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Here’s what you should know this morning.

1. After Rocket’s biggest outside shareholder Kinnevik sells 10.9 million shares, what does it mean for the German company?

Kinnevik sold 10.9 million shares overnight for 19.25 euros each, a 10% discount to the closing price, raising 207 million euros ($218 million). That’s just under half the Rocket share price of 42.50 euros at its 2014 IPO.

Has it been profitable for Kinnevik? Despite its poor performance since IPO, Rocket has been lucrative for Kinnevik. It has generated an annualized internal rate of return of 91 percent since the initial investment of 155 million euros in 2010

Growing bad blood: Kinnevik’s presence at Rocket has been a godsend fblessing or other investors since it gave more regular and realistic valuations of Rocket’s assets, than what was coming from the Rocket founders themselves. The Samwers and Kinnevik eventually clashed over strategy and the Swedish investor didn’t take part in a 1 billion euro fund Rocket raised last year.

The tensions built until the Kinnevik CEO and another executive stepped down from Rocket’s board in June.

Questioning the business model, is Rocket actually fit to be a public company?: For all its talk of being a builder of companies, it is best understood as a listed venture capital fund. It invests in or founds startups and nurtures them until trying to exit via a sale or an IPO.

That’s not the only reason it is ill-suited to public markets. Investors value public companies based on expected future earnings. Rocket’s companies are unprofitable, though losses are getting less. It only gets cash in the rare event that it sells or lists a company.

Read the rest of the story here

 

2. Finquest acquires investor-startup marketplace Detecq to boost tech M&A in Asia

Finquest, a Singapore-based platform that fosters global deal flows, has acquired investor-startup marketplace Detecq. No financial details were disclosed.

Both use a unique system of algorithms to curate and matchmake the best deals. Finquest currently has a database of more than 1 million users. The acquisition of Detecq will bring its entire network of corporate investors, M&A professionals and tech companies into Finquest’s umbrella. This will provide clients with a wider selection of deals to pick from.

The acquisition expand Finquest’s presence in Asia’s tech ecosystem.

Read the rest of the story here.

 

3. Recommended Reading: The Evolving Role of WeChat in a Shanghai Multi-Brand Boutique

Xinlelu.com has been a standout on multiple fronts. Much of this brand cultivation at Xinle Lu is done online rather than offline, and molded through a strong WeChat community and content.

Xinle Lu’s niche consumer is a small but growing base of a sophisticated, professional Shanghainese women who are fashion- and travel-curious.

“Strategy-wise, we are now aiming to drive traffic to WeChat as a destination. In the last five years, we saw traffic go from newsletter to website to WeChat to Weibo, but now we want to drive this back to WeChat.” Said Xinle Lu co-founder, Yilei Wu. “In 2017, we will likely focus more on website maintenance and building WeChat and Instagram. We will not be working on Weibo because the platform is not an efficient way to reach and engage with our customers.”

Read the rest of the story here.

 

While president-elect Donald Trump is working hard to stop China from becoming a global superpower, China hasn’t slowed its digital hegemony in Southeast Asia – China meaning Alibaba of course. After calling out Southeast Asia as being on the cusp of an ecommerce golden age in our 2015 trends edition, Jack Ma and his team swooped in four months later and picked up Lazada, the region’s leading ecommerce marketplace, for a crisp $1 billion.

The Lazada-Alibaba deal, Alibaba’s largest overseas acquisition to date, is a pivotal event for Southeast Asia as its implications span the entire commerce value chain from digital advertising, logistics, finance, insurance to even healthcare.

A look back at 2016

Even without the Lazada deal, this year still proved eventful for ecommerce in the region: Fast-fashion fizzled out and Rocket Internet’s Zalora ending up selling for peanuts to Thai retail conglomerate Central Group.

Singpost’s headaches continued after the sudden removal of its Group CEO Wolfgang Baier in 2015, the company also lost its COO, CFO and the group’s chairman stepped down amidst a corporate governance scandal. These events pushed back the company’s deal with Alibaba a third time and wasn’t closed until October.

Across the region, asset-heavy B2C ecommerce suffered. Singapore homegrown RedMart was acquired by Lazada after it couldn’t bleed anymore money and Ascend Group’s iTruemart shut down in the Philippines only a few months after boasting to become the first Thai regional ecommerce player by 2017.

