an old Christmas tree from their previous office reappears by the wall as a seasonless décor. A young employee spots us by the door and leads us to a section where floor cushions resting on wooden crates and roomy couches surround a big TV set. The sound of lunchtime conversations and a billiard game in progress fill the air. If there is a template for a port-modern millennials’ workplace, this has got to be it.

Except Carousell is more than just a template. Since its launch in August 2012, the mobile classifieds has grown into one of the fastest growing marketplaces in the world. It is present in 19 cities across the globe, and ranks as the most popular lifestyle and shopping app in Singapore, Taiwan, and Hong Kong. It boasts a listing of over 80 million, as well as the financial support of Venture capitalists Sequoia Capital, Rakuten Ventures, 500 Startups, Golden Gate Ventures, and QuestVC.

Ease of use is among the attractions that Carousell claims to have over its competitors. How hard can taking a picture of a product, doing some cropping and filter enhancements, and posting it on the platform be especially if the entire process can be completed on the mobile phone? “Mobile phone has really changed computing,” says Marcus Tan, 33, co-founder and president of Carousell. Previously, a similar posting protocol would have required some skills and time, but not anymore. The app, designed for intuitive navigation and use, is easy to master. It is an open, democratized environment.

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  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

Local Yet Global

“Carousell is the same app wherever you find it,” assures Marcus. “It’s exactly the same platform, but localized in language, content, and categories. The beauty of the platform is that the local community shapes it and makes it unique and special for their market.” In Indonesia, postings are fashion and beauty centric, just as it was in Singapore two or three years ago, Marcus elaborates. On the other hand, Singapore is now broader, with electronics and even cars included among product categories.

“We started with a predominantly female fashion listings, which developed into lifestyle and has finally grown into general audience. But you will see variations of this in different markets. In Hong Kong collectible toys are big, while in the Philippines, it’s vintage karaoke stuff.”

Marcus emphasizes that the idea behind the platform is old, going all the way to when people advertized items they wanted to sell. It biggest reinvention prior to the electronic version was the newspaper classified ads. Subsequent innovations helped by technology made the buying and selling faster and more effective. It also improved the accessibility of the platform and placed control in the hands of the buyer and the seller.

“Students were our first targets,” Marcus shares. “We were familiar with them, and they made up a strong community. When students leave their dormitories, they sell their furniture; when they start another term, they buy textbooks and other things they need.” Carousell tapped on students’ cycle of activities and pattern of buying and selling.  

“Interestingly, we had a predominantly female audience at the start. Gradually, they brought in their boyfriends probably, and the males started coming on board.” They brought along with them, Marcus notes, their interests – sneakers, Legos, gadgets, collectors’ items, which soon formed into communities.

  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

To Dream Bigger Dreams

Every single meeting room on the upper floor is named after an encounter with a Carousell user. One is about how a 65-year-old man who delivered mail around Pasir Ris ventured into the app to hunt for a good deal on a bicycle. He found a seller who, after hearing his story, was so moved he wanted to give the bicycle for free. But the buyer insisted on paying, and the deal was closed at S$50. That to Marcus is a modern-day parable of people forming connections on a platform, and technology serving as an enabler allowing more of them to participate.

“What made Carousell big was our focus on problem. We started out to solve problems, not to make tons of money,” he says. “And we are still working to find better solutions to problems.” Lucas Ngoo and Quek Siu Rui are Marcus’ co-founders in Carousell, and from the start Marcus has been focused on product design and community building.

This was not exactly the path he wanted to pursue – Marcus had his sights set on a career in marketing advertising, and had even done a stint at some of the top agencies, including DDB.

While a student at the National University of Singapore (Business Administration and Entrepreneurship), he spent some time at Stanford University and worked in Silicon Valley under the NUS Overseas College Program. There he saw unusual drive among technopreneurs around him and was inspired to get into a field where passion was basic requirement.

“You sit around in a caffe with these people and the conversation were so inspiring. They were talking about projects that solved problems, and problems that will change the world. Their dreams were far bigger.”

When Marcus returned to Singapore, he was clear about what he wanted to do.

  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

The Wonder Boy

You will want Marcus to succeed because he is earnest. Because he works hard and has remained committed to his objectives. Because he has remained disinterested in the trappings of success. He lives with his parent in a four-room flat and he does so because he wants to look after them. He doesn’t drive to work, but takes Uber or Grab so he can catch up on work during the commute. He plays football with his old mates, and watches games with his father.

