Ecommerce platform EZBuy nets $18m as Taobao service resumes

Singaporean ecommerce website EZBuy has raised US$17.6 million in a pre-series C round, the company announced today. The funding comes from new and existing investors with a strong presence in China, including Ventech, Sky9, IDG, Vision Knight Capital, and China Growth Capital.

EZBuy helps users shop on online marketplaces based in overseas markets like China, the US, Taiwan, and Korea. Websites like EZBuy act as middlemen, contacting sellers on those platforms on behalf of its users to purchase the items and have them shipped, imported, and delivered to buyers.

It’s an incarnation of the concept of daigou or “to buy on behalf of” – a very popular practice with Chinese ecommerce customers looking for items outside of China. EZBuy itself used to be known as 65daigou.

The startup plans to use the funding to “offer quick and more reliable modes of localized services to customers” and expand to more countries within and outside Southeast Asia.

These include a shorter shipping duration for items and mitigating risks for customers who shop across borders, according to co-founder and CEO He Jian. The CEO doesn’t share any details about EZBuy’s expansion plans, saying only that the startup is “currently in discussion with several partners.”

Most of the investors in this round came in for EZBuy’s US$20 million series B fundraise in early 2016. The startup has more than 3 million active users, according to He Jian.

Juggling marketplaces

Late last year, EZBuy was in the headlines because of a spat with Alibaba-owned marketplace Taobao. The Chinese company accused EZBuy of acting like a “scalper,” creating multiple accounts to buy from its marketplace.

This led to a significant backlog of orders from EZBuy users, especially since this happened so close to Singles Day, China’s largest online shopping event that has spread to other Asian countries as well.

In December, EZBuy claimed that all the delayed orders had been fulfilled and announced it would temporarily stop offering its Taobao service. The company said it continued working with other Chinese marketplaces like JD and Mogujie.

He Jian claims that since then, “service has resumed and is back to normal.” Taobao listings are indeed visible on EZBuy at the moment.

This highlights a risk that sites like EZBuy face, being dependent on foreign marketplaces that might cut them off and disrupt their business. That could be especially concerning in the case of marketplaces like Taobao, that can reach people through Lazada, which was acquired by Alibaba.

Diversifying their partners is probably the way to go, thinks Albert Shyy, principal at Burda Investments. “For ecommerce ‘enablers,’ the business model is strongest when there are a multitude of options, as their value proposition to users/customers increases and they reduce dependency risk on a single platform,” he says.

He adds that some sites can go beyond just connecting to foreign e-stores to add some range to their products. “They can go direct or private-label for top-selling products, given they should have access to a pretty rich data set by sitting on top of multiple platforms.”

Adrian Lee, research director at Gartner, cautions that even tapping into several marketplaces does not remove the risk altogether for startups like EZBuy.

“The additional funding should be rendered into expanding logistics and fulfilment capabilities across Southeast Asia as the core of what they do,” he says. “Unless EZBuy gets its formula right to ramp up fulfilment rapidly or revise its business model, it faces a real risk of redundancy within the next 12 to 18 months, as Alibaba Group continues its expansion in Southeast Asia.”

Taobao is a popular destination for many Singaporeans, who shop on it through third-party services like EZBuy and rival startups SGShopOops, and Peeka. Lazada started offering access to Taobao last year.

Peeka co-founder Mark Xu tells Tech in Asia the site expects to see more users buying from Chinese marketplaces, taking advantage of lower prices and the product range.

SGShop is present in Singapore, Malaysia, and Myanmar and also sees a steady increase in monthly transactions, says COO Lai Xin.

Update, 24/5, 7:05 pm: Updated with comments from EZBuy and third-party insights.