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Image credit: Pomelo.

Online fashion site Pomelo announced today it has raised US$19 million in what appears to be the biggest ever series B fundraise on record for a Thai startup.

The round was co-led by Chinese ecommerce giant JD and Indonesian investment firm Provident Capital Partners. US private equity firm Lombard Investments also participated.

Founded in 2014, Bangkok-based Pomelo started off with selling Korean fashion via its website and works with designers to create house brand products.

In September 2014 it raised US$1.6 million in pre-series A funding – an uncharacteristically large amount for a Southeast Asian ecommerce startup that early in its lifecycle.

By October last year, it has raised total funding of US$11 million after a series A follow-on from Jungle Ventures, 500 Startups, and others.

Pomelo claimed in a press release that today’s investment is the largest series B fundraise yet by a Thai startup. This chimes with Tech in Asia’s data, which shows the previous record to be the US$17.5 million raised by payments company Omise in its July 2016 series B round (Omise followed this up with a US$25 million token sale earlier this year). Bangkok-based Zilingo – a rival fashion site – secured US$17 million in its series B round in September this year.

JD’s investment in Pomelo is notable as the Chinese company has increasingly focused its attentions on Thailand – and on Southeast Asia more broadly – of late. In September, it set up a US$500 million joint venture with Thai brick-and-mortar retail giant Central Group. It also invested in Indonesian ride-hailer Go-Jek, as part of a funding round reportedly worth US$1.2 billion led by JD compatriot Tencent.

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Bernardus Sumartok, co-founder and CEO of Tripvisto. Photo credit: Tech in Asia Indonesia.

Indonesian tour package booking site Tripvisto is folding up, with CEO Bernardus Sumartok confirming the shutdown. Sumartok explained that the company’s worsening unit economics meant it could no longer continue to operate, but he declined to share other details.

The Tripvisto site is still accessible but no longer takes bookings, and its social media channels haven’t been active since July 2017.

In 2015, right after Tripvisto raised US$ 1 million from Gobi Partners in a series A round, Sumartok spoke of a “ten-fold growth in monthly revenue over the past year.”

Tripvisto was also backed by East Ventures in its 2014 seed round.

Gobi declined to comment on the shutdown. East Ventures managing partner Willson Cuaca said his assessment of the situation was the same as Sumartok’s.

A former employee with direct knowledge of the situation told Tech in Asia that the startup began to have trouble hitting operational targets in May 2017. Since then, employees started leaving Tripvisto until there was no one left in the team.

According to the source, “Management tried to improve the situation by entering [into] partnerships with media and telcos to help promote tour packages, but that strategy also failed.”

There are many tour package players in Indonesia, such as TripTrus, MNC-backed Mr Aladin, and Ideabox graduate Gogonesia to name a few, but they seem to have a tough time reaching breakout success. Valadoo, for example, closed shop in 2015, even after an attempted merger with a similar company, Burufly. Others like GoArchipelago and Pikavia seem to have ceased operations as well.

Meanwhile, online travel agents like Traveloka, which started off by selling airplane and train tickets and hotel bookings, have branched out into offering experiences and packages. Traveloka has secured hundreds of millions of dollars in funding from investors like Expedia and JD.

International tour package startups like Taiwan’s KKDay and Klook from Hong Kong are also pushing into Southeast Asia. Klook recently raised US$60 million, co-led by Goldman Sachs and existing investors Sequoia Capital and Matrix Partners.

This article was originally published in Indonesian, written by Aditya Hadi Pratama. Information was translated and edited for this version.

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Hari Sivan, founder and CEO of SoCash, with the SoCash team.

Singapore-based fintech startup SoCash closed a new round of financing. The sole investor in this series A round is Vertex Ventures, a global venture capital group whose notable investments include ride-hailing firm Grab. SoCash declined to disclose the amount raised and its current valuation.

SoCash promises to disrupt the way banks circulate cash. Its app turns regular stores into a place where you can withdraw from or transfer money to your own bank account.

Banks can benefit from this because it provides an alternative to growing their ATM networks, which are expensive to maintain. It also helps store owners because they get a fee for each transaction, argues SoCash.

