This Chinese graduate built Yamibuy into a US$100 million business selling Asian snacks, instant noodles in America

Alex Zhou, chief executive of US-based e-commerce site Yamibuy, has built a business out of selling hard-to-find items for the Asian immigrant communities

PUBLISHED : Wednesday, 30 May, 2018, 7:01am
UPDATED : Wednesday, 30 May, 2018, 11:14pm

When Alex Zhou, chief executive of US-based e-commerce site Yamibuy, first moved from the Chinese port city of Dalian to study at a university in the Midwestern state of Kansas, he never imagined that obtaining items like soy sauce or Chinese-style instant noodles would entail a two-hour drive on the Interstate-70 highway to Kansas City.

To Zhou, the college town of Manhattan, Kansas, seemed to be “in the middle of nowhere”, with almost no Asian supermarkets or restaurants serving authentic Chinese dishes. Even e-commerce had failed him – he found the Asian foodstuff selection available on Amazon to be limited, and what little there was on offer catered more to the tastes of locals than to the Chinese or other Asian immigrants.

“The closest mid-sized Asian supermarket was two hours away, there were no other options,” Zhou, 32, said in a phone interview. “I had friends who would drive hours every weekend to find specific Asian products or have authentic dim sum in a Chinese restaurant, and [that they were willing to do this] seemed crazy to me.”

The solution to an untapped market

The frustrations he faced in obtaining Asian foodstuff led Zhou to think of starting an e-commerce site to sell items to people who encountered similar problems – Asian students, professionals and immigrants who lived in the US but yearned for a taste of home.

Upon graduation from Kansas State University in 2013, Zhou moved to Los Angeles and forked out US$50,000 to start Yamibuy, with plans to stock Asian products that were hard to find in the US.

Once a solace for immigrants, are Chinatowns now obsolete?

Back then, Chinese firms like Alibaba and had seen their businesses boom in China, on the back of a burgeoning e-commerce market and a rising middle class. But the two companies did not yet offer international shipping options to overseas markets, which meant Chinese students could not purchase and ship their favourite snacks from the mainland to the US. Zhou seized the opportunity to claim this niche for Yamibuy.

“There was a large demand for Asian products, but nobody was fulfilling it,” he said. In the US alone, Chinese students make up almost a third of about 1.2 million international students, according to data from the Department of Homeland Security. Estimates from the United Nations showed that there are about 2.4 million foreign-born Chinese migrants living in the country as of 2017.

Going from zero to US$100 million

Armed with no experience in starting a company, much less an e-commerce business, Zhou had to do everything from scratch. To find suppliers for Asian foodstuff, he would travel to large Asian supermarkets and stand at the back of the store, writing down the supplier names that were emblazoned on delivery trucks as worker carted in boxes of goods through the back door.

The Chinese who struggled in US and classmate who made it at home

Armed with potential leads, Zhou began to call up vendors in the hopes that they would take him on as a customer.

There was a large demand for Asian products, but nobody was fulfilling it
Alex Zhou, Yamibuy chief executive

“At the beginning it was really hard, they don’t believe that you’re going to succeed,” Zhou said. The suppliers were also reluctant to sell him products because the order quantities he wanted were a mere fraction of larger Asian supermarkets.

“I talked to one vendor a total of seven times before they finally opened a business account for me,” he said.

The initial version of Yamibuy was a bare-bones site and a one-man show – Zhou had paid 5,000 yuan for a Chinese web development company to build the first version of the e-commerce platform (“The basic functions worked but the website was really crappy, very bad.”), rented a small warehouse measuring 2,000 square-feet, and stocked 200 different products – mostly snacks from Japan and Korea that were popular among Asians but hard to find in Asian supermarkets.

Zhou’s initial inventory sold out quickly as word of mouth spread. Demand grew steadily, and within three months he upgraded to a warehouse that was three times larger. In less than five years, Yamibuy now boasts 450,000 square feet of warehouse space for 20,000 different products, which include categories such as cosmetics and even kitchen electronics.

Today, Yamibuy has more than 800,000 users and sees “double-digit growth” every year. Although Yamibuy has only raised one significant round of funding – a US$10 million Series A round led by GGV Capital last July – the company has processed US$100 million in transactions in 2017 alone.

The company is near break-even point but is prioritising scale over profit at this stage of its development, Zhou said.

Building a community

Yamibuy’s success so far boils down to one very important factor – the site’s ability to build a strong community of users who are willing to return and buy.

Taking a leaf from the so-called Social+ model behind most of China’s e-commerce and social networking platforms, Zhou incorporated functions in Yamibuy that allowed consumers to share what they bought with their friends on social media channels. He also included social features such as a blog section where users can share photos and pen reviews of items they bought.

Chinese food is the new haute cuisine of choice for America’s rich

“A local touch in building a social network is extremely important in differentiating an e-commerce platform, and Alex gets it,” said Hans Tung, the GGV Capital managing partner who made the decision to invest in Yamibuy. “That and the growing secular trend for Asian goods [in the US] made it easy to invest in Yamibuy.”

For 26-year-old Guangdong native Cathy Yeung, who studies in the city of Milpitas, California, Yamibuy has become her main source of Asian goods. Yeung places orders on the site three to four times a month, spending between US$60 to US$70 each time to stock up on snacks such as coconut drinks, eight-treasure porridge, Guangzhou chow mein instant noodles, and even cans of Kvass, a Russian fermented bread drink produced by Chinese drink maker Qiulin.

