Helping Hand for Fans of Online Shopping

FF Fashion

Thu, Aug 12, 2010
The Business Times
By Chan Yuping


LOCAL start-up Comgateway offers its customers a unique proposition - access to US online merchants without the hassle of worrying about payment and delivery.

Founder Danny Lim got the idea for his start-up about five years ago when he realised the difficulties regional consumers faced in the online shopping space.

'My wife is an avid online shopper,' he says. 'I noticed her frustration when she tried to buy from US merchants.'
Mr Lim reckons that 'in difficulties, you find opportunities' - and here was an e-commerce gap waiting to be filled.

Many people cannot use US online merchants because up to 70 per cent of the merchants do not accept payments from or deliver to customers outside the United States, he says. And even the remaining 30 per cent usually charge exorbitant delivery costs that cancel out any saving from buying online.

'The US remains the online shopping paradise, offering the widest range of products available,' says Mr Lim. And online shopping has plenty of benefits, including lower prices and extensive information available at the user's fingertips to evaluate alternative products and seek out the best buys.

'Online businesses tend to operate at a lower cost and this is usually passed on to their customers,' he says.
Online shoppers can also scan prices worldwide and find bargains that may not be available at brick- and-mortar outlets.

A firm believer that delivery costs should not eat into savings arising from online shopping, Mr Lim says Comgateway's primary role is to negotiate shipping costs for its customers.

Cost savings via Comgateway's services are brought about by aggregating many purchases and negotiating bulk discounts with its partner DHL. The savings from the arbitrage are then passed on to customers - resulting in an average saving of 30 per cent, says Mr Lim.

The company also acts to bridge the divide between its customers and US merchants by providing safe, reliable and timely transport of purchases through DHL. Because the partnership is a close-knit one, Comgateway can tap DHL's wide geographic network to deliver products to over 200 locations.

Since it was launched in 2005, Comgateway has grown to have two offices - in Singapore and the US - with over 50 employees in total. It has also registered a consistent triple-digit growth in revenue.

In addition, the company has partnered major credit card companies and banks across the region to reach out to a wide customer base.

'Online shopping is still a sunrise industry,' says Mr Lim. 'It is very young and still breaking new ground every day.'
In essence, Comgateway is the middleman between the customer and the US merchant. It provides a US address for customers to which US merchants send their purchases. And then Comgateway ships these purchases directly to its customers through DHL.

The company also helps consolidate its customers' purchases from different merchants before shipping them - which helps keep delivery costs down and ensures a smoother flow of goods.

For US merchants who do not accept international credit card payments, Comgateway provides a unique 'BuyForMe' service, under which customers pay Comgateway to pay US merchants.

Mr Lim says about 30 per cent of Comgateway's business comes from business users, such as other SMEs. It has over 100,000 customers worldwide, with more than 95 per cent from the Asia-Pacific region.

Mr Lim reckons online shopping has realised only 5 per cent of its potential and there are immense growth opportunities. 'This is just the tip of the iceberg,' he says.

During the 2008-09 economic downturn, Comgateway went through a flat three months as customers generally cut back. But Mr Lim says business soared after the recession as people started to realise the cost savings to be had by shopping online.

'Singapore consumers are very tech-savvy - they are bargain hunters and smart shoppers,' he says. 'Going online is a smarter way to shop, especially for necessities like contact lenses and vitamins.'

Singapore is a limited market, and Mr Lim hopes to be able to keep expanding outwards and courting larger markets. 'We are essentially a logistics management business, so volume is key,' he says.