Typical clients are retail chains and convenience stores, CEO and founder Hari Sivan tells Tech in Asia.

The firm launched last year so it’s still in the early days of traction, but one of the clients that Sivan can name is Standard Chartered Bank Singapore, for which the startup has added “400 additional cash points” on the island.

Sivan says SoCash’s new funds will be used to expand the team and grow operations internationally, first targeting Indonesia.

Competitive landscape

Banks pay SoCash for its service, which includes sending staff to meet and onboard shopkeepers, as well as training staff so that everyone understands the system.

“We’re an alternative to traditional cash operators and security companies, the ones involved in the transport of cash, with armored vehicles, guards, and so on,” Sivan explains. “Those operators haven’t had competition for the last 40 years.”

Other comparable services are “cash out” options integrated with point-of-sale (POS) cashier systems in certain stores, but that only works in “highly organized, corporate retail,” Sivan says.

“That may work for Alfamart or Indomaret (the two largest minimart chains in Indonesia), but what about one tier below? Those have no POS machine,” he adds. With SoCash, those smaller, independent shops can became cash transaction points as well, and link up with many banks at the same time.

SoCash is comparable to U.S. startup Spare, but regionally, it’s the first mover, says Sivan.

The future of cash

Sivan was a banker before becoming an entrepreneur and at some point, he led the remittance section of DBS Bank. Despite building up expertise in digital payments, Sivan firmly believes in the future of cash.

“Cash is a very effective payment mechanism. It’s instantly settled, there’s no fee, it’s universally accepted.” He also cites how cash withdrawals aren’t really going down when one looks at central bank data. “Just in Singapore, there are close to 80 million ATM withdrawals a week.”

That figure, however, remains flat in Singapore because the population isn’t growing, and pretty much everyone has a bank account. But in countries like Indonesia and Thailand, where populations are growing and many aren’t yet connected to the formal banking sector, the “possibility of a cashless society is still decades away,” according to Sivan.

Prior to this series A round, SoCash had been angel-funded. It first raised a seed round in July last year and then took on another round of investment in March. The total amounted to roughly US$1 million.

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Didi Chuxing, China’s top ride-hail app, is steered by two very different characters.

See more on Didi:

• Anti-Uber empire grows as Didi invests in Careem
• Didi and Softbank invest $2b in Grab
• These are China’s 15 most well-funded startups

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Our Escalator Pitches are back. You’ve got just 30 seconds… Go!

Giving us their best shot were Le Wagon and Yunomi.

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Photo credit: petunyia / 123RF.

Does fewer cars on Singapore’s roads bode well or ill for Uber and Grab? It’s a toss-up – on one hand, fewer people owning cars could mean more passengers for ride-hailing services; on the other, if owning and driving a car gets much more expensive, is it worth it for drivers to stay on the road?

It will likely be some time before this is put to the test – Singapore’s Land Transport Authority (LTA) just announced it will be curbing the number of new cars that make it onto the city-state’s roads next year and the changes will go into effect from February onwards.

Previously, the annual increment of new cars allowed on the road was 0.25 percent; it will now drop to zero.

According to LTA, there were 898,239 vehicles on Singapore’s roads at the end of 2016, with 601,218 of those being private cars.

Lean and green

The reasons why this is happening now range from the purely pragmatic to the aspirational.

In practical terms, the island nation simply doesn’t have enough physical space to spare. “Today, 12 percent of Singapore’s total land area is taken up by roads. In view of land constraints and competing needs, there is limited scope for further expansion of the road network,” says LTA’s announcement.

Grab measures success based on using existing cars as efficiently as possible before adding more.

With a growing population and finite room to grow into, Singapore has been hacking together a number of methods to accommodate everything and everyone – a limited number of vehicles being one of them.

But Singapore also wants to be a “smart nation,” one driven by constant inflows of data, efficient processes, and quantifiable metrics. By limiting the number of cars on its roads, it can push for more efficient public transportation networks, more sustainable energy consumption, and reduced pollution.