Japan’s ecommerce juggernaut Rakuten withdrew from Southeast Asia and sold its Thailand business back to the original founder. Moxy moved away from traditional mass ecommerce while merging with Indonesia’s Bilna to become Orami, a female-focused content and commerce play that raised funding from Facebook co-founder Eduardo Saverin.

Borrowing Jack Ma’s terminology, if 2016 was the appetizer, then 2017 will be the main course for ecommerce in Southeast Asia. With a $238 billion grand prize and Amazon poised to enter Singapore in Q1, it’s already shaping up to be an interesting year.

Game on.

1. The giant finally awakens: Alibaba becomes more active post-Lazada acquisition

Arguably the biggest ecommerce milestone in Southeast Asia this year was Alibaba’s $1 billion acquisition of Lazada but not much action has taken place at surface level since the deal. That is slowly changing already and Alibaba will soon introduce its entire ecommerce ecosystem to Southeast Asia in the coming year. It consists of Ant Financial, Cainiao and the Taobao Partner (TP) program just to name a few.

Launched in China seven years ago, the TP program aims to enroll suppliers to provide ecommerce related services to Taobao’s merchants. TPs such as Baozun and Lili & Beauty offered store operations and fulfillment services that enabled Taobao and Tmall to grow into two of the biggest ecommerce platforms in China.

The imminent launch of a similar program in Southeast Asia (ahem, Lazada Partners?) will create ample opportunities for an entire ecosystem ranging from digital agencies to delivery companies. Full-service ecommerce enablers such as aCommerce and SP eCommerce are well-positioned to further grow the $238 billion Southeast Asian ecommerce opportunity.

2. Last-mile logistics will get commoditized, accelerated by Alibaba’s Cainiao Network

Logistics is often considered the biggest bottleneck to ecommerce growth in Southeast Asia and has therefore resulted in plenty of venture capital funding spawning an army of last-mile and on-demand delivery startups such as Ninja Van, Ascend Group’s Sendit and Skootar. Even cab and bike hailing apps like Go-Jek and Grab have tapped into delivery services as an additional revenue stream. All this has added pressure to incumbents like Kerry Logistics, DHL and JNE who are only scratching the surface in the fast-paced ecommerce logistics space.

This nascent, fragmented and hyper-competitive ecosystem is similar to that of China a decade ago and what spurred Alibaba to launch Cainiao Network, an open platform that aggregates all last-mile vendors. This asset-light approach addressed Alibaba’s weakest link—logistics—and enables the company to leverage its massive demand to control the conversation.

Over 70% of business for third-party logistics (3PLs) in China now come from ecommerce of which Alibaba drives the vast majority. This allows them to set industry standards and increase price competition among last-mile providers, essentially turning the latter into a race-to-the-bottom, commodity play.

Alibaba has already begun bringing in Alipay and Ant Financial and with Southeast Asia’s logistics ecosystem following China’s trajectory, the introduction of Cainiao Network is only a matter of time.

Cainiao Network is Alibaba’s missing piece of the puzzle to control the entire ecommerce value chain – Cainiao Network Business Model

2017 ecommerce trends

3. The battle for “first-mile”: New threats to Google and Facebook

Few people realize that ecommerce giants like Alibaba and Amazon aren’t only a threat to their direct competitors such as JD and Wal-Mart but also to the likes of Baidu and Google.

With product searches increasingly moving off search engines and directly on to ecommerce sites, Alibaba and Amazon are shaking up internet advertising. In the US, 55% of people now start product searches on Amazon, up from 44% in 2015. This is a big deal because product searches are one of the most lucrative search keyword categories commanding high cost-per-clicks.

In China, the rivalry between Alibaba and Baidu has led the former to block Baidu’s search engine spiders from crawling and indexing Alibaba’s pages since 2009, effectively preventing users from going to Baidu to search for products.

Expect this battle for “first-mile” to kick off in 2017 in Southeast Asia when Alibaba migrates Lazada over to its Tmall platform and introduces Alimama, its proprietary self-service ad platform similar to Google Adwords.

Merchants on Lazada will have access to a variety of PPC (Pay-Per-Click), CPM (Cost-Per-Thousand Impressions) and CPS (Cost-Per-Sale) based advertising such as Tmall’s P4P “Express Train” PPC search ads. These ads command an impressive 25% of China’s total online search traditionally dominated by Baidu. To give an idea of Alibaba’s progress in search advertising, Google China’s search ad market share peaked at 30% before throwing in the towel and exiting the Chinese market.

