How a startup marketplace skyrocketed to 80x revenue: A chat with Richard Xia, CEO of Novelship

‍Aspire: Looking back, what was the thought process behind building Novelship during a challenging period like COVID, and can you share the valuable takeaways from that experience?  

Richard Xia: We grew significantly during COVID. My co-founder Chris and I were from the same incubator during our time at National University of Singapore (NUS). At the time, we noticed that the primary channel for trading sneakers was mostly confined to fragmented communities like WhatsApp, Reddit, or Facebook groups. Unless you have the income, you would find it hard to get direct access to authentic products. Plus, if you were trading with strangers online, tough luck, you might get scammed. So, that became a problem we sought to address.

Chris and I validated our idea and finally launched the website at the start of 2019. We managed to hit critical mass in the middle of October 2019 and soon after, we raised our seed round and grew pretty quickly. We started in Singapore and expanded into Malaysia and Indonesia. However, halfway through our launch plans, we ran into a wall — COVID. At that time, we only knew that a lot of our shipments in Malaysia and Indonesia were being held by customs, but they didn’t give us any reason why. We received customer complaints and initially, we had no idea but we soon realised that something was wrong. Furthermore, we had no idea how long this was going to last. It was extremely difficult but we had to quickly adjust. There was even a time when the government was shutting down warehouses. For an operationally intensive business like ours, we needed to process orders and products and didn’t know if we could even continue. 

Fortunately, we were able to quickly put an action plan in place —  social distancing, tapes and everything — which we submitted to the government. Ultimately, we were granted the license to continue operating, even though we were a lot slower. In the second half of 2020, we did something that brought us a lot of goodwill. We realised many of our customers couldn’t get facemasks, so we gave away complimentary facemasks with each purchase. This gesture surprised many of our customers and was very well received on social media. From 2020 to the end of 2021, we grew almost 80-100x in revenue. We started building up trust and credibility during the second half of COVID, which ultimately was crucial to our success.

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Aspire: Novelship started as a bootstrapped business. With you and Chris having entrepreneurship experience under your belt, talk about the challenges with funding this out of your pocket and how you overcame that to grow the business.

Richard Xia: We had the dubious distinction of having experienced some hardships before we started Novelship, like during our time in NUS. By the time we launched Novelship, we had to deal with family pressure and questions like ‘What if it doesn’t work? You should get a job’. Despite that, both of us knew we were not the corporate type and we wanted to do our own business. Through our experiences, we also realised that we needed to research the market properly. You can’t assume that just because you like it, people will also like your product or service. We should validate the idea and whether a strong enough demand exists before we set up a website or app. Based on that understanding, we didn’t actually launch our website in its current format. 

We started on different forums, including Carousell, Facebook groups, WhatsApp groups under our brand name, with the aim of making it somewhat recognisable and building some early traction. Unlike now, where we have sellers, in the past we had to rely on our own collections since Chris and I have been active in the sneaker space for some time. So we knew exactly where to get the products from and we just listed them. We realised this could work when we listed limited edition sneakers — extremely exclusive products, priced between $300 to $500. We had no reviews, no followers and nobody knew us. It was very simple, they messaged us and we told interested customers that they had to make a deposit otherwise we would not get the products. The next morning, we received a ton of messages! Because the response was overwhelmingly positive, that became our eureka moment that there was strong demand for our service.

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Aspire: With Novelship's recent Series B $9.5m fundraise, you've transitioned into accepting external investment. Can you share the considerations that led you to open up Novelship to fundraising?

Richard Xia: First off, I think we are very fortunate to have supportive investors. For Chris and myself, there are a few things that are important to us. One is speed and the other is flexibility. So if you’re someone who is more uptight or has preconceived notions and you are not willing to change them, you’re probably not our type of financier. We’ve made it clear to investors that we’re driving the ship. If you want to get on board, you are welcome to join us, but you’re not the driver. I believe that as founders of the business, we should be the absolute experts. Obviously investors are there to support us financially and provide us with some strategy value, but they’re not the ones driving the ship. Investors can still give feedback and advice, which is important. We made this quite clear and fortunately, they have been very supportive. After the first meeting with investors, you will roughly know if there is chemistry and whether you’re compatible. I don’t think there is a right or wrong answer, it’s more about whether the particular investor is the right fit for our business.

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Aspire: Operating in Southeast Asia can be difficult, especially since markets in the region are quite fragmented. Can you share how Novelship has confronted localization and related challenges?

