Carousell eyes Hong Kong, Philippines for revenue growth


Carousell eyes Hong Kong, Philippines for revenue growth

The seven-year-old startup is now valued at over US$550 million, following a deal with Naspers' OLX Group


ONLINE marketplace Carousell is looking to grow its top line in two of its overseas markets, the Philippines and Hong Kong. This will complement the seven-year-old startup's increased efforts to monetise its platform in Singapore over the past year.

However, Carousell - which also operates in Malaysia, Indonesia, Taiwan and Australia - does not have a precise timeline to hit profitability for now, its co-founder and CEO Quek Siu Rui told The Business Times.

The efforts to boost revenue come as it announced a US$56 million deal on Wednesday, with classifieds giant OLX Group taking an approximate 10 per cent stake in Carousell. This values Carousell at over US$550 million.

OLX is owned by Naspers, the South Africa-headquartered Internet company and technology investor known as an early backer of Chinese tech giant Tencent.

As part of the deal, Carousell is acquiring OLX Philippines, which the startup claims is the largest online classifieds site in the Philippines, with more than six million unique users monthly and 13 years of experience in online classifieds.

The just-over 100 employees of OLX Philippines will now be part of Carousell, said Mr Quek. "By continuing and integrating with them, we are naturally going to scale up monetisation in the Philippines," he said.

Carousell currently has three revenue streams, which it has mainly rolled out in Singapore - advertising and partnerships on its platform, where it works with brands and advertising agencies; "premium visibility" services Bumps and Spotlight, which allow sellers on its platform to increase the visibility of their listings; and Carousell Pro, a subscription-based platform where property agents and car dealers can list their offerings.

Mr Quek refers to the latter as the "verticals business". There will be "exciting" developments on this front in the coming months, he added. Carousell's top line is now "pretty evenly split" across the three streams, he said, declining to disclose specific figures. Carousell aims to boost revenue from all streams through its enlarged operations in the Philippines.

Beyond the Philippines and Singapore, Carousell will be stepping up monetisation in Hong Kong this year. "We've started in Hong Kong very recently in pushing out our advertising and premium visibility businesses. The second half of this year is when we will start to focus on the verticals business... selling packages to car dealers," he said.

Since its inception, Carousell has had more than 196 million listings and 71 million items sold on its platform. But in monetising its platform, it appears that the startup's efforts may not have always panned out as expected.

In June last year, for instance, Carousell launched CarouPay, a mobile payment service that the startup monetised by charging sellers a nominal "success fee" of 4.98 per cent of the transaction value, with an additional 50 cents charge.

But in December, Carousell dropped the success fee, no longer monetising CarouPay. When asked about the decision, Mr Quek said that the rationale was to "reduce friction" for the uptake of the service, given how a "large population" did not understand or appreciate it fully.

"We learn and iterate - that's very much the general product philosophy that we have within Carousell. So when we first launched (CarouPay), we were actually putting it out there with a set of assumptions that we had," said Mr Quek of the experience. Now, CarouPay purely serves to improve user experience, which was its key purpose from the start, he added.

When asked if Carousell has a timeline for profitability, Mr Quek said: "Building an enduring company is still an important thing but we don't have any specific timeline for profitability. Because I think the long-term potential really outweighs the need to be overly focused on near-term profitability."

Carousell will likely face higher costs in the near-term with the larger workforce in the Philippines, he acknowledged, but added that he expects revenue to grow simultaneously. When asked if the revenue growth will be sufficient to cover the increase in costs, he replied: "We are very well-capitalised for growth needs for the next couple of years."