Lelong began as a pioneer of online auctions in Malaysia in 1999. The company has since grown to become Malaysia’s most popular one-stop marketplace under the leadership of Richard Tan, an accountant by training. KINIBIZ talks to Tan about going where no one had gone before.
With RM280,000 in cash after divesting his stake in a software venture, along with a vision that the Internet is bound to revolutionise the way business is done, Richard Tan Ling Geck bade farewell to his career as a chartered accountant to establish Interbase Resources Sdn Bhd, which owns homegrown e-commerce company Lelong, alongside co-founder Wei Kwok Seing.
That was the story in the year 1999, long before the term electronic commerce, or e-commerce, was widely heard in this country. It was certainly long before the idea of online shopping made much, if any, sense.
Today, almost 17 years on, Lelong.com.my has survived the test of time to count itself as a pioneer e-commerce platform which has grown to stand among Malaysia’s most visited websites, ranking 24th on web analytics site, Alexa. It provides a one-stop platform offering everything from marketing, payment solutions and hosting to online store services.
Lelong is the main revenue driver for Interbase Resources, which raked in RM25 million in revenue for the financial year ended Dec 31, 2014, and a net profit of RM2.3 million. According to company filing with the Companies Commission of Malaysia (CCM), Interbase Resources also boasts a reserve of RM2.1 million.
Pioneer with a vision
When asked how the idea of setting up an e-commerce business came about, the now 54-year-old dotcom entrepreneur said: “I’m actually an accountant by training. I’ve worked in audit, I’ve worked in manufacturing, and I’ve also worked in the software industry. And then I became an investor and shareholder in a software company. When we subsequently sold off the software company, we found ourselves thinking of what to do next.”
“In hindsight, I’ve always believed that technology, and especially the Internet, can change the way we interact with each other on the social front, in our transactional business relationship, with our suppliers, etc.
“The way I see it, if you are able to apply the Internet on the whole supply chain, there is efficiency that can be created,” he said with a gleam in his eyes.
Transition abounds in e-commerce business
But Lelong did not start out as an online auction and a one-stop marketplace from the very beginning. As with all great entrepreneurial stories, it went through a series of trials and tribulations in the process before arriving at the current business model, as the idea of online buying between the late 1990s and the early 2000s remained far-fetched to the regular Malaysian.
The astute businessman then decided that he should first start with looping onboard those who were savvy with technology and hence more likely to be receptive towards the then-novel idea of online buying – the technology-savvy user base which became the pioneers of its seven-million-strong trading community and which remains faithful to the portal until today.
“In the early days we started not as Lelong, but as BuyPC, because we were focusing on personal computers (PCs) and mobiles phones. So it actually started with people selling memory cards, hard disks, monitors, printers, and the like.
“Our target customers were this group of people who were savvy with this kind of Internet buying and selling, so we created a platform for them and then it became the first of its kind where you can actually sell secondhand mobile phones,” he recalled.
As BuyPC increasingly gained traction among the first generation IT-savvy crowd in the country, demand for the platform to expand its product categories poured in.
Tan then made another pivotal decision to change the name of the portal, from BuyPC to Lelong, adding a peculiarly Malaysian touch and bringing precision to the understanding of the business which, at that time, operated largely on an auction model.
“This (model) is useful for the secondary, pre-used items market where a price cannot be really ascertained. All that the sellers think is that they want to get rid of the item and hence any price would do, while buyers bid up the prices on the other end.
“There is always some fun and excitement in the bidding process,” he grinned.
Five years into the business, at a time when online buying was picking up in terms of popularity and becoming increasingly well received, Tan again observed a change in user trends. Auctioning items off piece by piece had, by then, become rather “tedious”, and there was a growing voice from the selling community demanding to operate as a business-to-consumer (B2C) platform.
Again, Lelong, which counts both its buying and selling community as its priority stakeholders, chose to make a defining change to its business model to reposition itself as an online B2C marketplace, with auctioning declining to a mere 5% of its operations today.
Lelong attracts international investor
In 2009, amidst looking at expanding into the developing market, Intervision Holdings stumbled across Lelong and came on board as its majority shareholder. Intervision Holdings is part of South Africa-based Internet services and media giant Naspers, which boasts a market capitalisation of US$58 billion (RM250.6 billion).
Naspers is also the single largest shareholder in Chinese Internet giant Tencent, which, until the ascension of Alibaba, was the biggest global initial public offering in history.
Reluctant to divulge the amount offered in exchange for its shares by Intervision Holdings, Tan merely said that the partnership came into fruition as the company is part of a big multinational operations rather than a pure venture capitalist, which is in line with Lelong’s future growth plans.
Lelong enjoys first-mover advantage
While other players were subsequently starting to make inroads into the now-lucrative e-commerce business in the mid-2000s, homegrown Lelong had already carved out a sizeable market of its own.
Take American e-commerce giant eBay for example. eBay entered the Malaysian market in 2004. Today it runs behind Lelong as the 173rd most popular website domestically on Alexa’s ranking, a far cry from Lelong’s 24th position.
“If you were to do e-commerce today you’d need big money – you would need a lot of money. The game is different today. It’s no longer hundreds of thousands but tens to hundreds of millions.
“We do enjoy an advantage in the sense that we started at an early stage when e-commerce had yet to be spoken of,” said Tan, while concurring that more needs to be done now in order to appeal to the younger demographic.
“At Lelong what we tell sellers is this: you are not in technology, you know your products better than anyone else, you know how to price our product, you know what product sells; hence focus on the product while we enable you in terms of technology, and let us find the buyers for you,” he told KINIBIZ.
But here is the caveat, added Tan: “We cannot do anything, though, if you don’t price it right or if you don’t find the right product.”
Tomorrow: The long, bumpy road to profit