During the pandemic, almost all retailers in Asia have established an e-commerce presence and adopted digital payments. But one thing that hasn’t changed is sourcing, say the founders of Marcato Cross-Border Market. Retailers still need to travel to overseas trade shows, email new brands and fulfill orders by filling out forms and orders. Marcato It wants to change that with a cross-border marketplace that focuses on independent brands that also allows them to manage their wholesale operations in Asia in one place. The startup will launch in Hong Kong today with $5 million in seed funding led by Lightspeed, marking the company’s first investment in Hong Kong.
Marcato was founded this year by Brian Lowe and Martin Lee, who previously worked for Deliveroo and Uber respectively. The two told TechCrunch in an email that they believe there is huge potential for a B2B wholesale business model in Asia, the largest retail market in the world, and they have been inspired by the success of similar wholesale markets. They wanted to work with independent brands because many of them lacked the time, resources and knowledge to tap into the retail market in Asia.
Lu and Li said independent brands usually have to build local teams or work with traditional wholesalers to overcome cultural and language differences when selling to new markets. Just as Uber and Deliveroo digitized the transportation and food industries, Marcato is focused on digitizing the delivery of small brands to overseas retailers. Some examples of brands she works with include ceramic brands Jore Copenhagen and Ini Ceramique, natural health line Nala Care, candle studios Ambustum and Stan Editions and jewelry brand Gisel B.
For retailers, Markato provides personalized product recommendations, making it easier for them to discover new brands. It then enables them to buy at wholesale prices from European, American and Australian brands through volume aggregation. Markato offers a 60-day buy-now, pay-later option, and 90-day free returns, making it less risky for retailers to have unsold inventory and more likely to try new products. In return, brands get analytics that helps them make production and pricing decisions, while reducing customer acquisition and operating costs.
Lu and Li said Marcato is able to reduce cross-border e-commerce prices for SME buyers and sellers through integration with payment infrastructure that saves foreign exchange and other payment-related transaction costs. It is also able to secure lower cross-border rate costs for market users to reduce freight, which are further reduced through consolidated freight volumes.
Marcato now has 19 employees and has worked with 200 brands. About 80% of the brands it serves were not previously available in Asia, and 90% of them are sold exclusively through Marcato. The platform has more than 4,000 products currently listed, and plans to grow to 2,000 buyers and 2,000 brands over the next few months. Some of the retailers it currently serves include kapok, Co Ninety Select Shop, TLE Wellness Select Shop, and JIA Group.
Marcato plans to expand across the region soon, starting with Singapore. The funding will be used to hire engineering, product and business development teams, build out own technology, work on logistics infrastructure and develop its data analytics.
In a statement about the financing, Lightspeed Partner Rahul Taneja said: “We are excited to partner with Brian and Martin as they build Markato. Their vision of serving independent businesses in Asia and enabling access to the best products globally is compelling. Early progress on the platform is promising. Very encouraging and we strongly believe they are the perfect team to transform the overall retailer experience in Asia.