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This article first appeared in The Edge Malaysia Weekly on June 19, 2017 - June 25, 2017

THERE is a newish e-commerce player in town that is occupying an interesting niche — working with popular online influencers who have thousands of followers on social media platforms.

ModeFair, the platform, is a startup backed by Morvin Tan, the son of Berjaya group founder Tan Sri Vincent Tan.

Morvin and co-founder Polina Samoylova, who are both active social media users, launched ModeFair after observing the power social influencers wielded on consumer behavior.

“People admire the lifestyles of these influencers and want to be like them. It’s likely that people will buy things that are recommended by the people they admire, trust or support.

“With these trends in mind, we decided to design and build an e-commerce platform that connects brands with social influencers to sell curated items online,” Morvin says in an email interview.

To be sure, ModeFair’s proposition is not new or unique. Other e-commerce platforms, such as Shopee, too have found ways to integrate social influencers in a bid to boost brand visibility and drive sales. More recently, Amazon was reported to be beta testing an “Influencer Programme” to integrate social influencers with the e-commerce giant.

Morvin adds that brands have started picking up on this trend and are always looking for ways to engage with social influencers to increase brand exposure. He cites a recent online study that found that 71% of shoppers refer to social media platforms before making a purchase decision.

ModeFair’s day-to-day operations are spearheaded by CEO Tang Siew Wai, a software engineer by training who has extensive technology and e-commerce experience.

According to Tang, ModeFair has seen encouraging growth since its launch on Feb 17. It started with 20 brands and about 15 social influencers and has since worked with over 120 brands on various marketing campaigns and activated over 70 social influencers.

Most of ModeFair’s influencers are lifestyle bloggers or Insta-famous people. There are also some local actors and celebrities. A big name influencer on the platform is Amber Chia.

Interestingly, Morvin’s sisters — Chryseis and Chrystal — are also social influencers on ModeFair’s platform.

Initially, it was very tough to persuade both brands and influencers to join the startup, Tang admits.

“It’s a chicken-and-egg situation. It was really tough to get the first few brands onboard. Once we got the first 10, it got better.

“But then, it was tough to bring in the influencers because they would say, ‘what brands do you have?’” Tang recalls.

 

How ModeFair plans to make money and compete

ModeFair has two main revenue streams. First, it charges brand partners a campaign management fee. This is primarily for access to the social influencers on ModeFair and to dispatch sample products to influencers who want to participate in a campaign.

The second revenue stream is e-commerce commissions. Brands agree to share a certain variable margin with ModeFair for all purchases that come through the platform. ModeFair, in turn, shares part of that margin with the social influencers who originated the sale.

The other thing it does for brands is that it not only sends on orders to brands but also takes care of the fulfilment by working with three courier partners.

ModeFair has secured an interesting collaboration with influencer Asyalliee Ahmad (@asyalliee), who has 1.1 million followers on Instagram. Asyalliee is exclusively selling her own range of headscarves on ModeFair. According to Tang, five out of eight headscarf designs sold out shortly after the launch.

Morvin concedes that e-commerce is an intensely competitive industry, but also one that presents the most opportunities and growth.

“We don’t intend to compete head-to-head with the existing big players. From my understanding, most of these players pay to acquire traffic (or even lose money to secure sales) and we don’t think this move is sustainable in the long run,” he says.

Tang points out that ModeFair is competing by anchoring itself to a strong technology platform that fully integrates all its systems, namely its campaign management platform, mobile app, merchant dashboard and e-commerce site.

It also hopes to forge a competitive edge by providing a cost-effective and hassle-free platform for both brands and social influencers to use.

Morvin adds that Malaysia is definitely a good market for a business model like ModeFair, given the country’s high social media usage and internet penetration.

There are an estimated 18 million active social media users in Malaysia, of whom 6.5 million are on Instagram. Consumer spending on e-commerce is still a very small proportion of total retail spending, although this is projected to grow in the next few years.

“The ecosystem of e-commerce plus social influencers is certainly sustainable, and may grow larger over time,” Morvin says.

ModeFair’s product categories include fashion, accessories, food, lifestyle, beauty and grooming. It also offers experiences such as dining and spa and wellness.

Predictably, popular and fast-moving products on ModeFair tend to be fashion apparel and accessories.

 

Of what use are influencers?

The use and usefulness of social media influencers have been the subject of some debate of late. Critics say they are just the fad of the moment and have been ruined by those who function as walking endorsement boards for just about anything. Then, there is always the lingering question of fake followers versus real engagement with online audiences.

Sure, Tang does not deny that in the wide world of social media, there are invariably influencers or celebrities who buy followers and like to bulk up the size of their purported social media following.

“You can buy a lot of followers and fans. But over time, you cannot keep buying likes. You can tell, for example, that some may have hundreds of thousands of followers but only a few likes per post. Maybe they bought fans before.

“What spoils the industry, I believe, is fake reviews. I do see that this thing will be sustainable. Authenticity is definitely the way to go.”

ModeFair has two main criteria in deciding whether to work with a social influencer on its platform.

Firstly, it looks at engagement levels between a social influencer and his or her followers.

“The followers and likes are all in the thousands. We always look at engagement first, if he or she is able to deliver a few thousand likes,” Tang says.

Next, ModeFair evaluates a particular social influencer’s style to see if it can indeed connect them with the brands that they are planning to bring on the platform.

Tang seems content for ModeFair to occupy its niche in e-commerce and is not rushing to add on more brands and items for the sake of doing so.

“We will actively hunt for good brands but we will not simply take in brands. We are not like a marketplace. We want nice items that we know influencers will like.”

Tang declines to disclose the amount of seed investment that went into starting ModeFair.

He would only say that the bulk of the investment went into developing a solid technology platform to reduce manual processes and streamline operations. It can also help make the business very scalable.

Once ModeFair is reasonably established in Malaysia, the startup could expand regionally to markets like Singapore, Indonesia and Thailand that have very similar levels of social media usage.

“It’s a natural network effect. Brands attract influencers, influencers attract shoppers. More shoppers, you can bring in more brands. The whole thing just works!” Tang says.

 

 

How ModeFair works

In a nutshell, ModeFair serves both the brands wanting to engage with social influencers for campaigns as well as social influencers wanting to monetise part of their engagements online.

On the brand side, ModeFair helps craft social media campaigns and connects them with social influencers who are already on the platform.

Brands can choose whether they want a campaign to run on Facebook or Instagram.

Campaigns can be hosted for any number of days or weeks, depending on the brand’s requirement.

Generally speaking, the process is quite simple. Once a brand hosts a campaign on ModeFair, social influencers can view the items and if they want to try any, they can order it and it will be shipped to them for free.

Influencers then have to post a photo and/or a video and upload it on their social media pages. They also have to write a short review and hashtag it as stipulated under the campaign requirements.

The item will then appear on the social influencer’s online store on ModeFair. Any sales that happen through their own stores will entitle them to a slice of the commission.

Sometimes, brands offer an endorsement fee, but usually, influencers receive the sample goods for free and get a cut whenever their followers purchase the items through their stores.

 

 

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