Will new halal B2B online marketplace OneAgrix succeed where DagangHalal, Zilzar failed?

SINGAPORE - A Singapore-based start-up has developed a B2B e-commerce platform for halal ingredients and food products, which it believes will solve the sector’s key challenges.

According to co-founder Diana Sabrain, OneAgrix offers features such as escrow secure payment, varied shipping options, and blockchain-based traceability and certification consensus check, all of which make the platform stand out in in its sector. It began taking on suppliers in December.

During its peak around 2016, the halal B2B e-commerce sector boasted three direct competitors, all based in Malaysia: DagangHalal, Zilzar, and AladdinStreet. Today, only DagangHalal, the pioneer that launched in 2007, remains in the fight, and it’s on shaky ground.

Despite raising £4.2 million in April 2016, the company withdrew its listing from London’s NEX Exchange Growth Market in October last year after reporting a loss of 13.2 million ringgit ($3.2 million) for 2017. It said it was withdrawing its listing because there was “limited trading” in its shares and it had “been unable to raise capital from the UK equity markets to further fund its operations”.

Fundamentally, DagangHalal and OneAgrix tackle the same key challenges faced by the cross-border trade of halal products, which are attracting sellers and buyers to one marketplace, verifying halal certificates, and ensuring secure payment gateways.

The most obvious difference between the two is the mindset and approach to solving these issues. In addition, the new start-up can benefit from entering the market at what appears to be an opportune time.

RIGHT TIMING FOR MARKET, TECH

“Why halal B2B e-commerce? Because we see there’s no one that’s taken market share: none, zero, zilch,” Diana told Salaam Gateway in an interview on June 10 in Singapore.

DagangHalal.com has 5,691 sellers, according to its website on July 10, a nudge up from the 5,022 it reported in 2016. Apart from its core marketplace functions that facilitate trade between buyers and sellers, the platform also provides e-commerce services for its suppliers to use on their own websites.

In 2013, it launched a halal certificate verification system it developed called Halal Verified Engine (HVE), then three years later started a halal application approval system, HAAS, that halal certification bodies (HCBs) have to pay to use.

Unfortunately, in 2017, both e-marketplace and HAAS, under DagangHalal Group, earned staggeringly small revenues, 0.17 million ringgit ($41,042) and 0.1 million ringgit ($24,142), respectively.

OneAgrix is now pouncing on what it believes is a big market gap to serve the cross-border trade of halal products.

Co-founders Diana and Raihan Ali were biding their time. They bought the OneAgrix.com URL in 2015 but only really started putting things in motion around 2017.

“We thought of the idea [in 2015] but we knew it wasn’t the right time because cross-border trading needs payments to be solved, and logistics to be solved. At that moment, technology didn’t allow it,” said Diana, who like Raihan is a seasoned entrepreneur with around a decade of experience trading commodities.

After closely tracking developments at DagangHalal and Zilzar, last year she and Raihan succeeded in convincing major global names in secure payments and logistics to partner with them in a bid to solve what they saw as the biggest technical issues of halal B2B cross-border trading.

Secure payments are enabled with Escrow.com, which since 1999 has processed at least $3.5 billion in transactions. Both DagangHalal and Zilzar were unable to move away from credit card and bank payment methods.

Shipping options (ex-cold chain) are possible with Freightos, the world’s largest online marketplace for sea freight rates that raised $44.4 million in Series C funding last year.

Traceability and “certification consensus check” are powered by Trace Lab’s OriginTrail, which is also Oracle’s partner for blockchain technology. OneAgrix is the first halal B2B e-commerce platform to use blockchain tech, and in this manner.

The most recent strategic tech partner signed on is Inexto, whose solutions—that include for authentication, and track and trace—secure over 100 billion products annually.

These companies have signed on to enable a platform that, according to Diana, cost the co-founders only a “low five figures” of dollars to develop.

OneAgrix’s mindset and product development strategy is to work with third-parties to provide each step of the online trading process.

“What we use right now is technology that is already fool-proof, already used, already very seasoned,” said Diana.

HUMAN EXPERTISE

To add to the tech enablers, Diana and Raihan have also attracted advisors experienced in related fields, including veteran businessperson Tay Kah Chye for finance and agribusiness, agri supply chain expert John Keogh, veteran halal industry consultant Salama Evans, and the former CEO of Zilzar Rushdi Siddiqui.

Rushdi left Zilzar in 2016, two years after the platform was launched in Malaysia. The American once again appeared on the public stage in Kuala Lumpur in April this year at the annual MIHAS, Malaysia’s biggest halal trade fair.

In an emailed response to questions on July 4, Rushdi told Salaam Gateway why he agreed to return to the sector, and to be a part of OneAgrix.

“It’s important to share experience and knowledge attained, so they don’t make your mistakes.

“Finding right co-founders and making sure the investor does not micro-manage and undermine your position/authority, keep the burn rate lean (especially office) and runway long, hiring (hire slow and fire fast) intelligently, need to keep eye on valuation and funding (major distraction), etc,” he wrote.

OneAgrix is different from DagangHalal and Zilzar in that its focus “is more apparent”, said Rushdi, citing examples including quality suppliers/SKUs over volume and quantity, blockchain technology to provide trust, tracking and transparency, and explaining how the technology will complement the work of certification bodies to protect the integrity of their issued certificates.