LTA’s decision follows the country’s bid for less reliance on private vehicles, mostly by boosting its public transportation capabilities (subway breakdowns notwithstanding). For example, its newest Massive Rapid Transit (MRT) subway line – the Downtown Line – has recently been extended to increase coverage. The country is also looking to improve its fleet of buses with electric vehicles – and is even experimenting with self-driving ones.

Sharing is caring

In all of this, where do operators like Uber and Grab – and, to a lesser degree, licensed taxi providers – fit in?

Jochen Krauss, managing partner at consultancy Simon-Kucher & Partners, thinks ride-hailers are among the parties that can benefit. “Many more people will rethink if they want to own a car or not,” he tells Tech in Asia. The trend of switching from owning cars to using shared alternatives is seen elsewhere in the world as well, he adds.

Uber claims its philosophy in Singapore is in line with LTA’s when it comes to a “car-lite” society. “Together with great public transport, ride-sharing platforms like Uber can create a credible alternative to private car ownership by allowing people access to a safe, reliable, and affordable ride wherever they are in the city,” an Uber spokesperson told Tech in Asia.

According to the ride-hailer’s data, nearly 30 percent of Uber trips on the island begin or end near MRT stations. It’s something the company has talked about before – how its service can work in collaboration with public transport, driving people to specific spots where they can then jump on a train or bus for the rest of their journey.

Close to 30% of Singapore Uber rides begin or end near MRT stations. Image credit: Uber.

It’s a use case that’s supported by other types of vehicle sharing too – it only takes a brief walk around different MRT stations in Singapore to see throngs of shared bikes parked outside, as people ride from home to the station and then take the train. LTA created new bike parking zones outside several stations on the island for this exact purpose. Bike-sharing provider oBike also announced it would notify users of such zones through geofencing.

The sharing concept extends to carpooling – a pre-existing concept given new life through mobile apps. Singapore startup Ryde made this its core concept, while also adding cab booking features through a partnership with local taxi operator Comfort DelGro in May.

Uber and Grab offer their own carpooling options by allowing a driver to pick up multiple passengers. Grab also offers GrabHitch, a peer-to-peer carpooling option that’s closer to Ryde’s concept.

“Carpooling is a cheaper and greener point-to-point option. The cut in car growth actually means that people are going to share rides more often,” says Terence Zou, Ryde founder and CEO.

Grab is going a step further in that direction by having its own dedicated service for multi-passenger transport. GrabShuttle lets riders book shuttle buses that follow specific routes and groups passengers together depending on where they are headed. It’s like a bus service, but on demand. The service works in collaboration with Beeline, a transportation platform using real-time data created by Singapore’s Government Technology Agency.

Head of Grab Singapore Lim Kell Jay tells Tech in Asia the company will continue expanding the service for large groups of commuters.

GrabShuttle allows users to book a seat on shuttles following fixed routes. Photo credit: Grab.

Fewer cars doesn’t mean less business

LTA has said its decision is not expected to greatly affect the number of Certificates of Entitlement (COE), the finite licenses granted to Singapore vehicles to allow them on the road. The issuing of new COEs is dependent on how many vehicles are deregistered every year, as a new vehicle replaces the old one – another measure to control the number of cars on the road.

Fewer available cars could lead to increased prices for those COEs, which could put the squeeze on drivers for Uber and Grab. “The one thing that’s clear if you limit the car population is that prices will go up – COEs might become more volatile,” says Krauss.

New ventures come up the moment you have a limited supply.

One danger there, he adds, is that drivers may not be able to continue bearing the cost of cars, or operators like Uber and Grab might push those increased costs onto their customers. He clarifies, though, that while he expects price increases, he doesn’t think they will be so drastic as to make ride-hailing drivers give up.

Uber and Grab did not comment on the topic. Uber also did not comment on whether it expects LTA’s decision to result in fewer available cars for the service. Grab says it measures success based on using existing cars as efficiently as possible before adding more.

Lim says that more than 90 percent of the company’s vehicles are leased to commercial drivers who spend at least five hours a day driving for Grab.

