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Here’s what you should know today.

1. Y Ventures Group raises $5.56m in IPO 

Singapore-based company Y Ventures Group has commenced trading on the Catalist growth board of the Singapore Exchange (SGX). The IPO saw it place 35 million shares at S$0.22 each and raising S$ 7.7 million ($5,56 million).

The firm specialises in online retail data analytics, marketing, distribution and sale of a wide range of merchandise, under third-party brands and its private label “JustNile”. The company’s merchandise is marketed and sold online in marketplaces such as Amazon, eBay, Lazada and Tokopedia.

“With scalable business model and robust proprietary data analytics capabilities, we hope to capture promising ecommerce industry prospects and continue to enjoy growth upside,” said CEO Alex Low.

The listing of Y Ventures bring the total numbers of technology companies in SGX to a total of 76 with combined market capitalisation of more than S$82 billion ($59.2 billion).

Read the full story here

2. Only 9% of Singaporean use mobile app banking

 

Singaporean are not keen to use mobile banking apps as the latest findings from HSBC reported. Whilst 66% currently use online banking, only 9% surveyed prefer to use banking apps – which is below the global average of 13%.

The behavior has something to do with Singaporean’s cautious attitude towards adoption of technology and innovation, especially banking.

And while tech-literate, Singaporean are particularly concerned with cyber security as 73% are extremely concerned about data leakage, compared to global average at 56%.

Regulation plays an important role in guaranteeing consumer faith and 75% of Singaporeans saying it is essential that new technology is regulated for security.

Read the full story here

3. Recommended Reading: Amazon wreak stock-price on its competitors in all categories

Amazon’s latest ventures are not only impacting the retail world but also troubling for its competitor of all kinds.

Best Buy market value has dropped by 7%, representing a more than $1 billion drop in value, since the news of Amazon pushing its virtual assistant Alexa. Not to mentioned the change in supermarket value since the news of Amazon/Whole Foods merger as can be seen below.

Amazon/Whole Foods merger

source: Recode

The latest distribution deal with Nike is enough to caused the value of number of sporting goods competitors to drop to a half billion dollars since. Amazon’s own market value is up by three percent since the Whole Foods deal and up to 33% since the beginning of 2017.

Read the full story here.

Southeast Asia in 2010 started to experience an ecommerce boom with the likes of Ensogo, Rocket Internet’s Lazada and Zalora, Groupon, etc. It seemed to be at the height of its peak with money pouring in, mergers and acquisitions happening every day, and Amazon finally moving in to capture the region’s potential but amid these buzzworthy headlines, down rounds plagued startups such as Lazada, were sold for scraps like Zalora Thailand, or shut down completely, such as Ensogo.

What happened? Smaller startups began venturing into other fields providing human resources (Getlinks), car wash services (Wash Mobile), recruitment (JB Hired), agriculture (EverGrow), hardware (DriveBot), and more. It seemed that startups were shifting focus to offer niche services to carve out their own demographic in a saturating market but could they sustain themselves?

A Sustainable Model: Fintech

Across the region and even in once-upon-a-time unicorns such as Flipkart and Snapdeal, news reported large reductions in hiring, peaking salaries, and a slowdown in capital flow shadowed the once profitable businesses VCs banked hard on. The customer behavior in Southeast Asia, more specifically trust, is simply not mature enough.

It also cannot be denied that a capital and inventory intensive model requires deep pockets. After running a successful ecommerce company in Thailand for three years, I realized it was necessary to go back to the basics, to start a business model that encompassed the three components of sustainability:

  1.       High margins
  2.       High customer lifetime value (LTV)
  3.       Low customer acquisition cost

A business with these characteristics usually has a strong foundation and presents a good investment opportunity because it shows promise for profitability down the line. While ecommerce does have low customer acquisition due to the nature of retail and lower commitment products, such as retail and consumer goods that are being sold, it severely lacks in margins and customer LTV (lifetime value).

Margins are often eroded away by high operation costs, packaging, shipping, and inventory while LTV is nullified by heavy competition as most ecommerce companies do not have exclusivity on products and pricing. After all, it isn’t in the best interest of product owners and manufacturers to only distribute their products through one single channel.

Fintech on the other hand, a recently booming industry, does not suffer from these disadvantages. Like most tech companies, there is no inventory to hold, the margins are much larger and once you have acquired a customer, you have an 80% renewal rate for at least the next four years (Bangkok Insurance’s internal data). By building better fintech, it would change the behavior of consumers in Southeast Asia and eventually fuel the growth of ecommerce in the region.  

fintech-southeast-asia

Lack of Innovation: More Room to Grow?

Fintech is ripe for entrepreneurs because existing legacy players such as Viriyah and MSIG in the market lack innovation. Companies like Bangkok Insurance, HSBC, and other traditional financial institutions are only beginning to realize the magnitude of the tech wave that has hit the world.

As the saying goes, it is hard to steer big ships, and ships seldom get bigger than the companies that make up our financial industries. These companies earn a vast majority of their profits from traditional channels, leaving the unexplored to opportunistic entrepreneurs like myself with Frank.co.th and many others who have managed to convince investors for support.

