How a Fin-tech Startup Is Improving E-commerce In a 3rd World Country
By: Perry Fried
Earlier this week, I had the pleasure of sitting down for coffee with Ofri Kadosh, the co-founder and CEO of the Philippines based startup Payo. Payo is a Cash on Delivery (COD) gateway for e-commerce platforms. I was meeting with Ofri to discuss entrepreneurship in Tel Aviv and learn about his start-up. The first thing I asked Ofri was “what is an interesting fact about yourself?” to which he replied…
- “I don’t know, I feel like I’m a pretty boring guy”
However, after speaking with him, I learned that he and his startup are not boring at all.
In 2011, after concluding four years of IDF service, Ofri began working as a marketing manager, and he did business development for a business consultant agency, while he was studying at the Rupin Business School. While at school, he became extremely fascinated in e-commerce. In 2012, Ofri and his business partner Liron Gross, who also worked at the consulting agency, came up with the idea of building an e-commerce platform and selling to the U.S. market. They researched the most popular key words in searches on Amazon, Ebay, and Google, and learned that many of the searches pertained to Christianity. Ofri shared…
- “There is no business like God’s business, and we were in the Holy Land. We began selling rocks found near the Nativity Cave with crosses carved into them, and we branded them as “Nativity Stones”.”
Ofri and Liron started selling their product in the United States, but they quickly learned that advertising and marketing efforts were extremely expensive in the U.S. market. They also became aware that they had a lot of traffic from the Philippines, where 80% of the population is Catholic; The media space was very cheap in the Philippians, because there was no e-commerce competition. Ofri and Liron had discovered a Blue Ocean.
“Nativity Stones” was receiving over 100 orders a day from the Philippine market, but they could not fulfill the orders because of the e-commerce system that was in place. Ofri explained…
- “E-comerce is growing in developing markets such as the Philippines, but nobody knows how to pay since only 7% of the population holds credit cards. This means that most transactions, including e-commerce transactions, are done with cash. As a result, 25%-30% of e-commerce transactions are never completed, because people can decline orders on their doorstep, and fraud occurs very often. There are also many last minute delivery changes and delays, which make merchants bleed”
Improving the Philippines COD system was the inspiration behind Payo. Payo is a gateway that manages and simplifies COD transactions for merchants. The merchants integrate Payo to their online shopping carts. Payo then processes sales, analyzes the client using courier optimization algorithms, coordinates the pickup, tracks the orders, and communicates with the merchants’ clients. Payo also monitors money collection and remits the merchants with their earnings.
Payo’s services have proven to be very successful; In the first six months of the company’s existence, it has secured deals with 300 merchants. These merchants now have a cancellation rate of only 7% (compared to the 25%-30% rate they were experiencing before). The startup is currently responsible for 20,000 e-commerce transactions per month in the Philippines. Ofri hopes to grow this number to 200,000. According to Ofri…
- “We understand that the Philippians is a hard market to grow e-commerce, but there is a lot of room for opportunity.”
To conclude my interview with Ofri, I asked him what advice he would give to aspiring entrepreneurs, to which he answered…
- “To be a successful entrepreneur, you definitely need luck on your side. I think it’s probably 60% luck and 40% skill. But you also must be willing to challenge yourself and accept the fact that you’re going to make mistakes; making mistakes is just part of the process. What’s the worst that’s going to happen if you fail? The sky isn’t going to fall.”
Ofri admitted that he has made many blunders in the process of growing Payo; however, he has learned what not to do from these experiences.
Check out Payo’s website https://payo.asia/
Follow Tech it Forward on Facebook for more articles like this one!