“Grab will continue to maintain strong utilization rates while growing our fleet meaningfully within LTA’s quota,” he adds. “We believe the primary responsibility of ride-hailing companies is to convert as many personal cars into shared assets, so that more people may benefit from the increased convenience and accessibility of point-to-point transportation services, as opposed to operating a car rental business which leads to an oversupply of unutilized vehicles.”

The sharing economy, which includes everything from cars to bikes to umbrellas, has had its share of failures. But it has also given rise to some of the biggest companies out there at the moment. “New ventures come up the moment you have a limited supply,” Krauss says. “That includes cars and many other things that essentially allow sharing of limited goods in an economy.”

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This article is brought to you by Tech in Asia Jobs. Looking for a job? Search jobs from companies like Carousell, Skyscanner, Lazada and Go-Jek here today!

So you’ve got a foot in the door and secured an interview at a promising startup. Just as your potential employer is assessing you, this is a good time for you to assess if the company is a good fit. We went through this Quora post for some brilliant questions to get you started.

Photo credit: 123RF Stock Photo

General

1) What will the company look like in a year from any and all perspectives — product, people, team, revenue?

“You’d be surprised how well you can discriminate a team that has true vision and their act together from one that doesn’t just by the answer here. Is it rambling? It is delusional? Does it all make sense and tie to the data and learnings you have so far?” – Jason M. Lemkin (Investor & Founder Champion at SaaStr Fund)

2) How about in five years?

3) What do I need to accomplish in my first 90 to 120 days to be a success and have an impact?

“You’d be surprised how many hirers can’t answer this question. They just want to fill a slot. Is that all you want? Or do you want to have an impact? If it’s a great opportunity, they’ll know exactly how someone great (a great sales rep, a great engineer, a great customer success officer) can move the needle — at least some needle — and make an impact within 90 days.” – Jason M. Lemkin (Investor & Founder Champion at SaaStr Fund)

4) What kind of people succeed at your company?

Market

5) How big is the market for the product? How fast is it growing? Is it a stable market or so cutting edge that nobody recognizes it’s even a market?

6) Does the company have plans to enter new markets? If so, what are they and what is the timescale?

7) Which markets will I be working in, and what are the biggest opportunities and challenges?

Product, product differentiation, and competition

Photo credit: Štefan Štefančík

8) How developed is the product?

9) How is the product going to change? How will the product evolution affect my job scope?

10) Product-wise, what are the biggest challenges?

11) Who are the biggest competitors and how are they doing?

“If there are no competitors, ask why. It could be a sign that there isn’t a market. Or you could be tapping into a new market, gaining first-mover advantage. If the startup is going head to head against an established company, it may be tough. Or could signal that the company could be a good acquisition target. Impressive market competition can validate, or kill, a startup.” – Mira Zaslove, Product manager at Cisco

12) What sets your company apart in the market? Why do consumers choose your product over the competition?

13) What are the key metrics for success in the next six to 12 months?

“Startups need very well-defined goals. This question is intended to narrow down on specific metrics or targets that the startup is aiming to achieve in the relatively near future. The intent here is to understand whether those metrics exist, how they’ll be measured, and whether they’re reasonable. Ultimately those are the metrics that all employees should be judged against.” -Rohit Sharma (Founder, Career Dost)

Funding

14) Are you profitable?

15) How much investment has your company received so far? How much runway do you have left? What is the burn rate?

16) Who are the investors? Do they take an active role?

17) How is my compensation structured? What kind of options are available?

Ability to scale

18) How will your company scale as it grows? Does it have the infrastructure in place to take advantage of the opportunity?

Growth plans and exit

19) What is your growth rate?

20) What are the top three issues preventing you from achieving your growth targets?

“The answer should be clear, comprehensive, well thought-out, and most importantly, honest. If you detect any sense of obfuscation or any kind of smoke and mirrors tactics in their answer, run.” -David Fallarme (Senior Marketing Manager at HubSpot)

21) What would a successful exit look like?

Team

Photo credit: Rawpixel.

22) What is the attrition rate at your company?