Alibaba’s ad business is more than just search. In addition to Alimama, it also operates an affiliate platform called Taobao Affiliate Network, a display ad network called TANX (Taobao Ad Network and Exchange) as well as a Data Management Platform that rivals Oracle’s Bluekai and Adobe’s Audience Manager.

Media companies better brace themselves for new competition and digital agencies should start learning how to buy and optimize media on the Lazada platform in 2017.

4. Alipay’s entrance into Southeast Asia will drive consolidations in the online payments sector

The new year will mark the beginning of consolidation in the payments space in Southeast Asia. Cash-on-delivery (COD) dominance—75% of ecommerce transactions in the region—has inspired a plethora of startups like Omise and DOKU and established telcos and banks to build the next PayPal.

But most of these initiatives don’t address the core of the issue—lack of credit card penetration and a large population of unbanked in Southeast Asia. For example, LINE Pay, the Apple Pay-esque solution from one of Southeast Asia’s most popular messaging apps, only works with credit cards. While great from a PR perspective, these initiatives have yet to shift consumers away from COD.

Majority of fintech ‘solutions’ have been created to do “technology for technology’s sake”— building a faster car when what is really lacking are more roads.

Lacking what’s most important—scalable distribution channels—we expect these payment companies to struggle throughout 2017. With Lazada, Alibaba pulled off the ultimate trojan horse strategy to bring in Alipay and Ant Financial into the region. The marketplace offers a massive user base and distribution channel that most Southeast Asian payment startups envy.

2017 ecommerce trends

5. “Ecommerce 1.0” to “Ecommerce 2.0”

As previously predicted, Rocket Internet’s Zalora had to sell its Thailand and Vietnam businesses for chump change to local retailer Central Group. This same year, Cdiscount Thailand, part of French retail conglomerate Groupe Casino, was sold for $31.5 million to TCC, a local Thai company that also owns popular beer brand Chang.

Alibaba’s presence and the rumored Amazon launch in Singapore in Q1 2017 closes the window of opportunity for “Ecommerce 1.0” plays—those that peddle other people’s products to a mass audience. Even MatahariMall, the “anti-Lazada” ecommerce initiative launched by Indonesian conglomerate Lippo Group, has re-positioned itself as an online-to-offline ecommerce play rather than a direct competitor to Lazada.

As we enter 2017, the opportunity in ecommerce will increasingly shift from “Ecommerce 1.0” towards “Ecommerce 2.0” where firms will base their competitive advantage not on traditional economies of scale but on a mix of what Bonobos’ founder Andy Dunn calls proprietary pricing, selection, experience, and merchandise.

Whereas Ecommerce 1.0 is a game of brute force and strength, Ecommerce 2.0 exploits 1.0 loopholes in many creative ways to avoid the zero-sum game against the likes of behemoths like Alibaba and Amazon.

It’s encouraging to see companies in Southeast Asia already moving towards Ecommerce 2.0. Pomelo Fashion, an online-only, direct-to-consumer fashion brand, focuses on building its own brand and vertically integrating its supply chain by manufacturing its own apparel.

In Indonesia, another startup has taken a cue from the Facebook and Instagram seller playbook, and put it on steroids. Sale Stock, a fast-fashion startup based in Jakarta, has taken a similar path to Pomelo Fashion with its own unique, experiential angle.

With an increasing amount of Sale Stock orders coming from chat sessions on its mobile website, the company has invested in and launched the region’s first ecommerce chatbot to process mobile chat orders on Facebook Messenger, built by former Google, Palantir, and NASA engineers.

2017 ecommerce trends

6. Expect more casualties from a potential Alibaba and Amazon face-off

2016 was a big year for consolidations in the Southeast Asian ecommerce space:

  • Zalora Thailand and Vietnam sold for scraps to Thai retail conglomerate Central Group
  • Cdiscount was picked up by Thai tycoon Charoen Sirivadhanabhakdi’s TCC Group
  • Female-focused ecommerce player Moxy re-emerged as Orami after merging with Indonesia’s Bilna
  • Japan’s Rakuten shut down its Indonesia, Malaysia and Singapore marketplaces as well as returning its Thailand business to its original founder
  • Singapore-based online grocer RedMart sold for less than it raised to Lazada on the heels of a rumored Amazon entry into the market with AmazonFresh

And they will continue throughout 2017, especially in the hyper-competitive “Ecommerce 1.0” space. One of the big victims could be Thailand-based Ascend Group, which owns a portfolio of ecommerce and fintech assets such as Wemall (B2C) and WeLoveShopping (C2C). There have already been signs.

