SINGAPORE (Aug 26): In just over a year after its listing on the Singapore Exchange’s Catalist board, e-commerce company Synagie Corp has grown significantly by expanding its footprint across several Southeast Asian countries and inking deals with MNCs.

The company launched its IPO last August, selling 43 million shares at 27 cents each. However, the share price very gradually sank to as low as 5.5 cents on April 2. Yet, there are signs that interest in this counter has been rekindled.

On April 4, Synagie’s share price surged 40%, prompting a query from SGX. Executive director and CEO Clement Lee says he is unable to give an exact reason for the fluctuation, but he believes it is because the company “has a very new model” that takes investors more time to understand and appreciate. “So, initially, people wait and see, and then, suddenly, one day, the market wakes up because they realise that everybody’s buying things online. And, I suppose, that just sparked the interest,” Lee tells The Edge Singapore in an interview.

Year to date, Synagie’s shares have increased 5.63%, closing at 17 cents on Aug 21 — still 37% below the IPO price of 27 cents. At this level, the company is valued at $44.9 million.

As an end-to-end e-commerce solutions provider, Synagie caters for businesses selling both on and offline through its cloud platform. The company functions like an integrated “back office” for users to manage or automate their entire value chain, ranging from orders and inventory management to last-mile delivery.

Lee adds that the company even looks after all the needs of its customers, from taking photographs and cataloguing products to writing their content specifications. It also helps brands reach a larger audience by selling in online marketplaces such as Lazada, Qoo10 and Shopee.

When Lee co-founded the company in 2015 with his sister Zanetta and their partner Olive Tai, they faced many challenges, such as inventory management across the various channels. To overcome this, the company created its own cloud software and algorithmic model that is able to help its customers keep close tabs on what is happening across the entire chain. And while one may think that such functions are done in-house, Lee says customers prefer to outsource them to service providers such as Synagie. “They prefer not to get involved in the nitty-gritty of logistics and warehousing.”

The company seems to be on the right track. For the six months ended June 30, revenue increased 31% y-o-y to $9 million, from $6.9 million in the year-earlier period. The higher revenue was attributed to a bigger customer base in Singapore. Also, during the period, Synagie grew strongly, by 375% in Malaysia, albeit from a small base.

The e-commerce segment saw the most growth: 38.4% y-o-y to $6.8 million. Meanwhile, the e-logistics segment grew 16.9% y-o-y to $400,000, from 1HFY2018’s $300,000. Synagie’s insurtech business increased 11.2% y-o-y to $1.8 million.

However, the growth came with higher costs as well. In 1HFY2019, Synagie’s distribution costs increased 69.9% y-o-y to $508,000 and administration costs rose 26.5% y-o-y to $5.8 million. The company also booked higher depreciation charges. Overall, in the first six months of the year, net loss widened 9% y-o-y to $3.7 million. Still, Lee says he is “encouraged by the continued momentum from the strong growth across all business channels”.

Tech-based growth

To be sure, there are many e-commerce platforms around. Synagie is betting that it can compete by adding other complementary products and services. For example, the company has created a mobile app called Kiasu.me, selling users “pay-as-you-use” lifestyle insurance policies for threats to digital purchases. Services offered include digital distribution, claims automation and pricing of insurance products. It also offers a 12-month mobile-phone screen damage protection through its Device Shield plan.

According to Lee, the app operates on demand and charges lower premiums than traditional insurance policies. “Traditional insurance policies are probably two sizes bigger than they should be. We provide custom-fit protection at an affordable monthly price,” he says. Insurance and risk management company Jardine Lloyd Thompson notes in a February 2019 report that the insurtech industry has a “positive growth outlook” for 2019, amid rising incomes and increasing awareness of insurance products. Lee intends to ride this wave by expanding the reach of Kiasu.me to other Southeast Asian markets.

Synagie is also using technology to help Asean companies enter the China market through a collaboration with Weimob, a Hong Kong Mainboard-listed company that offers cloud-based commerce and marketing services, particularly through China’s WeChat ecosystem. By tying up with Weimob, Synagie’s customers can set up shop in the sprawling WeChat ecosystem by leveraging its partner’s expertise and domain.

Synagie has been appointed by the Malaysia Digital Economy Corporation as a cross-border e-commerce initiative partner for its seller adoption programme under the National eCommerce Strategic Roadmap. This roadmap is aimed at increasing e-commerce adoption among Malaysian businesses. MDEC has ambitions to double Malaysia’s e-commerce market to reach RM211 billion ($70 billion) in GDP contributions by 2020. The programme, which started at end-June, will be executed through Synagie’s wholly-owned subsidiary, Synagie Sdn Bhd. Lee says it is a win-win situation, as while the businesses will be able to reach markets through Synagie’s network, the company will also have a stronger foothold in Malaysia.

Synagie has also been deepening its e-logistics capabilities and has tied up with logistics and delivery company Singapore Post to provide on-demand warehouse solutions to small and medium-sized enterprises in Southeast Asia. This will allow the SMEs to capitalise on the strong growth in e-commerce order volumes while benefiting from the operational efficiency of SingPost’s logistics capabilities. Lee says SMEs can save on the heavy upfront capital expenditure needed to set up and operate a warehouse through Synagie’s platform.

More collaborations

Besides deepening its tech capabilities, Synagie is also partnering with other organisations. On Aug 20, it announced that it would be providing brand store management services across Southeast Asia for online store giant Lazada. This is through its wholly-owned subsidiary, BTFL, which has signed a memorandum of understanding with Lazada. Under this MOU, Synagie will become a regional Lazada partner and provide services such as management, marketing and operations for selected “brand stores”. A brand store refers to the online avenue that companies such as Watsons operate on the Lazada platform.

With more than 400,000 sellers and brands offering over 300 million stock-keeping units on Lazada, Synagie’s Tai, who is also an executive director, believes the partnership will help Synagie and its partners generate faster growth and gain deeper and wider market access. “We believe [this] will be a game changer for Southeast Asia’s e-commerce,” she says.

Earlier this month, the company signed an MOU with the Singapore-based subsidiary of Henkel, a German consumer products maker, to manage and expand its on and offline beauty care brands in Singapore, Malaysia, Vietnam, the Philippines and Indonesia. Previously, Synagie had also signed deals with luggage company Samsonite International and sports company Amer Sports to support their e-commerce efforts in Malaysia.

The company’s partnerships have also brought it to other parts of Southeast Asia such as Malaysia and Vietnam. Lee says Synagie’s entry into these markets took place seamlessly because of its customers’ interest and presence in those markets.

Lee’s game plan is to continue collaborating with heavyweight brands and expanding the reach of Synagie’s platform to other brands and logistics providers. He will be focusing very much on SMEs too. The bigger players have their own expertise, which SMEs do not, so they will better appreciate the services that the likes of Synagie can provide. “Cross-border is another area, and our main focus will be both intra-Southeast Asia and from Southeast Asia to China,” says Lee.

After its recent expansion into Vietnam and the Philippines in 1HFY2019, Synagie is revving to move into Thailand in 2HFY2019. It has set its sights on Indonesia for next year.

This story appears in The Edge Singapore (Issue 896, week of Aug 26) which is on sale now. Subscribe here