This article was originally published on Oasis.
JJ Chai has a fascinating description of online marketplace: every brand or company starts off like a sapling and then slowly grows into a big, healthy tree. They are part of the natural system that has many different types of trees, which survive and thrive by depending on each other.
“That’s the idea behind our company name, Rainforest. We support long-lasting and sustainable e-commerce businesses,” said Chai, the co-founder of the online retail brand aggregator. Rainforest acquires and scales consumer goods brands on Amazon.
Oasis spoke with Chai, who was previously growth and strategy SVP at Carousell and regional manager director at Airbnb, to hear his thoughts on how an e-commerce sapling can thrive.
This interview has been edited and consolidated for clarity and brevity.
Oasis (OS): Why did you decide to establish Rainforest? What was the pain point in e-commerce that you thought harbored an opportunity?
JJ Chai (JC): Nowadays, with e-commerce, logistics, and third-party factories, individuals are able to produce small batches of goods and launch their brand really quickly. That means anyone can be an entrepreneur, anyone can create their own brands.
But when I talk to brand owners, many feel stuck. They want to become bigger, but lack sufficient support. Some are looking for an exit, and that’s where we come into play. We take a brand and professionalize it. We hire product specialists, digital marketing specialists, platform specialists, and internationalization specialists to take your brand to Amazon US, Europe, or Asia, and improve its distribution, operation, and other areas.
OS: What do you look for in a brand before committing to an acquisition?
JC: We acquire two types of brands. The first ones carry good, functional items and have good reviews—like the brands that pop up on the first page when you search for kitchen knives on Amazon. The second type are ones that have unique characteristics or brand stories. What I learned from my past jobs at Airbnb and Carousell is that storytelling is really important. That’s how you form connections with consumers.
OS: Some consumer brand founders we’ve interviewed before said owning their own factories gave them the chance to create unique products. For general consumer product e-commerce merchants, how important is it to have your own production facilities?
JC: There are three major parts of a retail business cycle: manufacturing, distribution, and design. I think design is the part that adds the most value to the brand.
In some cases, you’ll need better control over the factories to play out your edge, like building electric cars and batteries. But in the categories or for the products that we look at, like moms and kids products, or home products, there are a lot of good moulds available, you can create designs based on those, but use different materials. So I would say that e-commerce merchants can go quite far without factory capabilities.
OS: What advice would you give to a smart, driven entrepreneur looking to get into e-commerce?
JC: Too many would-be entrepreneurs spend too much time planning, researching, analyzing and talking about their ideas, rather than getting going.
OS: What advice would you ignore?
JC: I’d ignore any advice about creating products that you’re personally passionate about. What sells and what users want can be very, very different from what you like. Use data and ask users, don’t rely on gut judgement alone to launch products.
OS: What can e-commerce companies do to become more environmentally friendly, especially with all the packaging and shipping?
JC: There’s strong incentives for e-commerce companies to think about better, more reusable and sustainable packaging these days. With shipping costs going up and consumers demanding more sustainable packaging, brands increasingly need to develop better versions of products and packaging materials.
What we’ve seen is that smaller sellers sometimes cannot afford to adapt their products to consumers’ preference for sustainable products. This is where aggregators like ourselves can play a role. We have in-house product designers who work alongside supply chain and sourcing specialists. Together, they conceive and identify materials to make more sustainable versions of the products after our acquisitions.
OS: What purchase of SGD 100 or less has most positively impacted your life?
JC: A pair of running shoes I bought at an outlet sale almost four years ago. They finally fell apart recently and are beyond repair, but they were my favorite pair of shoes. I think of all the miles I’ve gotten out of them, the physical and mental health benefits. It’s definitely been a great investment!