Richard Xia: The first step is to think about the actual market. Because sometimes the market is there, but it's very small. So, is there such a need in the first place? Is there a problem for your solution? For step two, how many people actually have this problem? Since you are operating a business, we are thinking ‘If I devote this kind of effort in this market, does it make sense from an ROI perspective?’  So these are the two main things we think about. Of course, thirdly, I also think about the concept — right to win.

A lot of investors have asked us ‘Have you thought about the US market or China?’ My answer is always ‘Yes, I know there is a lot of money to be made and the market is huge’. But I also think objectively, ‘Are we born there? Do we know the brands and the situation on the ground? Have we spoken to the sneakerheads there? Do we know what the supply chain is like or the sort of payment channels available?’ There’s a lot of nuance. So, even though the market is huge, our chance of winning is very low. 

When you think about Southeast Asia, it’s very fragmented. For example, the income level, the culture, the language, and the average order value (AOV,) and the products being bought are also very different. To give you an understanding of how complicated it can get, the shipping partner that we are working with who is shipping from Singapore to Malaysia is different from the partner that is shipping from Malaysia to Singapore. Now, multiply that by six across the different markets in the region and it gets very complex. And this is not just logistics, there’s also payment and regulations that we have to consider. While these are challenges, we don’t necessarily see them as bad things. It just means that there are difficulties in entering the market. As long as we can resolve this in a better way than our competitors, we will win the market. 

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Aspire: Landing Snoop Dogg as a strategic advisor was a milestone. Tell us more about what it was like signing Snoop and speak on the impact of working with celebrities and creators for your brand.

Richard Xia:  It all started when we sat down with one of our investors — an ex-Warner executive — who has many connections with big names. He started asking us ‘What will it take for you to bring your brand to the next stage?’ As a hip-hop fan, I started thinking about the OGs like Dr. Dre, Eminem, Snoop Dogg, and maybe Edison Chen. The investor advised that if we could only go with one, we might as well go right to the top. So, he said that he might be able to put us in touch with Snoop Dogg. We had a few conversations with Snoop Dogg’s company and representatives. We explained how we were a company trying to build the street and sneaker culture in Asia and it piqued their interest. I flew over to the US and met with his investment managers and team. I also met Snoop’s son, who was very involved in the business, and he showed us around this huge complex near the LA airport. There were so many collectibles and rare memorabilia like signed NBA jerseys lying around before we eventually made it to the studio. Imagine seeing a huge guest book and right on the first page, it was hand-signed “From Aunty Rihanna”! It was a cool moment for sure, meeting Snoop Dogg in person, especially after I discovered he was way taller than I imagined.

When it came to our brand and working with influencers, we actually redesigned our logo and set out to make sure that we first gained trust and credibility in the market. Instead of promising the cheapest or lowest prices or avoiding tax, we wanted people to associate Novelship with being reliable, fast, and authentic. By the start of 2022 when we became Southeast Asia’s largest sneaker marketplace, we realised that a lot of first impressions of our brand revolved around a reliable, authentic, and trustworthy platform to buy sneakers. Having achieved that, we had to think about what was next. We don’t want Novelship to be a place strictly for buying and selling sneakers. That’s because consumers who buy such products are buying a lifestyle and culture that we can see for example on TikTok. So, we started thinking about building a platform where people can come together to not only trade sneakers but also to interact and engage with each other, like a community. Naturally, working with creators and influencers or celebrities who fit that image is something that helped us to further grow our brand reach and identity.

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Aspire: What’s the single most important factor that has contributed to Novelship’s success?

Richard Xia: As I reflect on my entrepreneurial journey with Novelship, I realised that the only constant has been crisis, year after year. Be it good times or bad, business is all about dangers and opportunities. There’s never been a year when everything magically fell into place and things went smoothly. Every month, every year, there’s a big crisis and more crises. When COVID happened, initially we managed to get things moving, but the next immediate question was about our team. Back then, we were a very small team, all of us working from the same office. For both my co-founder and myself, the way forward still wasn’t exactly clear to us. How can we still keep this going? Now that we’ve gotten things stable, do we continue with our product expansion plans? If yes, we need to hire. But due to COVID, we won’t be able to meet the person we are about to hire. This came down to trust and delegation.

In the early days, when remote working wasn't the norm as it is now, we had to quickly figure out working arrangements that were feasible for our business. It’s also about keeping your spirits up and learning how to deal with the uncertainty. So in conclusion, I believe it’s always a race to be most adaptable, no matter the situation.

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‍Join over 600,000 users on Novelship — Asia’s fastest-growing online marketplace for authentic, limited-edition sneakers, apparel, and collectibles.