Social commerce sellers can be as small as one person selling products to their followers on social media platforms like Instagram or Facebook. Many don’t have a web storefront and instead rely on private messages to take orders and payments. This might not seem like enough to move significant amounts of product, but in many Southeast Asian markets, social commerce sellers are making up an increasingly large portion of e-commerce. In fact, according to a recent Bain report, social commerce accounted for 65% of Vietnam’s $22 billion online retail economy last year.
Despite their combined retailing power, many social commerce sellers cannot buy in bulk directly from brands. Instead, they rely on wholesale aggregators, but that means they may not be able to trace the provenance of their products, said Aemi co-founder and CEO Kim Vu.
Aemi was created with CTO Hieu Nguyen to help solve social commerce seller’s supply chain issues. By working with hundreds of social commerce sellers, it is able to buy directly from brands. Because Aemi works with hundreds of sellers, it has the purchasing power to negotiate lower wholesale prices than individual sellers, while at the same time guaranteeing the provenance of products.
Currently focused on beauty and wellness, the startup’s ultimate goal is to expand into more verticals and create a suite of backend software that will help sellers manage inventory, ordering and payment.
The startup has raised $2 million in funding from Alpha JWC Ventures and January Capital, with participation from Venturra Discovery, FEBE Ventures and angel investors. Funding is being used for hiring, especially for product engineers to build software for Aemi’s micro-merchants.
The social commerce sellers Aemi works with are typically micro-influencers, with follower counts of about 10,000 to 30,000. Vu told TechCrunch one of the reasons she wanted to start Aemi was because she’s a social commerce enthusiast.
“I love buying on social commerce, Facebook stores, Instagram shops and the like, because I trust the person, so I trust that they have done a really good job at breaking down the products and reviews from a content perspective,” said Vu. At the same time, when she had questions about a product’s authenticity and source, she found that many sellers could not assure the products were genuine because they didn’t have the selling volume to develop a close relationship with brands and instead relied on wholesale aggregators.
“I see a huge demand from a consumer standpoint, but also from a supply perspective,” said Vu. “Not too much effort has been put into growing supply chain support for this sector.”
Before founding Aemi, Vu spend six years as a management consultant for Bain, where she specialized in retail. This included working with global brands to grow their distribution in emerging markets. She found that they approached branding and distribution in a very traditional way, missing the growing dominance of social commerce.
“A lot of effort is being put into high visibility, like physical stores, but people have a growing affinity for buying social commerce, buying items online and getting it delivered to their house,” Vu said. “From a supply chain perspective, not too much has been built in.”
As a result, many social commerce sellers not only have unreliable supply chains but also don’t have the software and marketing support they need to build their businesses.
Aemi also offers marketing support, which means helping sellers create memorable content. Many have created a niche for themselves recommending certain types of products, like skin care or beauty products, but don’t have the social networking clout to gain brand partnerships. Aemi helps by providing professional product photos, product descriptions and information to sellers. It is also planning to build software, like drag-and-drop storefronts, that will help sellers manage sales and inventory across multiple social media platforms.
“The people that we are catering towards are what would be classified by brands as long tail distribution,” said Vu, “but they make up the majority of volume on social commerce” in Vietnam.
Source: Tech Crunch feed