The global machine industry’s size is gigantic. According to latest reports, the industry is now valued at $649 billion and could grow to reach $835 billion by 2027.
The machine sector is vital. People use machines to make day-to-day life easier. Machines can carry out tasks in faster, quicker, and more efficient manner.
In Korea, the country’s economy is based on the manufacturing industry – electronic and semiconductor, automotive, shipbuilding, construction and engineering, petrochemical, bio and medical, steel and machining, among others.
The Korean machine industry generates $40-50 billion every year from about 30,000 companies operating in the industry.
Much of the industry, however, remains offline and there is still a huge gap in terms of addressing the demands of global buyers and the machines available from suppliers.
The industry could have shied away from what online marketing and platforms have to offer for years. This is understandable considering that more than 90% of industry players are small and medium enterprises that are run by older generations.
But as the global business arena becomes more digital and global consumers turn to the internet to buy goods, players in the global machine industry are missing out huge market potential.
Komachine sees that huge gap and the potential of the online market. It is transforming offline-based Korean machine industry database by streamlining and customizing them individually to maximize online results.
With more than 3,000 machine suppliers and 10,000 buyers from 150 countries using its platform every month, Komachine has become the #1 machine industry online platform in Asia.
Many people still doubt how $1,000-5,000,000 worth of industrial products can be traded online without seeing or verifying the item offline. The usual process also becomes tedious for participants in terms of quotation, invoicing, purchase order, payment, production, inspection, and shipping with too many documents.
The company understands the concerns and Komachine founder Charlie Park, who has 20 years of experience in machine and parts trading, has built a unique online trading process and system for machinery and parts in faster, safer, and easier ways than ever.
AsiaTechDaily talks to Park to know more about the company, his growth vision, fundraising plans, and more. Edited excerpt below:
Can you please tell us about yourself and your company?
My name is Charlie, and I am the founder of Komachine. Komachine is the number one machine industry online platform in Asia, now connecting more than 3000 machine suppliers with 100k buyers from 150 countries every day. With Komachine, we have transformed offline-based machine industry information to online, and we have changed the machine industry database and the transactions online.
How did you start the company?
The global machine industry is around $2.4 trillion in market size. In Korea, the machine industry generates around $92 billion every year, which means the machine industry is a pretty big economy and industry. But not many people pay great attention to the machinery industry, as it is not seen online much.
So in Korea, the machine industry is big, but more than 99% of the machine industry sector is the older generation. So they were completely offline-based. So when I was in India, in 2001, I started my trading business. And I realized that the machine industry is pretty big, but it’s offline. So I wanted to make this industry online. So that’s how Komachine started.
How has the company evolved, in terms of growth, users, revenue, etc.?
So my work experience started in 2001, but my company started in 2017. We spent around two years building up the platform and collecting the database, which was offline-based. We had to transform this offline-based database to online manually. It took more than two to three years.
In 2019, we initially launched the beta version of the platform. And that time, our DAU was around like 100. But right now, we have a DAU of about 10,000 every day. We started with like 300 companies for the database, but now we have over 3000 companies registering on the platform. And at the same time, our transaction volume has also become huge. So, in 2017, our revenue was around $40,000, but our revenue was $3.3 million last year. So far, we have completed more than 2000 transactions with more than 110 countries. The business and the growth are pretty big, and it is still developing.
How does the company operate and what are the various divisions?
We have three divisions right now. One is a transaction department. If global buyers like to purchase any machines or products from Korea, and we complete it, then we handle transactions from the buyers and suppliers. That’s one thing.
The second thing is we have a database division that oversees the industry database and the Premium members and advertising for our platform. The data division is handling that. We have a development division that handles the building up of the platform and developing, managing the site and stabilizing the cloud server, etc.
How did COVID-19 affect your business, your sector? How did your company deal with those changes?
During the COVID-19 pandemic, buyers were unable to travel, especially in the industrial sector. From the suppliers’ point of view, they could not advertise or market their company to the global market because they could not travel outside. Also, during the COVID-19 trade expos, trade shows were temporarily shut down. The industry had to survive and keep moving on, but they could not do any marketing activity. It was not only in Korea, but the outside of Korea also, to sell, they had to advertise their company or do their marketing online.