23) When people leave, where do they go?

24) How are decisions made?

“Often, you hear from startups that everyone has a say, but you need to dig deeper into how the final decision gets made. It’s not a democracy and you can’t design by committee. Ask them to give an example of conflict and how they resolved it.” -Pradeep Padala (Head of Cloud Infrastructure, Cisco Jasper)

Role

25) Why is the current role open? Have other people held the role and left? If so, why?

26) What kind of problems do you typically get to solve?

27) What does the day-to-day work look like for this role?

28) What were the biggest challenges for those who have held this position?

29) How will performance be assessed?

Culture

Photo credit: Glassdoor

30) How do you onboard an employee?

31) What does the office look like at 8pm?

32) How often does the team have lunch together?

33) When was the last time members of the team met after work? What was the occasion?

34) Would you want your best friend to join this startup?

35) What do you not like about working here?

Personal development

36) What opportunities are there for personal growth and development?

We would like to thank the following Quora contributors whose responses contributed to this article: Jason M. Lemkin (Investor & Founder Champion at SaaStr Fund), Mira Zaslove (Product Manager at Cisco), David Fallarme (Senior Marketing Manager at HubSpot), Garion Hall (Creative Director at abbywinters.com), Rohit Sharma (Founder, Career Dost), Kartik Ayyar (Machine Learning Engineer at Google), and Pradeep Padala (Head of Cloud Infrastructure, Cisco Jasper).

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Photo credit: oBike.

Singapore-based oBike has introduced “geofencing” in a move designed to address local authority concerns about unused bicycles obstructing rights-of-way and cluttering public spaces.

Going live on oBike’s mobile app today, geofencing enables users to leave bikes in designated parking areas which appear on the in-app map. Users will be notified via the app when they enter these virtual enclosures so that they know they are parking the bike in an appropriate location.

The company said that there are over 1,100 designated parking zones for its bikes in Singapore, typically located next to bus stops and train stations, and in public spaces such as shopping centers, parks, and housing estates. Many of these are outlined on the ground with a painted yellow line, but some are completely virtual and can only be found by viewing on the oBike app.

Not all of these designated zones are geofenced at this stage. OBike plans the full rollout to be complete by the second quarter of next year.

Memorandum of understanding

OBike indicated that geofencing was stipulated in a memorandum of understanding (MoU) it recently signed with the Singaporean government’s Land Transport Authority (LTA) along with its two main competitors in the city-state, Mobike and Ofo.

This came after authorities expressed concerns that the companies’ dockless bikes were being left in places where they cause a nuisance.

During the first three weeks of June this year, the LTA attached removal notices to around 600 dockless bikes that were illegally parked. Of these, 135 were eventually impounded because the operators failed to remove them within a 12-hour grace period.

Other initiatives reportedly agreed under the MoU are the development of a single app platform for the general public to report illegally parked bicycles and a common response time among the three companies for their removal.

Penalties

OBike introduced a points system to penalize “negative behavior” – like parking bikes illegally or failing to lock them – back in April. Such acts lead to points deductions, while “positive behavior,” such as reporting faults, gains points.

The company said today that users who do not park their bicycles inside geofenced areas or other designated parking zones will receive a notification in the app. Once the current trial period of 6 months is over, users will have 10 points deducted each time they are found to have parked outside a designated zone. Users who hit zero points will no longer be able to use oBike’s service.

On the other hand, those who consistently park in the specified areas will be rewarded with points, which they will be able to accumulate and eventually exchange for things like shopping vouchers and discounted hotel stays.

One of the more recent entrants into Singapore’s bike-sharing scene, SG Bike – which launched a pilot service in the city’s Holland-Bukit Panjang district in August – also employs a form of geofencing. Riders must park in the vicinity of a “geostation” device, which emits a radio-frequency identification field (RFID) that recognizes if the company’s bikes are parked nearby. These RFID geostations have a typical range of 5 meters.

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Roman Khan and Jennifer Chong. The duo started fashion brand Linjer in 2014. Photo credit: Linjer.

