After luring VC money, SE Asia’s DTC startups look to tackle customer acquisition cost

DealStreetAsia

Southeast Asia’s direct-to-consumer (DTC) market is going through a major transformation with many new labels emerging in the region. This includes names like Indonesian culinary startup Mangkokku, and Singapore-based Ox Street designing Asian-inspired streetwear for the region’s next generation of image-conscious millennials.

“The value that founders can unlock in DTC has grown smaller in the last five years,” acknowledged James Tan, managing partner at Quest Ventures. “We are very opening to meeting DTC startups in Southeast Asia, and I believe we have analysed or met every one of them. But there are not many.”

“Shein is succeeding not because of its global coverage, but because of the thousands of suppliers it has at any time for any product and the quick turnaround time and quality that these suppliers have. Southeast Asia does not have the scale of production to match,” Tan added.

“Any worthy upstart from Southeast Asia will have to solve production before competing with Shein. If any such competitor were to emerge, it would be from Vietnam, which is already the world’s third largest garment producer after China and Bangladesh,” he continued.

As consumer-facing brands, the oft-mentioned variances in cultures and living standards across Southeast Asia also come into play here, which would mean that there are more likely to be local winners rather than regional ones, said Tan. “This limits their total addressable markets.”

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