SINGAPORE (May 13): If there is one thing that internet and app-oriented start-ups track closely regardless of the industry they operate in, it is the conversion rate. This metric measures how much user traffic is translated into a desired action, for instance, sales. The aim, obviously, is to have a high conversion rate in order to boost the chances of success.
Recommend Group, which operates platform apps in three Southeast Asian markets, has found a way to improve the conversion rate. The home maintenance and improvement services platform has run trials in Indonesia with Grab, a much bigger regional platform with services ranging from ride-hailing to food delivery.
What Recommend did was to temporarily integrate its offerings with the Grab app in Indonesia. This enabled Indonesia-based Grab users to procure services, such as air-conditioner servicing, plumbing, renovation works, interior design, architecture and construction, from the service providers also on the platform. These transactions were captured and reflected on Recommend’s back end.
The outcome was incredible. “In the space of six weeks, [our] conversions increased by 800%. So, the proof was there, [as] the [trial tie-up] showed that this was something viable,” Alex Tan, co-founder of Recommend, tells The Edge Singapore in an interview.
To be sure, the temporary integration was possible only because of Recommend’s participation in Grab Ventures Velocity, an accelerator programme initiated by Grab. Recommend and four other start-ups were shortlisted from more than 500 other applicants. Besides Recommend, the other four short-listed start-ups were home-cleaning services provider Helpling, education platform Tueetor, online ticketing service provider BookMyShow and barber-and salon-booking service provider Minutes. Helpling and Tueetor are locally based, while BookMyShow and Minutes are based in Indonesia.
Grab Ventures Velocity’s aim is to spur the scale-up of participating companies through access to the resources, capabilities and networks of Grab and its programme partners. Throughout the accelerator programme, Recommend was tested on the viability of its offerings to complement Grab’s suite of services, says Tan. The other four start-ups were also subject to the same test.
“Grab wanted to see whether its users were interested in these services,” says Lua Jes Min, Tan’s co-founder at Recommend, at the same interview. Tan adds that “it is Grab’s intention to partner with other start-ups to complement [its app] and align with its objective to be a super-app. We already know it is in transport, food delivery and so on. But there are many other areas in which to increase the usage of its app.”
The trial tie-up, which lasted six weeks, has ended. Recommend is now trying to formalise a permanent partnership with Grab. “We are working towards signing a commercial agreement,” says Lua.
In response to queries from The Edge Singapore, Grab is careful to be discreet. It will not even state whether it is in talks with Recommend. “We are in discussions with a number of start-ups from the first intake to deepen our partnership with them. For example, we recently announced that we are launching the new tickets tile [icon] in partnership with BookMyShow, which was in the pioneer batch of Grab Ventures Velocity,” says Grab.
Regional platform
If all goes well and an agreement can be reached, the permanent integration of Recommend’s offerings with the Grab app will be rolled out in stages, says Tan. The process will start in Indonesia, followed by Malaysia and Thailand. The company’s services will be offered under the existing brand name Sejasa.com in Indonesia; Recommend.my in Malaysia; and Helpdee.com in Thailand, he adds.
“We hope [permanent integration] will allow us to be more prominently featured in the Grab app [because] the [trial tie-up] had us located in what was called the content feed. Hopefully, we will get a more prominent placement,” says Tan. “We definitely expect [user] traffic and demand [for our services] to increase significantly.”
Such a partnership between Grab and Recommend will naturally invite comparisons with Go-Jek’s Go-Clean. Similar to Grab, Go-Jek started as a ride-hailing company before expanding into other businesses and it now operates in several markets in Southeast Asia. Under Go-Clean, Go-Jek provides house-cleaning services, which are available in some of the countries in which Recommend operates. Lua acknowledges that Go-Jek offers similar services, but she points out that there are still some services that Recommend has that Go-Clean does not, such as home improvement.
Meanwhile, what will become of Recommend’s own app and website platforms? Tan says these platforms will continue to operate. “Grab essentially becomes one of our channels. It is not as if we will no longer appear anywhere else,” he says. Lua denies that the user traffic and conversion rates of Recommend’s platforms will be cannibalised by the Grab integration. “I think Grab has a different user base than ours,” she says.
Re-enter Singapore?
Recommend was founded in Malaysia in 2014 as an online solution to the fragmented home maintenance and improvement market. The founders embarked on this venture because they were trying to solve a problem they personally faced. Both Lua and Lim found it difficult to search for trusted and reliable service providers. Thus, they decided to do something about it.
Prior to Recommend, Lua was a management consultant at Bain & Co and Accenture, while Tan was a Microsoft programmer-turned-marketer. Lua’s husband and Tan were university mates in the UK. The pair met their other co-founder, Anthony Wijaya, when they were exploring ways to enter the Indonesian market. Wijaya had previously worked for Lazada and other e-commerce start-ups.
Besides convenience, Tan says Recommend wants to fulfil another objective: safety. “It can be scary when you hire people to come into your home. We also want to provide convenience [because] previously, you had to ask around. With Recommend, you can now specify what you require and the app will connect you to a suitable professional. Last, but not least, it is about transparency. There is a lot of pricing opacity and misunderstanding. We provide clear pricing,” he says.
As with any start-up, building a business is challenging. For Lua, this revolves mainly around people. How to attract the right people to expand the team? How to figure out ways to source for reliable and trustworthy service professionals to offer their services on Recommend? Finally, how to identify customers with high intent? Getting these elements right is crucial to Recommend’s business model. “Over the years, we have refined the model,” Lua says.
Now, as Recommend is about to turn five years old, the challenges have evolved. The company has more than 500,000 customers and over 40,000 service professionals across Malaysia, Indonesia and Thailand collectively. The goal is to expand further in a sustainable manner, says Lua. She admits that the company is still in the red, but reckons that it has a “clear path” to start making money. “We expect to be profitable by 2020,” she notes, adding that the company is seeking a round of fundraising to scale up.
The partnership with Grab should prove to be beneficial to Recommend. It will help the company grow its user base while spending less on marketing. “In fact, we are trying to drive down the cost of acquisition to zero as much as we can,” she says.
Beyond the three markets now, Recommend is open to moving into other emerging markets (EMs) in Southeast Asia. The company expanded to Singapore in 2017 as Recommend.sg, but shut down early this year as growth did not meet expectations. Lua does not rule out a return. “The problem was that our solution was for an EM problem, which revolves around the issues of transparency and trust. While these issues are present in Singapore, the degree is smaller. So, we decided to focus on solving an EM problem rather than in Singapore. Also, the other Southeast Asian markets are bigger,” she says.
Lua adds that Recommend is also exploring ways to optimise data collected from customers and service professionals. In particular, data such as consumer behaviour and demographics could provide insights for the company to roll out other services, such as loans and financial products. The aim is to become a “one-stop shop”, she says.
Such plans indicate that the co-founders are in it for the long haul and are not likely to sell their business anytime soon. “It depends on how good the offer really is. But I don’t think we are the kind of people who build the company and then sell it. What we really want to do is solve a market problem. There is still a lot of work for us to do. And we are not hoping to run away anytime soon,” says Lua.
