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Thailand’s COL, a subsidiary under Central Group held a shareholders meeting Wednesday and made significant announcements regarding the future of its online business. The group is planning to sell its B2C online businesses to its parent company to focus on growing online B2B operations.

COL has three key businesses:

  1. B2S books and stationery stores
  2. OfficeMate stationery stores
  3. Online platforms Central.co.th, Robinson.co.th and Zalora.co.th.

According to an attendee of COL shareholder meeting, originally posted on LongTunMan blog, the following took place:

The most significant moment of the meeting came after a reflection of last year’s performance. Management explained why they were “taking a step back from online business”. The main reasons being:

  • Market leader and new competition within the ecommerce landscape
  • Unlikely to be profitable in the near future (subsidies too high)
  • The online business requires more monetary investments at a large scale

Source: COL business plan presentation at the Annual shareholders meeting

“Currently, ecommerce in Thailand is a cash-burning race. The top performing player, LAZADA, is losing billions of baht. Central is not ready to experience losses of that scale in order to participate in the online race. All B2C online businesses under COL will be sold to Central Group, which has significantly more resources to fight the competitors,” wrote the attendee of the meeting.

COL business plan* shows that in 2016 the net loss of its digital & online business was 330 million THB (9.5 million USD).

That is almost double the net loss of 185 million THB (5.3 million USD) in 2015. Stepping out of online business will significantly improve COL profits.

Source: COL business plan presentation at the Annual shareholders meeting

The attendee of the shareholder meeting noted that as soon as the management made their announcement, shares went up 22% to 39.5 baht. What do shareholders think about this?

“Some may be disappointed that COL is pulling out. However, shareholders prioritize a company’s profitability. If we were to study performance results from 2016, it becomes clear that by removing its online businesses, the company will gain 86% in profit,” says the LongTunMan post.

Next steps for COL

In its business plan, COL has defined that one of the key strategies to continue sustainable growth is to develop a new online B2B platform that matches vendors and potential customers in various industries.

By focusing on B2B operations, it will serve as a quicker win for COL. The company already has a strong consumer base in that area.

Source: COL business plan presentation at the Annual shareholders meeting

According to LongTunMan, “management has announced that COL will now be an abbreviation for “Central Omni Logistics”, as the company will shift its focus to B2B.

This is where the company’s expertise lies, and remains a market leader. COL currently claims 80% of market share for office supplies.

“This decision shows that in some cases, it is better to take a step back in order to move forward and focus on where your business’s strength lies. Simply put, it is not worth it for COL to put all of its resources into fighting with other players, who have more resources to burn,” says the LongTunMan’s blog post.

In addition to moving to B2B online operations, COL also wants to step up its logistics game and in the future sell third party logistics and fulfillment services to other market players.

Source: COL business plan presentation at the Annual shareholders meeting

These changes in COL are aimed to turn the company into “the region’s leading business solution center”. The company is moving away from loss making activities to focus its efforts in the B2B area in hopes of a more profitable business model and where it has significant strengths.

Source: COL business plan presentation at the Annual shareholders meeting

Find the COL business plan presentation from the annual shareholders meeting in English here.

The original version of COL shareholders meeting attendee was published in Thai, and can be found on LongTunMan’s blog here.

* NOTE: The original version of presentation from the COL shareholders meeting, accessed by ecommerceIQ on April 7, included the slide which detailed how big company’s net profit would be without its Digital & Online business. This slide, however, is missing from the latest version of its business plan’s presentation available on their website.

BY: NIKI CHATIKAVANIJ AND AIJA KRUTAINE

Here’s what you should know today.

1. Grab confirms it will acquire Kudo to boost digital payments

The ride-hailing startup confirmed in a statement today it has signed an agreement to buy Kudo for an undisclosed sum.

Behind the acquisition is Grab’s interest in expanding its digital payments ecosystem, GrabPay.

Through Kudo, it taps into an already existing payments platform and online-to-offline channel. The startup’s most obvious asset is approximately 40,0000 agents who use the app to sell things like prepaid phone credit, tickets, household items, and fashion.

Read the rest of the story here

 

2. Indonesia’s Bhinneka shares updates on IPO goals

The Indonesian ecommerce platform for electronic goods and gadgets has the ambition to strengthen its offline store network.