However, he issues a caveat: “There is no formula for start-up success, and possibly the better approach is understanding and executing ‘what not to do!’ It’s about right timing, right product, and right place.”

RIGHT PRODUCT?

Beyond solving issues of secure payments and logistics, OneAgrix’s fundamental need is to deliver “safe, anti-counterfeited food”.

“The future e-commerce marketplaces are not the normal ones you see today,” said Diana, referencing latest developments at Amazon and Walmart.

Amazon launched its anti-counterfeiting suite of tools in February, and Walmart, working with IBM, launched in September last year a blockchain-enabled traceability system for leafy vegetables.

“We see an opportunity here with B2B e-commerce and halal, if we do this right and if we make sure our marketplace has that aspect of food traceability, anti-data tampering and anti-counterfeiting from the get-go,” said Diana.

While giants Amazon and Walmart have had to embed new tech at a very mature stage of their business cycles, OneAgrix has started on the same strong footing, tech-wise, she said.

The time is right, said Diana, as halal consumers are now more advanced, familiar with new technology, and the younger demographics are “very conscious of what they eat”.

“Generation Z and millennials want to know what they’re eating and where their food is coming from,” she said.

The intention is to assure both B2B counter-parties as well as end-consumers that their products are genuinely halal, as per their paper qualifications.

TRACEABILITY, HALAL COUNTER-CHECKS

“In cross-border trading it’s normal for corruption, it’s normal to tamper documents. That’s the reason why platforms like Alibaba and Amazon are now trying to in-build [anti-counterfeiting, anti-tampering] technology into their marketplaces,” said Diana.

OneAgrix’s “consensus check” system is meant to make sure certificates produced by suppliers match with information from certification bodies.

“We want to be ready that, for example, when a supplier who is certified by IFANCA joins OneAgrix, we’re able to check with our system that their certification is legit and not tampered with,” Diana said.

The same thinking is also found on DagangHalal, manifested as the Halal Verified Engine (HVE) that lets users find suppliers’ halal certificates. HVE currently lists around 40 participating certification bodies.

OneAgrix’s own counter-check system sits on the OriginTrail blockchain by Hong Kong-based Trace Labs, which developed a proof of concept with Slovenian company Perutnina Ptuj Group to track and trace its halal poultry that is certified by the Mesihat of the Islamic Community in Slovenia.

OneAgrix also insists suppliers submit other requirements, said Diana. These include business registrations and relevant food safety certifications, with the OriginTrail protocol allowing the platform to make consensus checks to ascertain the validity of the certificates.

The platform currently has an estimated 300 SKUs, with 70 suppliers who have enquired and are in queue to have their products listed, according to Diana.

Currently, the platform is being built to include halal certifiers and so cross-checks are still being done manually.

“Eventually it will be automated but whilst still onboarding HCBs to build an automated system, our team is firefighting to increase the speed of the vetting process,” said Diana.

Unlike its tech partnerships that are already in place, Diana said the company is still in discussions with halal certification bodies to onboard their databases to facilitate cross-checks. She declined to reveal who they have been in contact with.

Apart from its blockchain-enabled technology, OneAgrix’s counter-check system differs from DagangHalal’s HVE in that it is open to any halal certification bodies that agree to be onboarded. DagangHalal only lists those that are recognised by Malaysia’s national-level halal authority JAKIM, which immediately limits its global coverage.

“We’re not a MUIS (Islamic Religious Authority of Singapore) site that says we only accept MUIS-allowed [standards] or only accept JAKIM halal [standards]. That’s not the idea,” said Diana.

“We are a neutral platform.”

The idea, said Diana, is to give back the power to consumers and buyers to choose for themselves which standards or practices they are comfortable with, including what other food specifications concern them.

“We want to know, for example, if this food has GMO (genetically modified organism), do we as a Muslim consumer want to eat it?”

She warns, though, that technology is not the elixir for all challenges the halal industry currently struggles with.

At this juncture, it’s worth noting that the track record of OneAgrix’s solutions providers may not be squeaky clean—Inexto, for example, suffered a blow to its image when, in 2016 it bought tobacco giant Philip Morris’s product serialisation system designed to clamp down on the illicit tobacco market, and was criticised for being a sort of front company for a system allegedly still under the control of big tobacco.

For the halal industry, tech solutions can’t be the fix for issues such as counterparties knowingly releasing fake halal certificates or issuing them as a result of corrupt practices.

“It’s an issue of human behaviour, which technology cannot solve,” said Diana.

$2 MLN

The start-up is currently looking for $2 million in seed funding to scale and grow.

Its first set of target markets include Germany, Spain and Portugal in Europe, Singapore, Malaysia and Indonesia in Southeast Asia, and the Middle East, through Bahrain and Saudi Arabia.

Diana told Salaam Gateway on July 11 that OneAgrix will release details “in the coming weeks” of a “transactional end-to-end e-commerce pilot between a prominent meat company and a supermarket in one of the countries in the Gulf”, which would mark its official entry into the Middle East and North Africa.

(Reporting by Emmy Abdul Alim emmy.alim@refinitiv.com; Editing by Seban Scaria)

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