[LAUNCHPAD] Gates2Asia Pitches a Groupon for SME Businesses

Founded in March last year, Gates2Asia (G2A) is a B2B cooperative buying sites for international based SME’s to buy directly from low cost Asian suppliers like China. Essentially it is like a Groupon for SMEs, meaning when teaming up with other SMEs to buy the same things in bulk it leads to lower costs and greater competitiveness.

Although the site is still in beta and will officially launch in August this year, Founder and CEO Kenneth Chan has big hopes for G2A. Self-funded with a team of 5, Chan wants to help the little SME guy be as competitive as their larger competitors that have sophisticated supply chains and relationships to low cost Asian suppliers. You could argue that this is what Jack Ma did with Alibaba, but businesses like G2A have mixed in cooperative buying to make purchasing even cheaper. Chan says the biggest problems for international SMEs when buying from China is that they are uncomfortable with the process including language, customs, shipping, how to pay, taxes etc.

The market size is evidently big. In 2009, SME’s imported US$124 billion in goods from China alone and 80% of SME imports were from wholesalers and non-manufacturing companies. Such a big opportunity was not neglected when Japanese based Infinity Ventures and SOS Ventures, invested US$3M into OrderWithMe.com and the winner of TechCrunch Disrupt Beijing in 2011.

The process is fairly simple. SMEs can join G2A, state what they want to buy and the quantities they want. After sourcing and negotiating with suppliers they post the details on a board. Other SME buyers can join the co-operative and when there is enough, the purchase order is made. Of course everyone saves money because the total order is large.

SMEs can rate their experience with the supplier to warn or encourage others. The rating system is also designed to promote good suppliers or other SMEs and remove the bad ones. Such transparency mechanisms are aimed at keeping everyone honest and efficient. Alibaba has been infamously found to be promoting shady suppliers because they simply paid for it. G2A does not charge any fees except for a cut of the transaction value to keep the platform performance based.

To test the business model G2A will start with computer products.