The company plans to open another five to 10 offline stores, though they did not give further details in which city they are going to locate in

Bhinneka has implemented several business models, including B2C, B2B, and B2G.

This year, Bhinneka also aims to increase revenue from its B2B line for up to 40%. The company is also still on track for an IPO.

Read the rest of the story here.

 

3. Amazon is trying to push past Walmart by going directly to big brands

Amazon is working to convince major brands they’d be better off selling their goods directly to shoppers.The news service obtained an invitation Amazon sent to packaged goods companies for a meeting to discuss the initiative, which would require them to package their products in new ways.

The grocery business has been one of the most resistant categories in the shift to online spending. Not only do most shoppers prefer to pick their own produce, but fresh food is a notoriously low-margin business. It requires a sophisticated supply chain and quick sales to prevent items from spoiling.

Read the rest of the story here.

 

4. Recommended Reading: What does Amazon’s acquisition of Zouq mean for the future of retail?

Retailers are already reporting lower revenues and rents in malls in Dubai and Abu Dhabi are stagnant, according to JLL consultants, and likely to decline in secondary locations.

Retailers are battling a higher US dollar, which erodes any price advantage, particularly for tourists, and a weaker economy

S&P analyst Sapna Jagtiani told Arabian Business in February that “footfalls in the malls are stable”. However, shoppers are buying less. The deep pockets, data and experience of Amazon in the Middle East will speed up the region’s ecommerce boom.

Read the rest of the story here.

Newly out of DTAC’s accelerate program, B2B marketplace Freshket raised 6 digit funding from an anonymous agriculture company in Thailand, including VC fund 500 tuk tuks to continue connecting food suppliers with restaurants through its online platform in Bangkok.

The startup is currently in pilot testing and working with 20 restaurants in Thonglor, one of Bangkok’s most trendy districts, to figure out what suppliers and restaurant owners need.

Freshket Founder Ponglada Paniangwet tells eIQ that the platform will soon be open to 30 restaurants in different areas in the city and eventually expand to Singapore and Indonesia.

Freshket’s website homepage

Saving costly time for small businesses

Freshket is the first of its kind to solve a deep-rooted challenge in the restaurant industry in Thailand that Ponglada experienced herself having started her career as a fresh food supplier.

“I spent four to five hours after midnight every night to fill paperwork for different restaurants, to sort orders and review bills. Every restaurant had different requirements for ingredients, and everything had to be sorted manually,” notes Ponglada.

She saw the opportunity to build a solution that would simplify the workflow between a restaurant and its food suppliers and replace the time consuming pen and paper process.

“By spending less time on ordering stock, it leaves time for business development, organizing staff and other more important things,” says Ponglada.

Restaurants can simply log onto Freshket and order the ingredients they need one day to one week in advance and choose the time for supplier trucks to deliver the goods. The pilot period has helped determine that demand occurs before lunch and before dinner, between 8-10am or 2-3pm.

Freshket’s platform instantly creates an online purchase order (PO) under the user’s profile consolidating the type, quantity and total price all in one document.

Ponglada recalls that restaurants in Bangkok order their supplies through fax, email or LINE chat app and can easily create errors because suppliers consolidate each order by hand which  can often lead to incorrect deliveries. The automated PO fixes this as well.

Transactions on the site are currently made only through bank transfers but the startup is working to integrate credit cards or bank accounts for a one click payment. Freshket is also planning to allow companies to choose the logistics provider to deliver their goods, whereas currently all deliveries are handled by suppliers.

Challenges with traditional food supply

“We’re currently working with our partners to find out common trends in both delivery times and product selection,” says Ponglada. “For example, no restaurant wants deliveries at noon so we don’t prioritize this time slot. These details help standardize our offerings and maximize resources.”

It’s difficult for smaller restaurants to bargain with high quality food suppliers because they typically target larger chains or big scale businesses.

Suppliers are also known to hoard special produces despite demand in the market.

Both scenarios limit the produce selection available to the little guys.

Freshket tackles this challenge by connecting restaurants with food suppliers of all sizes and ‘smart farmers’ on one platform. It widens the assortment of produce SKUs so any restaurant can more likely find for example, a specific cut of meat or five different types of white shrimp.