“Yamibuy stocks many products which are extremely difficult to find in the US, even in Asian supermarkets. Apart from snacks, they also carry items like Korean and Japanese make-up, and even Japanese brands of sanitary towels,” said Yeung. “It’s such an intimate item, but the feel and sizing of the towels can vary in Asia and in the US. We might have different preferences from locals.”

Yeung is also among Yamibuy’s most active community members. To date, she has posted a total of 160 posts on Yamibuy, writing about her latest haul of goods from the site, including pictures of food and reviews of make-up she has bought.

“Writing about the items I buy and posting photos is a method of expression, where I can talk about the things I love. It’s like a creative outlet for me,” she said.

Branching out into an ecosystem

Apart from the difficulty of obtaining Asian goods in the US, Zhou found another problem that many of his customers grappled with - finding restaurants that serve authentic cuisine.

Although restaurant review services like Yelp are popular in the US, Zhou realised that it was difficult to find good Asian restaurants, since the majority of Yelp reviewers may have different preferences when it comes to Asian food.

“I’ve found is that it is a little inconvenient for Asians to use Yelp. Sometimes, a really great Chinese restaurant has a very low rating on Yelp, and restaurants with four- or five-star ratings end up serving American-style Chinese food,” Zhou said.

How China's consumer patriotism is hitting US and international brands

Earlier this month, Yamibuy introduced a Yelp-like feature into its mobile app to tackle this problem. The name of the feature directly translates to “eat drink play happy” in Mandarin. In English, it’s simply called “Fan”, which is the hanyu pinyin romanisation of the Chinese character for “rice”. The pronunciation for “Fan” in pinyin also sounds like the English word “fun”.

The feature is currently reminiscent of Meituan-Dianping, a massive platform that started out as a review platform for restaurants. Meituan-Dianping currently offers everything from food delivery, discount coupons for consumers, and even restaurant reservations, and Zhou believes that Yamibuy can build an ecosystem of services, be it selling Asian products or providing Asian consumers with relevant information when it comes to dining out.

“We have partnered restaurants to offer deals to our customers, and we hope to connect the online with the offline and [vice versa],” Zhou said.

To be sure, Yamibuy runs the risk of becoming too successful for its own good, attracting the attention of e-commerce giants like Alibaba Group, which owns the South China Morning Post, or On the prospect that either of the two companies may muscle in on this turf, Zhou is sanguine.

China’s e-commerce giants reach for the wallets of overseas Chinese

“There is no point in worrying about whether Alibaba or will enter this market, if they come, they come,” he said.

“I’d rather spend the time thinking about how to improve my customer experience, and fulfil the demands of my customers because no matter who competes with you, the only reason your customer will leave is if they can’t get the service or customer experience they expect.”

Eyeing the new markets - both local and overseas

Currently, 90 per cent of Zhou’s customers are immigrants like Yeung, or Asian Americans. But he noted that the remaining 10 per cent consists of non-Asians who are interested in trying out Asian products, and he expects the trend to grow.

“More Americans are starting to consume Asian entertainment content, such as Korean television dramas, anime, stuff like that. It’s the beginning of a trend, and Asian products are going to become very popular in the United States,” Zhou said, adding that the company is planning to expand its non-Asian customer base.

Kristin Morris, a 22-year old university student who lives in South Texas, is a fan of Japanese anime and has watched a few Korean dramas. She turned to Yamibuy to try out instant Korean ramen and Japanese noodles after she could not find a store near her that stocked them.

“[Yamibuy sold the noodles] at a good price too. If you try to purchase those items on Amazon it’s in bulk most of the time, but with Yamibuy I’m able to try new things [without buying in bulk],” said Morris. “I do want to go to Japan and Korea one day for sure, so I feel like getting a small taste of these different flavoured foods is like getting a small taste of my future travels.”

The next big thing for China’s 600 million social media users is ‘Social+’

For hospital administrator David Steinberg, who lives in Chicago, Yamibuy has become the only site where he can find his favourite Nongfu Spring Jasmine Tea drink. He had first come across the drink when he and his wife were in China on an adoption trip, and had tried to no avail to find a store that stocked the drink in the US.

“I had been looking for the Nongfu Spring jasmine tea in the US for five years. We live not far from Chicago, which has a wonderful Chinatown but even there I could not find it,” said 43-year old Steinberg, who has adopted three Chinese children with his wife and lives in northwest Indiana, an hour outside Chicago.

He eventually found the Yamibuy platform when searching for the tea on Google, together with a few of his favourites – hot, spicy dried tofu, dan dan noodle spices, and lychee water.

“Yamibuy has everything. I never thought I’d find those [foods I had in China] in the US,” he said.

By the end of 2018, Yamibuy plans to expand its e-commerce business to Canada, and Zhou did not rule out the possibility of eventually offering its services in Australia as well as Europe. The soccer fan, who plays in his spare time, is also taking lessons to fly light aircraft in Los Angeles.

“We are a business without boundaries,” he said. “In these countries, Asian people share the same profile, the same education level, same household income, same background. If the customer profile stays unchanged, we can replicate our business there as well.”