A recent report from Accenture found that global investment in fintech has skyrocketed from $930 million back in 2008 to over $12 billion by the beginning of 2015. Europe experienced the highest growth rate with an increase of 215% to $1.48 billion in 2014. Globally, fintech startups have raised investments totaling $19 billion according to a insight report published by Citibank. This has begun to eclipse other startup sectors as it continues to grow.

Challenges of Fintech

The next big thing does not come without its own challenges. Fintech startups need to realize very early on that there are many rigid regulations which were not created with innovation in mind. For example, in Thailand, selling insurance online requires a business to report to at least three different governing bodies all of which have their own set of rules to abide to. This increases admin work for small companies and also requires legal knowledge that most new companies lack.

Companies are also not allowed to call a customer to confirm purchase as that would be considered “telemarketing insurance sales” and requires a different license. One of the biggest challenges for fintech companies is encouraging users to trust young companies with their financial information, savings, and future to adopt its products and services.

It takes time and a lot of marketing dollars to explain to customers who you are and why they should trust you with their money. These challenges do get easier as more startups enter the space and educate their audience through smart marketing initiatives.

Rabbit, a company based in Thailand, is the first integrated online/offline payment platform in Thailand accepted in multiple retail stores, restaurants and used for public transportation. Its partnership with LINE earlier this year means over 5 million users are slowly allowing their financial information to be connected to some sort of a tech platform.

“This joint partnership [Rabbit LINE Pay] will strongly support government policy in driving Thai people into a cashless society,” says Nelson Leung, chief executive officer of BSS Holdings, the operator of Rabbit card.

Influence from neighboring countries such as Singapore and Malaysia, a lot of which have already set up country specific ‘sandboxes’ to trial for fintech regulations, are also moving towards a cashless society to drive the realization that there is a need for innovation in the financial sector.

Ecommerce is a big marketbut until the shopping habits of Southeast Asians are shifted to online spending habits, it can never reach its full potential. The emergence of fintech and its supporters mean that by building the fundamentals, companies in the entire ecosystem can benefit from its success. 15 years ago, people would call a travel agent and ask them to book a ticket. And now? When was the last time someone called a travel agent to book a flight or hotel room? Behaviors change, but it takes innovation and time.

BY HARPREM DOOWA, MD & CO-FOUNDER AT FRANK.CO.TH

Here’s a quick recap of ecommerce news for today.

 

1. Thailand’s price comparison Priceza raises Series B to double down on Southeast Asia

The company claims a combined 13 million visits per month across its markets and says that Thailand and Indonesia are its biggest ones. In Thailand, it has 7.5 million monthly active users across its website and mobile app. Read the rest of the story here.

 

2. Youtube tackles slow internet in emerging markets

Although not directly ecommerce related, Youtube is launching ‘YouTube Go’ to serve those with slow internet connections in emerging markets, starting with India. This follows a string of similar initiatives rolled out by Google to improve connectivity. The platform will aim at being ‘offline first’. Read the rest of the story here.

 

3. HSBC’s new “Future of Consumer Demand” report highlights how millennials use tech 

According to the report, consumers no longer want to buy things, but focus on ‘sharing economy’ instead. This may result in how ecommerce will have to change and adapt to evolving consumer trends. Read the rest of the story here.

 

4.  Uber-owned Otto to offer freight hauling services using autonomous trucks in 2017

The technology remains under development, but with Uber’s considerable resources now on board, Lior and his team aim to begin working with warehouses and stores to partially automate the driving process and generally improve efficiency. Read the rest of the story here.

 

5. Indian ecommerce war hotting up: Walmart in talks to invest up to $1B in Flipkart

Wal-Mart Stores Inc. is in advanced discussions to invest as much as $1 billion into India’s Flipkart Online Services Pvt, as the two companies battle Amazon.com Inc. in ecommerce, according to a person familiar with the matter. Read the rest of the story here.

After Android Pay launched in in Singapore in June, Apple Pay picks up its Asia strategy and was rolled out on Wednesday in Hong Kong to eligible cardholders of American Express, Visa and MasterCard.

The city is the third major market in the Asia-Pacific where the contactless mobile payment service, introduced by Apple about 20 months ago, has been launched this year following mainland China and Singapore.

There are an estimated 10,000 merchant locations in Hong Kong that accept Apple Pay, and more than 10 million in all nine major markets where the service has launched so far.

Apple Pay uses so-called near-field communications technology built into iPhones and Apple Watch to allow for contactless payment in stores, which have the contactless point-of-sale terminals to support the service.

Participating banks in the city include Standard Chartered, DBS, Hang Seng Bank, HSBC, Bank of East Asia and BOC Credit Card, a subsidiary of Bank of China (Hong Kong).

Consumers in Hong Kong are used to more familiar payment options, such as Octopus cards. Plenty of merchants are also wary of making new investments in contactless point-of-sale terminals.

Alipay, the online payments platform run by Alibaba Group affiliate Ant Financial Services, is betting on that same trend as it plans to partner with one million offline merchants over the next three years, enabling Chinese tourists to make payments abroad using its mobile wallet service.

Visa Hong Kong has published a list of local retailers offering Apple Pay here, and Mastercard Hong Kong has published a list of local retailers offering Apple Pay here.

Excerpts were taken from the SMCP on July 20. Read the full article here.