With nearly 80 percent of mobile users making an online purchase using a smartphone in the past six months, we asked Doropu Founders Engthurs Ang and Png Zhe Hao why online Reverse Auction retail is the next big thing in consumer spending preferences.
Home shopping channels on free-to-air TV may feel like a relic from the eighties with over 2.2 million adults pulling the plug on traditional satellite TV in 2017. Teleshopping giants HSN and QVC merged following a steady decline in sales as shoppers transit to smaller screens – their mobile phones.
The shift to mobile commerce is increasingly tangible. Nearly 80% of smartphone users have made a purchase online using their mobile device in the past six months, according to research by OuterBox. A 2019 study by US mobile partnership platform Button also revealed that 42% of smartphone users plan to do more shopping from their mobile devices in 2020. In addition, a third of annual e-commerce sales in the US totalling USD 111 billion came from mobile devices, based on a 2017 study by Internet Retailer.
The move to mobile from traditional teleshoppers inspired the founders of Doropu, Asia’s first price drop e-commerce app, to incorporate key features of British teleshopping channel Price Drop into an app-based platform.
During their studies at the University of Liverpool, Doropu founders Engthurs Ang and Png Zhe Hao came across Price Drop, the first reverse auction channel in the world; a certain number of units of a product were advertised at a specified price, and buyers could place orders by telephone. The price decreased until all units sold. The premise was ingenious; all bidders paid the final, lowest price.
Doropu’s price drop mechanism gamifies the shopping experience and allows consumers to purchase a variety of products, from household necessities to electrical appliances, at significantly discounted prices as low as one cent. As items are snapped up, prices keep falling until the product is sold out. Earlier buyers receive a cash rebate for the difference between the price they purchased and the final, lowest price.
Launched in February 2018 on iOS and Android, the first product for sale on Doropu was five sets of movie tickets. Since then, the app has sold over 35,000 products to date. With more than 180k downloads and 90k active users in Singapore and Malaysia, the hugely popular Doropu app sees an average of 12k unique visitors daily and is averaging a 30% growth in customer base every month. The company most recently raised USD 1.2 million seed funding round with angel investors in August 2018, with expansion plans into Australia, Indonesia and Thailand by 2021.
We asked Doropu’s founders Ang and Zhe Hao to unpack what is driving the growth and consumer trust for online purchasing and whether generational factors come into play.
According to Ang, consumers are responding so favourably to the price drop model because of the ‘better deal’ incentive.
“There are many factors but generally it boils down to two; price and convenience. Unless there is no confidence in the online retailer, there are few reasons why people do not purchase online if the product is cheaper. Regardless of age, everyone loves a good deal. Around 50% of our users are in their mid-20s to 30s and the next biggest group is mid-30s to 40s. So, there’s definitely generational factors at play. This may be due to these demographics being more receptive to using technology in their daily lives, not just shopping,” says Ang.
In terms of brand loyalty to particular shopping platforms, Ang says regardless of user experience, most shoppers will always opt for the cheapest price online.
“To be blunt, most consumers have no platform loyalty, they go to where the cheapest source is. Our model here in Singapore and Malaysia is extremely transparent and easy to navigate, we offer consumers the ability to choose to buy at their desired price. We currently offer free doorstep shipping too,” says Ang.
In terms of product demand, Ang says that there have been some surprising buys, and plenty of learning ‘on the job’ in terms of getting their price point right – without adversely impacting the end consumer.
“In the beginning, we did not have any data on popular items, but some unexpected items sold sell very fast, like toilet rolls! We have gradually learnt how to make margins on products we sell. This does not mean that consumers are paying more, but rather Doropu has negotiating power to buy in bulk. Consumers are very tech savvy; they will compare via the internet first and determine once we are the cheapest, they will buy,” says Ang.
In terms of future trends in e-commerce in Singapore and Malaysia, we asked how Doropu might differentiate itself in a very contested space.
“The way people purchase products is changing. Usually we shop online because we need to buy something, however with Doropu, users keep returning to the app to see what’s on sale each day. Once we scale, we believe this trend will continue. Traditionally, merchants who sell products online, offer no visibility on the product sold; they may have ten different vendors selling the same products across multiple marketplaces. However with Doropu, we list one product at one time and we guarantee same day sell out. By opening up our merchant center, we can help merchants to clear their inventories too,” says Ang.
According to Ang, the biggest opportunities to be found in this space are in mature markets like Australia, which is currently one of the top ten e-commerce markets, whereby 8 in 10 Australians shop online. For growth numbers, emerging countries in South East Asia looks promising too.
“The advantage of Doropu is that we are not limited to which categories or industry of items that we are selling. We are not limited to selling physical goods, we sell services too. Every country has its own nuances, and will will analyse and tweak our model to suit the different sensibilities of each market,” says Ang.