In the span of three years, Linjer has grown into a multimillion dollar online fashion company and it’s turning a healthy profit – a story that stands out in the world of fashion ecommerce, where profitability remains elusive even for established players.

Roman Khan and Jennifer Chong co-founded Linjer with a budget of US$20,000 – half of which went into crafting the company’s first crowdsourcing campaign, including a high-end video which set the tone for the classy brand. Now they turn an annual revenue of over US$10 million.

Linjer’s product was a briefcase – a meticulously designed leather bag, using the best materials in the market, but priced more affordably than top luxury brands.

Its crowdfunding campaign raised about US$190,000, enough to go into production. After that, Khan and Chong set up a new campaign for Linjer’s next product – an equally well-crafted handbag for women. Linjer sells exclusively on its own website.

In a nutshell, according to Khan, this is the business model that led Linjer to success: “Crowdfund every collection launch and be the brand, not a reseller.”

Neither Khan nor Chong, who is a former management consultant, had a formal design education. They were both passionate about style and had specific expectations – the rest, they learned on the go.

“We sent over sketches to the factory; they said this is horrible, we can’t work with that. They then sent over a technical file from one of their clients and said this is how we want it presented. We took that – reverse engineered it,” Khan recalls. “Jenn is brilliant at picking up new tools and processes.”

After its first product sold successfully, Linjer diversified, adding collections of women’s handbags. Photo credit: Linjer.

Of course, it wasn’t all smooth sailing. The first batch of bags actually came out wrong. Khan and Chong had to call every customer personally to apologize for the delay. It was also a financial hit for the young firm, but they were determined to fix the problem and deliver a perfect product.

They changed manufacturers and soon Linjer was ready to add a new line of products, this time watches. Again, it raised the necessary capital to start production through crowdfunding. This campaign scored nearly US$1 million in pre-orders.

The merits of slow growth

The startup hasn’t taken any venture capital and isn’t planning to anytime soon. It was a conscious decision to go the bootstrapping route.

Khan learned about fashion and ecommerce from his time at two ventures launched by Germany’s startup builder Rocket Internet, Zalora and Lazada.

Khan had joined Rocket Internet in its pre-IPO days – when it “did not even have a website, just this logo against a black background,” he recalls – and became part of the firm’s fast-expanding ventures in Asia.

In 2012, Khan was working in Hong Kong’s finance industry and was hired by Rocket’s online fashion site Zalora when it was just a few months old. Later, he moved to various locations in Southeast Asia, eventually becoming Lazada’s CFO in Thailand.

“I really loved it,” says Khan of his time there. “I learned a lot, got to try out a ton of different things.” He also admits to seeing some negatives in the venture-backed ecommerce model,  “at Zalora in particular.”

In its fifth year of existence, Zalora quickly grew across Southeast Asian, but is still running losses and has partly retreated from some of its markets. Lazada, launched shortly after Zalora, was acquired by Alibaba last year.

By mid-2014, Khan had quit Lazada to start Linjer. At first, it was only him, with Chong contributing part-time, as she still had a full-time job.

That changed only after the business was more stable. Even then, the team grew slowly.

“It’s just Jenn, three customer experience associates, all part-time and remote, and myself at this point in time,” says Khan.

Linjer’s operations span the globe, with leather suppliers in Italy, and warehousing and fulfillment handled by a third-party logistics firm in Hong Kong.

Life after Facebook

Linjer’s latest product is a collection of watches. Photo credit: Linjer.

Khan and Chong had been based mostly in Europe in the past years, but are now shifting their focus back to Hong Kong, where they plan to build a small team to enter Linjer’s next phase of growth.

“We’re profitable to the point we can cover our overheads for a team 10 times the current size and a have good enough cash cycle to grow threefold in the next year without external funding,” says Khan. “We want to keep the team lean and small, ideally we stay below 20 in headcount and scale with technology and marketing spend.”

Linjer’s main marketing channels are Facebook and Instagram – the startup sinks a “seven-digit amount” annually into the social network’s ad tools.