During the COVID-19, many machine suppliers in Korea started to pay attention that they can also do marketing online. So they began to use our service. And they spent a lot of money on the supplier listing and for the advertising. At the same time, global buyers had to buy machines and parts for their manufacturing industry and their factories. Since they could not visit Korea, they had to find the right company to complete the transactions on their behalf, deliver it safely and fast, and provide easy transactions. So that’s how we made transactions during the COVID-19. So compared to the year before COVID-19, I think the growth during COVID-19 has been an increase of 200 to 250% in terms of the database, revenue, and transaction volumes.
What are your revenue streams?
Our major revenue is coming from the transactions. So, if global buyers like to buy machines and parts through us, they pay us the money. That becomes our revenue. Once we get the money from the global buyers, then from this money, we pay the suppliers, and we pack it and ship the package to the global buyer.
We are handling the transaction from A to Z. That’s one of the biggest revenues we have. And for the transactions, we have around 700 customers in 110 countries. And among the 700 customers, more than 25% of the customers are multinational companies like Boeing, Kia, Hyundai Shell, and General Motors. Any multinational company operating factories or a manufacturing industry needs machines and parts, and some of them are available from Korea. If they have to source the parts for the machines from Korea, they have to contact the suppliers or manufacturer directly, and they always face some communication problems. Korean suppliers are mostly small/medium enterprises and cannot provide the service that the global buyers need.
When we started to provide a service, which global buyers needed, the transaction became big. So that’s one of the biggest revenue we are having. And for the transaction, our margin is around 10 to 30% depending on the items and transactions. And our second revenue is through online. Suppose the machine suppliers like to do their online marketing or do their advertising. In that case, they pay us and we display their banner or leave their information on the platform to show them better to Korean and global buyers. For the online service, multinational companies and Korean machine suppliers are our customers. These are the two major revenue models we are having right now.
Have you raised any venture capital funding? What are your plans when it comes to fundraising?
We are bootstrapping right now. We have around 20 team members. The beginning of our business wasn’t really popular until about three to four years ago. And the major venture capitalists and startup investors were mainly focused on the consumables and B2C market. No one actually paid attention to the B2B market. Our business model was not really popular in 2015-2017.
After 2019, people paid attention because of COVID. But anyway, we didn’t raise any funds because we had enough revenue. Our revenue was pretty stabilized, and it keeps growing. We could survive without the funding. We have no funding right now. We are bootstrapping but making pretty good money.
What are your future expansion plans? What do you have in the pipeline?
Now we are number one in Korea, and we aim to make this platform actual number one in Asia, of course, except China. So right now, our major database, our main suppliers are 95% of them are Korean suppliers. But from last month, we have started to let the global machine suppliers join our platform. Unlike China or some developing countries, the European and American makers who like to do their marketing in Asia, in Korea, so they start to pay us the money. We saw the potential because there are so many, not the big companies, but European machine suppliers who would like to do their marketing in Korea and in Asia. They were looking for some marketing channel. Of course, their initial plan was Alibaba, which is the most popular but more than 99% of the suppliers in Alibaba are Chinese. They didn’t want to be displayed with the Chinese suppliers on the platform. Whereas on Komachine our major suppliers are Korean, so it was pretty okay for them. By the end of next year, we think we’d like to expand our market to Europe and America, and in Vietnam. So that’s the future plans we have right now.
Could you also name some of the major companies you work with both on-demand on the supply side?
The most popular companies we have transactions and business with are ABB, Boeing, Kia General Motors, Samsung Gear, Hyundai Motors, Johnson and Johnson Controls, Exxon Mobil’s, and Shell.
What kind of support do you offer Korean companies and those from outside of Korea?
We support both sides: Korean machine suppliers and global buyers. The Korean machine suppliers, 99% of them are machine industry SMEs, and older generation, so they don’t even know how to use a computer or don’t even have a person who can speak English or handle the international trade transactions. What we do is give them a space on our platform to list their information. All they have to do is they have to send us the new website and their catalog. Based on the information we have, we customize and upload it on the platform to maximize the search engine optimization so they can be more readable on our platform. Machine suppliers can spend very little money and maximize their market reach in Korea and the global market. At the same time, global buyers can search and buy any machines and parts available from Korea easily and simply through us.