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E Commerce site says exciting times have arrived in SE Asia

May 03. 2016
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By The Nation

WEARYOUWANT, a Thai online fashion and beauty marketplace, is advising start-ups to have a clear strategy towards profitability, as investors are now demanding it, and that the e-commerce space in Southeast Asia is experiencing an exciting time.

At the “Last Mile Fulfilment Asia Conference and Exhibition” (LMFAsia) held in Singapore last month, Martin Toft Sorensen, chief executive and co-founder of WearYouWant, said there was considerable discussion on how start-ups should focus beyond just team, product and market to become successful.

“Start-ups should have a clear path and strategy towards achieving profitability by scaling the business without forgetting the lifetime value of the customer versus cost per acquisition,” he said.

“If e-commerce businesses simply follow a desire to climb user-acquisition heights quickly without keeping an eye on the ROI [return on investment], there is a higher risk of a greater fall.

“Penetration from online platforms can go far, wide and deep, but the trajectory needs to be based on running a business that brings money for investors, shareholders and other stakeholders in the near future.”

Echoing this advice was Thai e-commerce guru Pawoot Pongvitayapanu, CEO and founder at efrastructure inc and managing director and founder of Tarad.com, who also attended the business-platform event. LMFAsia brought together professionals from the retail, e-commerce, logistics and parcel industries.

Sorensen advised that in addition to creating a viable business model that balances the cost of acquiring customers with the ability to monetise the lifetime value of a customer, start-ups should be creative in how they attract and keep customers.

While many e-commerce sites are reporting high sales growth, the reality is that they may not be showing any profitability, he said.

“In Thailand, we have yet to see any e-commerce companies proving they can scale and yet become profitable.

“The recent acquisition of Rocket Internet’s fast-growing, yet loss-making, e-commerce site Lazada by Chinese e-commerce giant Alibaba, and Zalora (Thailand and Vietnam) by Central Group, has definitely created waves in the e-commerce industry.”

Sorensen said that while Lazada would pave the way for Alibaba to penetrate Southeast Asia in a market-leader position, it remained to be seen whether Zalora’s acquisition by a traditional offline retailer would kick-start true omni-channel experiences in Thailand.

He added that this was an exciting time for e-commerce companies and start-ups in general, as well as for investors.

“There has been a lot of noise on increased funding in various e-commerce businesses lately, but very few on acquisitions and exits, which are important factors that constitute to a healthy business. I think such acquisitions are just the beginning of market consolidation and a signal to what 2016 will bring, which is possibly more M&As [mergers and acquisitions] in this dynamic [Southeast] Asian market.”

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