This has been working out nicely for the kind of storytelling the brand does, says Khan. “You do what Leonardo DiCapro did in Inception – plant the idea that your product is the best offering and evoke desire in the customer.”

But with more and mega brands utilizing these platforms to run ads, prices are on the rise and smaller players are in danger of getting squeezed out.

“We expect CPM (cost per thousand views of an ad) to double in the next 24 months,” says Khan. “That would essentially put our growth rates at risk.”

Before that becomes a problem, Linjer will have to find new ways to address its audience. Influencer marketing is likely to play a role in this new phase, but Khan isn’t ready to share the details yet.

He thinks there are ample opportunities in the direct-to-consumer ecommerce model, if done right.

Shoes, for example, are tricky, he says. That’s because the operational costs of returns and exchanges are especially high. A shoe, unlike a bag, has to fit perfectly.

Khan’s advice: “If you do something you’re passionate about – you’ll figure it out. Do some basic back of the envelope math – and figure out if the business model fits your needs. Things to check for: Am I passionate about this? Do the economics work? Do I need outside financing, if yes, am I comfortable running a VC-funded startup and what comes with it?”

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A customer at a HyperCity cashier-less store in Hyderabad uses the Perpule app to scan the barcode on a packet of carrots. Photo credit: Perpule.

Amazon got attention around the world when it opened a cashier-less store in Seattle at the end of last year. But while the automated Amazon Go grocery store is still in trial mode, variations on the theme are springing up elsewhere.

A few months ago, Chinese startup Bingobox opened small, staffless convenience stores in Shanghai. Here, a customer scans a QR code to open the door and walk in, scans items to buy, and pays up on the app. A camera checks to make sure only what’s paid for is taken out. A customer support video line is available to sort out problems.

This is now happening on a larger scale in India. One of the leading supermarket chains, HyperCity, has opened up two cashier-less stores in the southern tech hub of Hyderabad.

They’re not fully unmanned. Some customer support and fulfilment staff are on the premises, but there are no cashiers.

The simplicity of Perpule makes it more feasible for deployment in a range of brick-and-mortar stores – and not just a few hi-tech stores like Amazon Go.

HyperCity has been trialing a self-checkout app built by Bangalore-based startup Perpule for several months now in some of its stores in Indian cities. Self-checkout is available for its customers if they choose to use the app.

Two fully cashier-less stores powered by Perpule, which opened a few weeks back, take this a step forward. These new stores are in the two Hyderabad campuses of IT giant Infosys. Being new helps the store use the cashier-less system from the outset instead of trying to integrate it with legacy systems and processes. Also, the tech-savvy crowd in the Infosys campus helps with adoption of a mobile app for offline shopping.

Here’s how it works:

• Users scan the barcode of any item to see the product details, price, and deals.
• The app supports multiple digital payment gateways and cards for a self-checkout. At the end, the app generates an invoice.
• To verify payment, a weighing machine coupled with a camera and computer vision can check up to five items. For larger carts, a human doorman does the verification.

The 3,000-square-foot cashier-less stores are about one-tenth the size of a typical HyperCity supermarket store. It mostly stocks groceries, but there are ongoing “splash sales” of apparel and convenience products.

Adoption and monetization challenges

I met Perpule co-founder Abhinav Pathak at the beginning of this year when the bootstrapped startup was on the verge of raising US$650,000 from Kstart, the seed funding arm of Indian VC firm Kalaari Capital. Pathak graduated from the National Institute of Technology, Suratkal, and worked for Goldman Sachs in the US, where he saved up money to become an entrepreneur.

His two co-founders, Saketh BSV, and Yogesh Ghaturle, are graduates of the Indian Institute of Technology, Madras. Saketh worked with Pathak at Goldman Sachs, while Ghaturle was with the Samsung Research Institute in Bangalore.

Tech for offline retail, which still accounts for over 95 percent of retail sales in India despite the rapid growth of ecommerce in recent years, seemed like a huge opportunity to them. But they soon ran into challenges of execution on the ground and monetization.

Ecommerce share of retail sales in India. Source: Statista.

