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shopback-logo-cropped, ShopBack Dominates iOS Store

Source: Tech in Asia

ShopBack, a service that lets you get cashback on your ecommerce purchases from over 500 merchants in Singapore, launched its iOS and Android apps yesterday. The app is now the top free app in the shopping category in the iOS App Store, and number four (as of July 5 at 9.45am SGT) in the top free apps category in Singapore.

Founded in August 2014, ShopBack has since raised $1.1 million from investors. It acts like an affiliate marketer for ecommerce sites, collecting a fee for every purchase made through ShopBack, part of which is passed to consumers. A variety of marketing methods such as influencer marketing through actor Tosh Zhang, Facebook paid marketing, email marketing to its existing user base, and YouTube videos were used to drive app downloads.

ShopBack Dominates iOS Store

Ecommerce cashback apps are not a new concept

San Francisco company Ebates was doing it since 1998, and in 2014 it was acquired by Rakuten for $1 billion. In Indonesia, Ardent Capital funded Snapcart, offers a cashback app for offline purchases, to encourage O2O behavior. Asia has seen an ecommerce boom only in the past few years, fueled by a combination of venture capital fervor, greater internet and smartphone penetration, and rising incomes in emerging markets. The ecommerce market is nascent but fast growing.

ShopBack doesn’t appear to have generated the same amount of enthusiasm among Android users yet, as it’s nowhere near the top rankings there. For developed countries such as Singapore, the concept may be successful as the market has reached maturity but for many countries such as Indonesia and Philippines where Android users are dominant, adopting the simplest of ecommerce behavior still has a long way to go.

A version of this appeared in Tech in Asia on July 5. Read the full article here.

Ecommerce delivery in Nigeria 2013. Source: Pius Utomi Ekpei — AFP/Getty Images

Ecommerce delivery in Nigeria 2013. Source: Pius Utomi Ekpei — AFP/Getty Images

Excerpts from Fortune.com

Rocket Internet is falling behind its emerging market targets and investors are beginning to doubt its ambitious goal to be the Amazon outside of America. Rocket now has a market capitalization of $3.3 billion, well below the $5.89 billion valuation it put on its portfolio at April 30, and only just above the $3.1 billion in cash held by Rocket and its operating companies as of March 31.  Its African fashion retailer, Jumia, made a loss of $18.8 million in the first three months of 2016 on sales that fell more than a third. The devaluation of Nigeria’s naira last week is a new blow for Jumia.

Its slowdown is the consequence of Rocket’s shift to rein in spending on marketing and logistics as it seeks to stem losses, which it said peaked at $1.1 billion in 2015.

The stock has been on a downward trajectory since peaking in February 2015 after it surprised investors with a new capital hike and shifted strategy to invest in the food-delivery business in developed markets.

The latest share price tumble started in April when Sweden’s Kinnevik, Rocket’s second-biggest shareholder after the Samwer brothers, slashed the valuation for its emerging market fashion websites by two-thirds.

Neil Campling, head of technology research at Northern Trust Securities, who rates the stock a “sell,” doubts the Rocket businesses can replicate Amazon’s success because its markets are so underdeveloped and the cost of logistics so much higher.

“As soon as they reduce marketing, you see revenue growth decline substantially,” he said. “They haven’t got the scale.”

Oliver Samwer says Rocket has more than enough capital to fund its main startups until they turn profitable.

Read the full Fortune article here, published on June 29. 

In 2016, more than 15% of the population will make purchases from abroad worth $85.76 billion and by 2020, more than a quarter of the population will shop digitally for foreign products, according to eMarketer in its first analysis of the consumer trend.

Cross-Border-Ecommerce-In-China-emarketer

The chart above in eMarketer’s brand new study represents buyers age 14 and up who have made at least one purchase from a foreign seller either directly through a foreign-based site or an intermediary at least once during the calendar year. Includes desktop/laptop, mobile and tablet purchases.

Last year’s intense growth is also attributable to Alibaba launching Tmall Global in 2014, and JD launching JD Worldwide in 2015, enabling overseas brands to sell their goods directly to digital shoppers in China. In addition, in some categories, such as infant products, consumers in China perceive overseas goods to be higher-quality and more trustworthy.

Cross-border buyers in China are expected to spend an average of $473.26 each this year on global goods, representing 4.2% of the total retail ecommerce market and will amount to a spend of $85.76 billion this year. 

 

Cross-Border-Ecommerce-In-China-emarketer change over time

The eMarketer forecasting analyst Shelleen Shum predicts shifts in platform use towards official and organized sellers.