Thailand’s army of smart farmers

Smart farmers are a new generation of business minded farmers that are producing crops based on demand forecasting to increase their sales. This can include selling only organic vegetables or a particular type of fruit that not many other farms are producing. There are approximately 100,000 smart farmers registered with Thailand’s national agriculture database, making up 10% of all registered farmers in the country.

Because smart farmers are located outside of Bangkok, business with them can be a challenge. Freshket must provide the right logistics and storage for farmers to scale operations.

Some smart farmers are also unable to process the packaging or customize produce according to each restaurant’s specifications.

Through this work, Freshket is collecting information regarding optimal temperatures, warehouse technology and freezer room specifications, to scale distribution for smart farmers on the platform.

What will Freshket ‘grow’ next?

“There’s a lot of potential for expansion in the region,” notes Ponglada.

The startup is eyeing expansion in 3-4 cities across Southeast Asia

“We would like to consolidate all the data we have access to and share with farmers what to grow this particular season because it will be in demand by restaurants,” says Ponglada. “Restaurants can also map their menu offering based on the seasonal crop during specific periods of time.”

Through data, Freshket will be able to evolve from a middleman platform into an agritech specialist that is able to project outcomes from industry demand.

“Everything we do is in steps. Freshket’s biggest goal is to tackle and modernize agriculture in Thailand, but we have a few areas in Bangkok to expand into first,” Ponglada comments. “One step at a time.”

The Freshket team at Google HQ in Mountain View

Here’s what you should know before the weekend starts.

1. Fintech hub Lattice80 expands to build ties between Singapore and India

Singaporean Fintech hub Lattice80 has signed an MOU with the Andhra Pradesh state government to open a fintech hub in the Indian city of Vizag.

As part of the agreement, Lattice80 will run training programmes to train 1,000 ICT professionals in India every year. The two sides will also co-research and develop key fintech technologies, including digital and mobile payments, blockchain and big data.

Read the rest of the story here.

 

2. Citi and Visa launch an e-procurement platform in Singapore

Thailand’s Siam Commercial Bank held a fintech event last week on behalf of its digital arm, Digital Ventures. ‘Faster Future: SCB Fintech Forum‘ drew in speakers from across the globe, from Wei Hopeman, Managing Partner at Asia based Arbor Ventures to Jeffrey Paine, co-founder of Singapore based Golden Gate Ventures, an early-stage VC firm that focuses on Southeast Asia.

“Southeast Asia looks like China in 2006, like India in 2011,” said Paine. “In China and India, the competition is usually local, but in Southeast Asia, the competition comes from around the world.”

During his panel, Paine outlined eight key tech sectors that he believes we will see more of in Southeast Asia within the next 3-5 years.

1. The age of differentiated commerce, more B2B

  • It is the age of niche B2B ecommerce. Southeast Asia will see the growth of niche verticals in the B2B space, for example, the rise of the industrial sector in Singapore
  • The industry will see a surge in ecommerce enablers that help traditional companies go online
  • Ecommerce will shift slightly to differentiated commerce. This refers to a culmination of good content, strong networks and an efficiency in selling. Ecommerce has evolved to an all-round experience, not simply putting something up for sale online

 

2. The rise of a ‘one stop shop’ financial platform

  • The region can expect a rise in fintech transactions over the next 2-3 years
  • Integration of big data in credit scoring will be prominent, especially in Indonesia. Big data should be able to minimize the amount of work and extend sources needed to provide loans.
  • The ‘one stop shop’ financial platform will allow you to purchase loans, insurance and credit cards in one place. This will be a place where a few winners can come into dominate market share
  • The rise of pure mobile online banks. Vietnam is already starting to adapt following the launch of Timo Bank, the country’s first digital bank
  • Financial services for ecommerce. For example, consumer credit will matter when a shopper buys something on a marketplace. This will also be in tandem with the rise of vendor financing for marketplaces
  • On-demand insurance will also become a trend in the next 3 years i.e. Asia Insurance
  • Blockchain infrastructure will arrive in Southeast Asia

 

3. Automobile innovation to benefit B2B & B2C

  • Innovations will be in the areas of software that helps drivers find parking, rent cars, connect with automobile care

 

