This Former Cellphone Accessories Salesman Founded A Tech Startup That Just Scored P600 Million in Funding
The Bookman is a nondescript beige building along Quezon Avenue, near the corner of Banawe Street in Quezon City. It’s not exactly the gleaming and glamorous highrise that a promising tech startup would call home, but climb up a short flight of stairs and go through double glass doors and you’ll enter the main office of Great Deals Inc.
The company—an end-to-end ecommerce enabler, solutions provider and online distributor—was in the news recently for having raised $12 million (about P612 million) in its initial funding round from Navegar, a private equity firm. It’s a significant sum for a company that’s been quietly building its presence in the highly competitive world of ecommerce since it was founded in 2014.
At first glance, the office is ordinary-looking, with about 20 or so workers hunched over their laptops on a desk under fluorescent lights. The muffled sounds of the traffic outside filter through the slatted windows. There’s a pathway on the right, however, which leads down to a slightly bigger office area that company founder and CEO Steve Sy says many of his staff recently vacated.
Through a closed door is an even bigger space, about the size of a high school gymnasium, which construction workers are busy turning into what will soon become the main common work room for the startup’s 200 or so employees. Sy points to conference rooms and work nooks in various stages of completion.
But the tour isn’t over. Further down the space, behind a tarp divider that filters out much of the dust and some of the noise from the contruction work, is where most of the Great Deals workforce is. It’s a barebones set-up, for now: long tables where technicians, content creators, graphic artists, and other workers (average age: 23 years old) sit elbow-to-elbow facing their laptops. At the end of the long hallway is a room with a mini theater, which Sy imagines will become the venue for the company’s town halls. Right now it’s standing in as a studio, where photographers are busy shooting the merchandise that will eventually make their way up to online marketplaces. But after construction is done in about three to four months, Great Deals’ employees can look forward to working in a real office enviroment closer to what they imagine most succesful tech startups look like.
“We started building all of this on faith, before we got the funding from Navegar,” Sy says proudly. Even then the founder was confident that the business he started from scratch was going to fly.
Forty-five-year-old Steve Sy founded Great Deals in 2014
Steve Sy: entrepreneur from the get-go
Sy says he always knew he was going to be an entrepreneur. In first grade, he remembers buying stickers outside the school for about P5, cut them out and sell them indivually to his classmates, tacking on an additional P1 on the price for each one.
Later on, in De La Salle University, where he studied business management, Sy sold watches and shirts to wholesalers in the provinces.
“My family used to sell in Divisoria, so we had access to a lot of goods,” he says. “So when somebody asked if I could supply them with watches and shirts, after class, I would go to Divisoria and Quiapo and get the stuff, and bring it (to them).”
Sy worked for years as an insurance agent, until he opened his own company called Young Taipan Financial Insurance Agency. He later sold it to a friend in 2010.
“My heart just wasn’t in it anymore,” he says simply.
Sy’s next venture was to buy and sell mobile phone accessories in 2010. He opened up shops in Makati, and whatever leftover items he couldn’t sell in his physical stores, he started selling online.
“That’s when I realized selling online is a different kind of animal,” he says.
Great Deals currrently has a manpower count of about 200, but plans to double it as the business grows
Online sale revolution
On November 11, 2014, during the annual 11-11 sale of giant ecommerce sites like Lazada, Sy sold a few thousand power banks in his warehouse. By the end of the online sale revolution, every single one of his merchandise was sold.
The episode opened Sy’s eyes to the near-limitless possibilities of selling online.
But ecommerce isn’t just one thing: there are many different aspects of it that people can get into—selling, distribution, payments, delivery and logistics, and many others. It took an encounter with a fellow businessman in a bazaar for Sy to zero in on his business model.
“In January 2015, I noticed a neighboring stall called Giga Virgin Coconut Oil experiencing brisk sales,” he says. “I went up to the owner and asked him if I could be his franchisee. But I told him I wanted to be an e-franchisee. I wasn’t going to set-up a physical store but an online store.”
And thus were the seeds of the Great Deals business model were sown. Starting with virgin coconut oil, Sy soon started signing up other brands and convinced them to let him sell their products and merchandise on existing online marketplaces like Lazada, Zalora, and Shoppee. The company essentially handles the brands' online selling business—everything from digital content, web design, analytics, chat support, warehousing and fulfillment, etc. Great Deals' client list now includes such multinational companies like Nestle, Unilever, Samsonite, L’Oreal, Reebok, Abbott, and many others.
“We’re basically distributors and retailers (for these companies and brands),” Sy explains. “You look at Lazada and Shoppee, those are basically the malls. Inside, there are a lot of boutiques and shops. We operate those shops.
“As a distributor, we get both: (they pay us a) fixed cost, and we get a percentage of sales,” he adds.
Great Deals is an end-to-end ecommerce enabler, solutions provider and online distributor
The company is currently renovating its office space in Quezon City that will soon house its growing workforce
How Great Deals does it
Great Deals banks on its expertise selling online, which, as Sy pointed out, is a completely different animal than the traditional way of selling offline, or in brick-and-mortar stores. One of the founder’s favorite examples is shoe brand CLN, which had been selling in Lazada for about two years before it hired the services of Great Deals.
“After just five months with us, they became the number two fashion brand (in Lazada),” he says. “What did we do? I’ve always said content is key. We changed all of their online images, made them all mobile-ready. For a client like L’Oreal, we did bundling.” The term refers to grouping and selling products together in a bundle.
“The average basket size of a customer can grow 30 to 50 percent immediately if we do bundling,” he says.
Sy also mentions what he calls basic ecommerce “operations” essential for a brand’s growth—fulfilling orders beyond customer expectations, 24/7 chat support for customer inquiries, performance marketing on social media platforms like Facebook to drive traffic, and many others.
Sy tours the writer around the Great Deals office in the Bookman building in Quezon City
The business is growing fast, and having just closed a pretty healthy funding round, it seems Sy and the Great Deals team is on a pretty good perch upon which to leapfrog into the next phase of its operation. When asked if the business is at all profitable—a sore topic that many other startup founders would prefer to gloss over—Sy doesn’t even flinch.
“Yes it is,” he says. “For the last four years that I’ve been bootstrapping our company, we’re positive cash flow and we have net income. I think that’s what makes us different. When I started Great Deals, it was built to last, not built to sell. Iba yung mindset.
“All of our decisions have been for sustainability,” he adds.
From a 160-square meter office not far from where they are now, Great Deals will soon occupy nearly 3,000 square meters that will house what will soon be double their manpower count of 200. The $12 million dollar capital infusion will come in handy for that, for sure, but Sy says some of it is earmarked for other othings, including adding a bunch of new warehouses. The company currently has two in Bulacan with one more scheduled to open in the same province.
“We’re planning to open also in Cebu and Davao this year,” Sy says. “That’s one, and then we will also use the money for tech research and development, IT infrastructure, back-end support, like SAP, which are quite expensive, and people development.
“We need that because we plan to triple our sales,” Sy adds with a healthy laugh.