“Furthermore, cross-border ecommerce goods sold via the business-to-consumer (B2C) channel are expected to take up a growing share of the total cross-border ecommerce market in 2016 as consumers shift to platforms that are more professional and organized. Since the merchants selling on these B2C platforms have to be authorized, they are considered more trustworthy.”

Rising  global brand.com cross-border ecommerce in China

More ‘professional and organized’ sellers? The article does not cite specifically what those disfavored platforms are (one can take a couple guesses) but with the current negative press around the proliferation of counterfeits on Alibaba, it’s probable that official brand.com webstores and non-marketplace models may see a spike in popularity as cross-border ecommerce in China booms.

Excerpts from eMarketer on June 14. Read full article here. 

By Felicia Moursalien
SingPost Warehouse Source: Bangkok Post, Thailand Post Logistics Unit Expected To Turn Profit

SingPost Warehouse, Source: Bangkok Post

The company’s logistics revenue is expected to reach THB 480 million, a 60% increase from THB 300 million in 2015.

“We also expect to break even this year, after facing a loss of 100 million baht last year, thanks to our cost-effectiveness strategy”, said Warakan Srinualnad, chief executive of Thailand Post Distribution, the logistics arm of Thailand Post.

Thailand’s logistics market has experienced an average annual growth rate of 15% per year, highlighting a growing need for high-class logistics service.

Thailand Post began its logistics operations in 2015, mainly serving the pharmaceutical industry, ecommerce and warehouse management. The company has nine of its own storage and distribution facilities in major provinces.

The company projects revenue from its medical and pharmaceutical services to account for 80% (THB 384 million) of the total this year. Ecommerce is set to account for 12% and its warehouse management service is set to generate 8%.

“Thailand Post Distribution expects revenue from its ecommerce service to surge to THB 58 million this year, as that market is booming,” comments Srinualnad.

A version of this appeared in Bangkok Post on June 24. Read the full article here.

Out of 189 countries, Indonesia ranks in the bottom 30% of worst countries to do business in according to the World Bank in 2014. Nonetheless, with its quarter billion population and largely untapped ecommerce potential, the archipelago is still pegged as the next big thing after India and China. Some even call Indonesia China’s little sister.

Since President Jokowi came into office in 2014, one of his main goals was to attract more foreign direct investment to Indonesia and on May 12, the President signed Presidential Regulation number 44 of 2016 that changed the rules of the Negative Investment List, a list that stipulates which sector is open to foreign investment in Indonesia as well as the percentage of foreign ownership permitted. Specifically, it changed foreign ownership laws in ecommerce business.

Now, 100% foreign ownership is allowed for business and companies approved under the Investment Coordinating Board (BKPM). The caveat is that the ecommerce business in Indonesia needs to have a value  of at least 100 billion IDR ($7.3 million US). If a foreigner has a great idea for an ecommerce venture but without the minimum investment, they can own a minority stake in a company, up to 49% with an Indonesia counterpart.

The Investment Coordinating Board’s (BKPM) director for business development, Pratito Soeharyo, said that since October last year, any company, including ecommerce businesses worth 100 billion Rp or more could be established in just three hours under the so-called three-hour licensing facility. Since the three hours licensing facility has been introduced, any company not in the list of Negative Investment List category could be established in three hours compared to the previous 23 days it required. Ecommerce business is now one of them.

Who Benefits the Most

1. Enterprise level ecommerce corporations 

Regulation 44’s valuation threshold will encourage large and established foreign investors to set up operations in Indonesia, such as Amazon, which just announced its expansion into Indonesia on June 16 2016. 

2. Local Indonesian ecommerce startups 

The other major winners and perhaps most important of all are smaller ecommerce startups from Indonesia. The regulation will ensure that foreigners who don’t meet the threshold of $7.3 million USD will have a joint venture with a local partner. The maximum foreigners can own is a 49% stake. 

 This will help level the playing field for both foreigners and local players as they will be able to easily attract more foreign investors.

Definition of “ecommerce business”

“Ecommerce business” is defined as online marketplaces, daily deals websites, price-grabber sites, and online listing platforms. Ecommerce enabler services such as logistics companies and on-demand transportation services are also included in the category, which falls under the jurisdiction of the Ministry of Communications and Informatics.

The change in regulation is part of a larger ecommerce roadmap that is being drafted by the government. The few key topics proposed are about consumer protection, including payment gateway and estimated delivery time, and also fiscal and business entity surrounding the industry. The roadmap plan will be finalized this year.

