Disruption is a heavily overused word in the startup industry and we’re trying to move past that. However, there are cases where disruption is the only way to describe what is happening. This is one of those instances.

We spoke to Wendy Chen, CEO and Founder of Omnistream, about her company and the evolving retail scene in the region. As a fast-growing retail technology company with investment under their belt, they are uniquely placed in the emerging markets in Southeast Asia to build the retail technology market in these countries.

With clients in Indonesia, Singapore, and The Philippines, Omnistream is already gaining traction in the region. However, this brings significant challenges in emerging markets that are often resistant to change and have a very challenging retail industry as well.

From fast-changing SKUs to high concentrations of stores, the region has the opportunity for growth but provides unique challenges to anyone looking to seize the opportunity.

The startups taking retail by storm

Wendy shared her thoughts on these topics and more.

pile of grocery items

Why build a startup in Southeast Asia after being part of one of the most exclusive investment companies in the world?

Because of the opportunity.

I used to be a quant trader in my previous life. When I moved back to Asia from New York a few years ago, I noticed that automated trading can only be as good as the data provided to the models and that human-machine symbiosis allows speed-dependent problems to be solved in a better way.

I felt that in Southeast Asia, the astronomical speed of development and change has essentially guaranteed that the next generation of entrepreneurs in Asia will be very different from the last. Thus, I saw an opportunity to use the same data and automation driven thinking to build an enterprise company servicing the region that I grew up in. In fact, I feel like the same data and highly automated processes can also be used to expedite profits for Asian enterprises, the same way hedge funds use data to create profit.

In this process, I fell back in love with Southeast Asia, the energy, the ‘can-do’ attitude, and the unique sense of pride in this region. Part of the motivation every morning is building a company that is truly from this region, and servicing its unique needs.

What especially makes Omnistream such an attractive proposition for a former Jane Street Capital trader?

We only win if our customers win. This guarantees a win-win for all.

I am extremely proud of our ability to execute outcomes-as-a-service model at Omnistream. Being outcome-focused allows customers to pay us based on outcomes, so for every $1 in incremental profits our customers make, we get a percentage. We only win if our customers win. This guarantees a win-win for all. I am proud of being able to offer this model because it means we’ve thoroughly tested our technology and our methods for the realities of emerging markets. This skin-in-the-game is sorely missing from the enterprise market.

There is a lot of demand for this in Southeast Asia, especially among conglomerates, who have been dealing with the legacy of large foreign consultancies/technology providers who come in and implement solutions that do not work at all in the realities of emerging markets.

We tend to service retailers who are trying to expand aggressively while slightly modifying business processes or cost structures to alter business models. Traditionally, speaking, had these retailers tried to work with traditional vendors or consultants, this type of growth would have longer payback periods with higher upfront investments. Our billing method allows retailers to move costs from CapEx to Opex (Capital Expenditure to Operating Expense) – allowing them to take more aggressive growth strategies.

We also focus on white space or the data you don’t have. In general, I believe companies spend too much time looking at the limited datasets they hold internally. To challenge existing processes or cost structures you have to think about the white space that is generally hidden in data you don’t have. This is why we place heavy emphasis on data about your operating environment, external trends, and other data sources that live outside your business. One of our best selling features is new store site selection and assortment planning for localised conditions. Whether a new store has 2-year payback or 20-year payback depends primarily on external factors.

We pride ourselves on being Asia-based and focused, so we understand how emerging markets are different. One motivator for me was always to build a world-class enterprise business out of Southeast Asia. This market is deeply underserved by global players. To do this, we are headquartered here, and we all spend most of our time in the markets we work in.

Your strategy is interesting where you build the market rather than try to gain market share? What challenges are you facing entering emerging markets?

people inside the market

The short answer is to paraphrase Clay Christensen. Incumbents tend to win established markets (where the fight is about market share). Startups need to fight in emerging spaces.

The Southeast Asia enterprise space is difficult for incumbents as operations can be challenging.

The way of working here is different from developed markets. There are two main differences.

