"By combining greater volumes, we can provide better pricing above discount from the end-supplier in each region, as well as increasing our top line and net revenue."

Jian Min (Edmund) Sim

FOUNDER, SOURCESAGE

August 12, 2024

Could you introduce SourceSage?

SourceSage was founded in 2015 as a B2B marketplace for (predominantly) oleochemical companies. Between 2020 and 2023, we launched two lines of product, seller.sourcesage.co and buyer.sourcesage.co, becoming a white-label platform for companies to buy and sell in a closed-loop environment. The chemical industry is quite protective - you will see at conferences how people stick closely together, and business is done in closed circles, considering they are dealing in high-value products with a high degree of financial risk. Our mandate as a business is to facilitate how companies conduct business in a more efficient and streamlined manner, cutting down unnecessary costs by making the most of the data visibility and analytical tools built within our platform. We do not target raw materials critical spend, which is imbued in protective relationships and sensitive transactions; instead, we focus on what we call peripheral items. Our revenue has spiked by about 10 times in the last couple of years, 95% of our revenue generated from peripheral products (indirect procurement) used by the chemical industry. 

On the vendor side, we collaborate with both big and small companies. As part of our open marketplace catalogs, we collaborate with companies like Amazon, Shopee, Lazada, or localized marketplaces like Tokopedia (in Indonesia), and as part of our “managed” service, whereby we onboard companies’ own vendors, we work with suppliers. 

The reason why companies choose us versus using Shopee or Amazon is that large companies (the buyers) have a PR-to-PO (purchase request to purchase order) process which is not compatible with jumping on Amazon to buy stuff. Our platform affords that B2B compliance. For that reason, one can think of SourceSage as a travel adaptor: The adaptor between large buyers and suppliers.

SourceSage has also expanded its local presence in the region. What advantages does this bring?

Over the last three years, we have grown outside of Singapore, establishing eight local subsidiaries, namely in Malaysia, Thailand, Vietnam, India, China, Japan, and Australia. The time was propitious for investment since were able to leverage a stronger purchasing power of the Singaporean dollar during the pandemic. 

Local incorporation does not only create an entry barrier for competition but it was also necessary to facilitate local payments. To give an example, the Malaysian Ringgit is a restricted currency so a company would not be able to pay on a frequent basis into a Singapore account for peripheral items. However, our scale-up approach is not contingent on building local platforms in each country. Under a 1-vendor model, SourceSage is able to bring cost and process efficiencies for multi-national companies on a platform.

Could you walk us through your scale-up strategy?

Our clients are not limited to the chemical industry. For instance, DHL has been working with us for 3.5 years across 10 APAC countries. Australian company Toll Group and Singaporean company TikTok also use our solutions for buying corporate gifts and the like. If you come to think about it, long-tail spend is applicable to all corporations; most of them will say that long-tail spend is 20% of the budget yet 80% of the work. With 20 MNCs, each engaged in 10 countries, that is easily 200 entities using our platform, with an annual spend of usually US$2-3 million each makes for half a billion in transactions flowing through. We set up a pay-per-use management fee structure, and we have a minimum drop-off licensing fee for transactions that fall under a given amount. In this sense, we seek to incentivize companies to put through more volume with us. 

Moving forward, we are expanding vertically into each of the product categories handled, moving up the value chain. By combining greater volumes, we can provide better pricing above discount from the end-supplier in each region, as well as increasing our top line and net revenue.

Do you have a final message?

AI is quickly disrupting the way we are buying and selling. At SourceSage, we are looking to develop AI and a Sustainability Index as core features into our platform this year. For example, if a company wants to spend 20% of its budget on “green” suppliers, tracking the supplier is the easy part, but getting them to formulate analytics is not, so we want to be the benchmark for green buying when it comes to indirect spend. 

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