How Ecommerce Regulation 44 in Indonesia affects current e-business

Foreign ecommerce players operating in the country were using loopholes by splitting business units in the company and registering multiple entities.

For example, one local company is established to handle fulfillment where it owns the inventory and handles everything related to delivering the product to the consumer. Another separate entity holds the IP and is registered as a web portal. The fulfillment company can have an exclusive contract with the web portal legally by Indonesian regulations. But this process of setting up multiple entities takes a lot of money, time and requires a lot of trust.

Overall, the new regulation will enable an easier process in setting up an ecommerce business or injecting new capital to the existing players. And in future cases where foreign ownership exceed the allowed percentage, they will have two years time to comply with the rules with three options:

  1. Sell their shares to the local investors,
  2. Sell their shares through the domestic capital market, or
  3. Buy the exceed ownership portion from the investors and treat it as treasury stock.  

Indonesia Ecommerce Market Potential

The changes in this regulations are expected to serve as a strong foundation to level out the playing field, giving local companies more foreign know-how and foreigners a chance to have a localized best practices as well as stimulate job growth. 2015 saw the total ecommerce sector reach $19.7 million US and employ 3404 people. With the new regulation, 24 projects were listed in Q1 2016 and the government expects to see ecommerce sales in the country rise to $25 billion US by the end of the year and reach $130 billion US by 2020.

The government expects to see ecommerce sales in the country rise to $25 billion US by the end of the year and reach $130 billion US by 2020 with Regulation 44.

Sales estimated with the expectation that the number of internet users in Indonesia will reach 280 million by 2030. It is already up to 100 million users this year according to data from the Association of Internet Providers (APJII).

Ecommerce Regulation in Indonesia - Ecommerce Foreign Investment Value in Indonesia

Source: Jakarta Post, May 2016

Indonesia versus the world of ASEAN

According to A.T. Kearney, Malaysia and Singapore have the best-established ecommerce laws in Southeast Asia. Philippines has allowed 100 percent foreign ownership for ecommerce. In Thailand and Vietnam, despite the law restricting foreign investment in various sectors, ecommerce in both of these countries is one the sectors that get the most support or promotion by the local government to attract foreign investors. Ecommerce Regulation 44 in Indonesia was taken to entice more foreign investors.

Ecommerce Regulation 44 in Indonesia - Foreign Ownership Regulations for Ecommerce in Southeast Asia

Singapore is considered the easiest country in the world to do business, whereas Indonesia has traditionally been among the hardest

With the door opened for the foreign players to play solo in the open field, it certainly attracts The Giants with a lot of money to burn. But even Goliath can be beaten by David and local players have the advantage of their market knowledge. It will take more than big capital to conquer Indonesia but no one can say that the reward won’t be worth it. 

By Rara Kinasih

Tweet your feedback to @ecomIQ and @ARKRara 

Indonesia's ecommerce going public

Source: theinsiderstories

Online forum Kaskus and ecommerce platform Bukalapak are in talks with Indonesian Stock Exchange (IDX) about the possibility of going public this year.

Kaskus is Indonesia’s largest online platform founded by Andrew Dawis in 1999, while Bukalapak is one of the country’s leading trading platforms. They are not the only Indonesian ecommerce company to do so.

Director of IDX, Tito Sulistio, said the companies are now facing challenges in preparing legal and administrative matters. However, he is optimistic the challenges can be overcome. “If they commit, the process would take about four to five months only,” he said quoted by local media Kontan.

The IDX and the Indonesian Chamber of Commerce (KADIN) are reportedly launching a special board and incubator program to support Indonesian tech startups to go public. The board will facilitate startups to prepare them for IPOs. 

The plan comes in the backdrop of the country’s financial markets regulator Financial Services Authority (OJK) preparing a regulation that will provide a legal basis for SMEs, including startups, to generate funds as high as Rp1 trillion, approximately USD$74.63 million from IPO.

The regulator is evaluating the IPO norms for startups and the exercise would be completed by June with an implementation timeline expected later this year. IDX and OJK are in talks to set up a special board for SMEs or startup companies. The idea is that SMEs or startup companies that have net intangible assets as low as Rp5 billion may also list shares on the Jakarta bourse, said Tito.

Last year, Indonesia’s Minister of Communications and Information also expressed his vision for Indonesia’s ecommerce to go public this year. The move is seen as a positive step towards the country’s goal of establishing a $130 billion digital economy by 2020.

A version of this appeared in Deal Street Asia on June 20. Read the full story here.