HyperCity CEO Ramesh Menon was one of the first to like the Perpule pitch, which pointed out the analytics and customer engagement possibilities of the app, beyond doing away with queues at cashier counters. Even then, Pathak tells me, integrating the app to legacy billing and inventory systems was a headache. And the stores wanted to see enough traction and impact before they would be willing to pay commission.

See: Here’s why Alibaba is expanding its offline footprint

What clicked for Perpule was offering it as a replacement for PoS (point-of-sale) systems stores were using. This involved building a full checkout system integrated with inventory management – that is, keeping track of products going out, replacements, and new products.

“Now they’re open to paying for Perpule, because they were anyway paying the PoS guys,” says Pathak, adding that the startup currently has a monthly revenue of US$30,000 on a GMV around US$300,000. Apart from HyperCity, Perpule has onboarded other large retail chains like More, Spar, and Big Bazaar.

The HyperCity cashier-less stores are seeing a revenue per square foot twice as much as regular stores, and a daily footfall of over 500, adds Pathak.

Online-to-offline

The Perpule app uses GPS which can show a user the nearest store that supports it. The app also has a feature that lets users place online orders and pick them up later.

Image credit: Perpule.

The fully cashier-less HyperCity stores in Hyderabad could be the next inflection point. Two more such stores are opening shortly in Cyberabad – the tech outpost of Hyderabad. One of them will be in the sprawling campus of Microsoft.

The value proposition here is that it does away with the substantial IT capex and opex involved with opening and running a brick-and-mortar retail store. With Perpule taking care of inventory, payments, and checkout, there’s no need for servers, UPS systems, billing counter terminals, and the expensive software required for traditional store IT. And it slashes the time taken to launch a large store. Pathak calls it a form of SaaS – “store-as-a-service.”

Another development is the entry of Perpule into apparel retail chains Pantaloon and Shoppers Stop. This requires a shift in orientation. “The fundamental difference [as compared to convenience and grocery stores] is that window shopping is 100x in an apparel store,” explains Pathak.

So Perpule is focusing on capturing the digital footprint of the customer in an apparel store – where she spends time, what she looks at, how much time she spend – and not just the self-checkout. It uses geomagnetic tech – previously mapped points in the store are matched with location tracking by magnetic sensors in the customer’s phone. This overcomes the problem of GPS not working indoors.

It is also trying to gamify this. For example, Perpule prompts you to scan the barcodes of clothes you try out – even if you don’t buy them. For every 10 items you scan, you get a special discount voucher. This has a twin benefit. It incentivizes you to try out more clothes which increases the chances of a buy. It also tells the store what attracts you – and what to recommend to you later with offers.

See: As ecommerce steamrolls retail, China’s brick-and-mortar stores fight back with tech

Perpule is a much lighter variation of Amazon Go. The ecommerce giant’s trial offline store is fully automated – that is, it uses computer vision to track a customer from the time she enters the store to picking things off the shelves and the final checkout and verification.

Pathak feels the simplicity of Perpule makes it far more feasible for deployment in a whole range of brick-and-mortar stores – and not just a few hi-tech stores like Amazon Go. The fact that Amazon had to put off its public launch and downplay initial media hype on plans to open 2,000 such stores supports Pathak’s view, at least for now if not “the store of the future.”

I ask him what will happen once he proves the efficacy of his self-checkout, cashier-less model. What will stop the likes of Amazon or Alibaba-backed Paytm to partner offline stores in India with something similar. The recent investment by Amazon India for a five percent stake in Shoppers Stop and plans for “experience centers” featuring Amazon products shows the interest in offline-to-online plays.

Pathak is sanguine about the prospects. “If a tech giant likes what we’re doing, they might as well acquire us instead of building it from scratch and onboarding big offline retailers. So that’s an exit possibility for us,” he quips tongue-in-cheek.

Indian brick-and-mortar retail giants like the Future Group, which recently acquired the HyperCity chain for US$101 million, have been lobbying with the government to curb the heavy discounting on Amazon and other ecommerce marketplaces. “They don’t like Amazon,” says Pathak. “We’re with the offline retailers and they are with us.”

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