I have experienced retailers insisting on ranging perishable SKUs with over 7000 days of supply

Firstly, retailer first margins are substantially lower in Southeast Asia driving local retailers to seek significant back margins like ranging fees, shelf space fees and fees for the right to conduct fully funded promotions. The back margins are almost always higher than front margins. This causes retailers to range some products that do not sell (I have experienced retailers insisting on ranging perishable SKUs with over 7000 days of supply) limiting space to products that do sell causing them to frequently run out of stock. This is exacerbated by a lack of processes and guidelines relating to assortment and merchandising practices, largely driven by the desire and need to drive back margins. Retailers here are happy to range new products to each category every week forcing layout changes.

Secondly, Southeast Asia retailers’ access to their own data can be a challenge. With a large portion of the retailers having very advanced systems (SAP) their abilities to access, mine and analyse the data remains limited. We frequently receive data which has missing elements and a lot of duplicates. My assumption is that this is driven by the difficulty of finding people with the right level of experience and knowledge to know what to do with this data.

Market disruption is still happening at an alarming rate

Which market in the region do you believe is the most underappreciated or underestimated in terms of investment or even recognition from the rest of the region? And why?

One obvious answer is the Philippines, with BPOs driving strong employment and differentiated consumption (partially due to the strange operating hours of BPOs). The only one that is a bit different is Myanmar due to the recent government policy changes relating to foreign direct investment in the retail space. With full ownership now permissible the market should see significant changes in the coming years. We should see more foreign retailers and a higher amount and penetration of modern trade.

What do you think are the biggest challenges facing traditional retailers in the region? Is it eCommerce or changing consumer behaviour?

The Southeast Asia retail scene is changing very quickly. A significant part of the changes is driven by easing of government regulations relating to FDI and the investments which are being made into the growth of modern retail trade made by both local and international players.

To start we must differentiate between ‘mum and pop’ shops (known as traditional trade) and multi-store ‘brick and mortar’ retailers, known as modern trade; we will call them both traditional retailers. Firstly, modern trade is taking over from mum and pop shops by providing a modern look and feel to their stores (air conditioning, good lighting), a wider variety of services (financial services, ready to make and ready to eat meals, in-store dining), as well as, greater product choice and more consistent availability.

What we are seeing is that modern trade is growing at a much faster rate compared to traditional trade, taking share away from the mum and pop shops. In saying this there are significant variations in these shares. In Singapore the share of modern trade exceeds 90%, in Malaysia, it stands at 60%, in the Philippines, it’s around 25%, and in places like Indonesia and Vietnam, it is around 15%.

What makes Southeast Asia unique is that eCommerce is maturing at the same time as modern retail, this opens the way for experimentation in business models that are naturally designed to solve cost constraints in eCommerce such as last mile logistics or via click-to-collect in convenience stores.

Southeast Asia countries are also more open to trailing new technologies and this is resulting in significant growth rates in the share of eCommerce vs traditional trade. In saying this, the reality is that the current share of eCommerce varies from less than 1% in most Southeast Asia markets to 4% in Singapore, not to mention that none of the eCommerce platforms turn a profit. The reality is that this will not increase to the levels we are seeing in China (18%) and Korea (21%) which are the two leading countries when it comes to eCommerce. The main reason for this is that the lack of penetration of modern financial services (credit cards, Alipay), with most people in Indonesia, Vietnam, and the Philippines still not having access to bank accounts. With that in mind, traditional trade is not going to be impacted by eCommerce

With all the above in mind, consistent product choice and availability will remain the greatest challenges for traditional retailers in Southeast Asia, specifically for modern trade retailing.

Which market is next on your radar and why?

Vietnam, Indonesia. These are large populations where enterprise players (modern retail) have aggressive ambitions but are struggling with profitable growth.

What advice would you give a young founder looking to build a business in the region?

The key advice I would give is to make sure that you have a unique proposition and resilient people who will fit the culture you are trying to build. There will always be lots of setbacks and the need for resilience to the ever-changing landscape will be key. Secondly, I would advise any young founders in this region to prioritise their efforts and make sure that what is promised is delivered. I frequently hear stories of up and coming startups making various promises and not delivering on them. In these markets, you might not get a second chance.


This is a new long-form interview section focused on delving deeper into industry topics and understanding the situation from a ground-up level. If you have a founder or industry expert in mind, which you believe would fit these criteria. Please drop us a message here.