“When we started out, there was already eBay and other similar platforms, but we sincerely cared about solving problems. There would have been no reason for anyone to get on Carousell if it did what everyone else was doing. Carousell was clearly a problem solver, and one that cared about the problems. Naturally, the people who went on the platform adopted that same community spirit.” It wasn’t long before Carousell became more than a digital classifieds. It was also a platform that was open enough for everyone to get on board and form communities according to their interests.

But the growth necessitated other things: Marcus and his co-founders didn’t set out to build a company. “That wasn’t our goal, but eventually we incorporated because we had to hire people and handle eventual growth. It was a by-product of what we set out to do.”

When they were about to embark on their first partnership – for content sharing – they had to sign a contract. “They asked if we have the company incorporated; we hadn’t at that point. Eventually, partners and investors who believe in our vision came on board.” Incorporation was inevitable.

"Carousell was clearly a problem solver, and one that cared about the problems. Naturally, the people who went on the platform adopted that community spirit." - Marcus Tan
  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

Business As Usual?

“The basic business model is classifieds, which has been around for a very long time. That was 1.0. Then came the PC where deals that took hours to close in the environment of classifieds took only minutes to complete. Now we’re looking at 3.0, which is mobile. Everything is moving from PC to mobile,” says Marcus.

The next step is to use AI. Over the past four or five years so much data have been collected in smart phones that they have practically transformed into data storage devices. The data in a smart phone can be drilled and mined. “We can match prices, recommend products down to specific models, and have effective pricing.”

  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

How It Goes From Here

Carousell’s purpose is to be more than just a transactional platform, Marcus explains. While it remains laser-focused on improving the buying and selling experience for its users, it also wants to inspire connections and exchange of stories on our marketplace. “We’re incredibly excited to be where we’re at, but still like to remind ourselves that we still have a long way to go,” he says.

Carousell has grown over the last five years, and so have its users. “Over 50 per cent of them in Singapore are now over 25 years old, and have significantly more purchasing power. We’ve also seen how their evolving needs have resulted in more listings and greater demand in higher value verticals, especially cars. Hence, we are also focused on growing our presence in high value verticals such as cars, jobs & services, and property. It also ties in with our goal to become the number one classifieds marketplace in the world.

“The Carousell business model is essentially a classifieds business model, and it’s a great business model that enjoys 50+ per cent EBITDA margins. In October last year, we acquired Caarly, a mobile-first productivity tool that makes it easier for used car dealerships to manage their inventory. This was a strategic move to position Carousell for leadership in the cars classifieds vertical,” Marcus explains.

The Caarly acquisition is paving the way for a monetization strategy that includes value-added services on top of what users already enjoy, such as premium listings, subscriptions and so on. Since then, the team had been working hard to launch Carousell Motors in February this year. “We’re focused on building revenue streams using high value verticals, while concurrently enhancing the experience of buying and selling on Carousell for our users.”

 Carousell also launched Carousell Bumps – a paid service on the Carousell marketplace that helps make product listings more visible and therefore faster to sell – in May in Singapore, and in June in Hong Kong.

  • LOCAL YET GLOBAL
  • TO DREAM BIGGER DREAMS
  • THE WONDER BOY
  • BUSINESS AS USUAL?
  • HOW IT GOES FROM HERE
  • HOW WILL IT MAKE MONEY?

How Will It Make Money?

About US$40 million have been pumped into the company to date. Marcus insists that the end is not to raise money but to have enough resources that will ensure sustainability and pursue innovations. 

At the moment, everyone’s eyes are set on finding out how Carousell is going to monetize the business. It has not charged anyone for the listing services; the funds it has secured have been its source of sustenance. With its phenomenal growth it is loaded with potential for tremendous earnings, but which way will it go to earn money?

“We are not at liberty to disclose that information,” Marcus says. “That said, our goal right now is focused on continually improving our search and discovery features to help our sellers meet the right buyers. The launch of Bumps on our Singapore and Hong Kong marketplaces is one of the many steps we’ll take to offer our users a great Carousell experience, and help anyone with a smartphone buy and sell on Carousell. At the same time, we are also exploring how we can make buying and selling in the jobs, services and property categories even better than what is currently offered in the industry.”