4. The rise of healthcare tech in Thailand and Singapore

  • The birth of centralized data hubs and analytics will be integrated with healthcare
  • Creation of software for hospitals, clinics and private practices to make their workflow more efficient. Ex. Patient records, paying bills etc.
  • The application of IoT software for hospitals and senior homes
  • The rise of telemedicine platforms online and doctor on-demand services. This would benefit rural provinces as it’s a challenge to find doctors on demand when you’re not in a big city

 

5. The strengthening of enterprise SaaS

  • AI/Machine learning based predictive analytics software for business users, especially in the area of automated customer service and sales management software
  • Will take time to develop and be applied, but it should be used by HR departments and accounting/finance divisions to automate certain processes such as number crunching and database filing

 

6. Long-haul logistics

  • Long haul trucking would be particularly useful for the popular trucking route between Malaysia-Thailand and vice versa
  • On-demand trucking platforms could add more convenience to consumers, allowing them to have parcels delivered at a more flexible schedule. This would be a challenge in Indonesia due to the different islands within the country
  • Route planning innovation will also become a trend in logistics. This would help to tackle various roadblocks such as unidentified locations, problems with delivery addresses and more.

 

7. Increasing popularity of agritech

  • Agritech has been slow to rise, but should become a key trend within the next few years as agriculture is prominent in Southeast Asia
  • The development of financial services for farmers will pick up. Thailand and Indonesia have begun to develop government centric databases and e-procurement platforms, but neither has fully taken off
  • The creation of market linkage models, ex. farm to table platforms

 

Looking ahead

Southeast Asia is waking up, especially as each country’s government is pushing tech initiatives and creating guidelines such as sandboxes for fintech and exploring taxing for ecommerce.

According to Jeffrey Paine,

As soon as the government starts to push, large corporations will begin to take notice.

This trend is apparent in Thailand, with many institutional banks such as SCB itself, or Kasikorn bank venturing into digital finance services.

Real estate companies such as Sansiri are teaming up with SCB to explore property tech, focusing on research, development and startups, aligning with the Thai government’s 4.0 initiative that aims to move the country towards a more digitized framework.

Jeffrey Paine notes that for domestic startups, going regional is not impossible. China will play a significant role in the region’s development, and Southeast Asia needs two main vices; capital and time, in order to accelerate the region’s technology growth.

For more on SCB x Digital Ventures Fintech Forum and to watch the panel, click here.

January is generally a slow month for retail as people are tightening belts after splurging during the holiday season. End of year campaigns are also allocated large marketing spend to drive more traffic to Southeast Asia’s November 11/11 sales period and the 12/12 “Online Revolution” driven by Lazada, the region’s largest marketplace.

Looking at SimilarWeb web traffic – a sum of all (non unique) visits both on desktop and mobile –  for Indonesia’s most popular B2C marketplaces shows a decline of around 3 to 20% from December to January. Lazada Indonesia experienced a 3% drop in the number of monthly visitors.

But it was MatahariMall,  the country’s biggest department store chain, who noted the largest staggering drop of 62% in visitors to its online marketplace.

The two-year old online venture, MatahariMall.com, raised $100 million in October last year to bolster its share of Indonesia’s ecommerce market. A look at the company’s online traffic shows a buoyant performance in terms of its visitors – spikes in traffic from roughly 7M to 24M shows the difference in organic traffic and the effects of a marketing push.

A more stable performance this year might provide a better indication if it will manage to live up to its ambitions to become the “Alibaba of Indonesia”.

Two players that continuously capture a steady audience are Lazada and Blibli.com, a six year old e-marketplace owned by Djarum Group and BCA, one of the largest banks in Indonesia.

Not surprisingly, the best performing ecommerce sites are the best-funded, making it harder for smaller players to compete unless targeting a niche audience.

Meanwhile, most C2C marketplaces saw site visitors in January increase by 3 to 8%. Jualo, an online marketplace for secondhand goods, saw the biggest lift in web traffic with 8% growth.

Web traffic, of course, doesn’t automatically equate conversions, it’s only one metric in tracking an online company’s traction. The data, however, is useful for marketers, advertisers, merchants, etc. to understand which marketplaces can provide an opportunity to tap into a large pool of existing customers.

eIQ will be updating the numbers every month. Find out the statistics for Indonesia | Thailand | Malaysia | Vietnam | Philippines