Its Philippines entity, launched in late 2015, shutdown this year. And with the company’s focus on fintech—it sold a 20% stake in Ascend Money to Ant Financial this year—Ascend may pull out of retail ecommerce for good come 2017.

7. Brands skip the marketplace bait-and-switch and go direct-to-consumer or multi-channel

There are many benefits for brands to sell on the likes of Lazada, MatahariMall and 11street—relatively quick setup and access to “free” traffic generated by the host marketplace. And that’s why 2016 saw many brands like L’Oreal and Unilever setting up shop on these platforms.

However, brands are gradually discovering that the cons outweigh the pros. Marketplaces collect huge amounts of data that pinpoint exactly which product categories and brands sell well, at what time and which location, and to whom. Amazon has leveraged this valuable information to introduce its own private labels to compete with its merchants.

In 2017, we will see brands getting smarter and leveraging a marketplace presence as an initial and short-term strategy. The long-term strategy is to sell direct-to-consumer via their brand.com sites where they own all the customer data, control of brand image and can offer features like subscription commerce.

2017 ecommerce trends

Others might adopt a multi-channel approach instead and use marketplaces to sell lower-end and lower price point products while reserving the brand.com channel for a more premium experience.

8. Hyper-competition will drive entrepreneurs and established firms to explore insurance, finance and healthcare

With ecommerce being hyper-competitive and capital heavy, entrepreneurs have started to look beyond physical retail for new opportunities. Following a similar trajectory as the US and China, startups in Southeast Asia will gradually move into insurance, finance and healthcare. The underlying concepts are the same—use the internet and technology to create marketplaces or go direct-to-consumer for non-physical products such as loans, life insurance and even data.

2016 saw new fintech startups such as EdirectInsure—with frank.co.th in Thailand and frankinsure.com.tw in Taiwan—trying to change the way car insurance is being sold as well as incumbents such as Asia Insurance offering Pokémon Go and mobile phone micro-insurance direct-to-consumer and exclusively online.

Alibaba’s acquisition of Lazada wasn’t so much about growing retail gross merchandise volume as it was about getting a scalable distribution channel for Alibaba’s other, higher-margin products. Jack Ma publicly alludes to it in his 2015 letter to shareholders:

“Alibaba group’s strategy is to build the infrastructure of commerce for the future. Ecommerce is only the first step. […] Around half of Alibaba Group’s workforce and our affiliated companies, including Ant Financial and Cainiao, are working on important areas of our ecosystem, including logistics, Internet finance, big data, cloud computing, mobile Internet, advertising and the so-called double H industries—Health and Happiness (the big data-based healthcare and digital entertainment businesses which will take 10 years to become data-driven).”

2017 ecommerce trends

Expect a roll-out of Alipay and Ant Financial related services (banking, credit scoring, mutual funds, etc.) towards the end of 2017. In addition, we will see more incumbents such as traditional banks, insurers and healthcare businesses moving online.

9. Ignored but not forgotten, companies will focus on the last remaining vestige in Southeast Asia: Myanmar

Businesses will be exploring new markets geographically in Southeast Asia as large markets saturate making greenfield ones like Myanmar more appealing.

With 53 million people, Myanmar is the fifth largest country in Southeast Asia. The country is also very unique compared to its neighbours as the country was shut off from the world until 2011 and is currently leapfrogging straight into the mobile era. Unlike its cousins who are “mobile-first”, Myanmar is mostly “mobile-only”—an estimated 20% of the population is online, most of which happened in the last two years.

Rocket being Rocket went into Myanmar as early as 2012 launching classifieds sites like Work.com.mm and Ads.com.mm. Its first proper ecommerce venture in Myanmar called Shop.com.mm got its start in late 2014. With an average of 90,000 sessions per month for the last six months and flat growth, Shop.com.mm doesn’t exactly paint a positive picture of the ecommerce opportunity in Myanmar.

However, given that Myanmar has 10 million Facebook users in the country, perhaps marketing an ecommerce business the traditional way isn’t the right approach. With so much of Myanmar’s internet usage attributed to social channels, starting out on Facebook shops may be a better way to tap into what could be one of the most interesting future ecommerce markets in Southeast Asia.

2017ecommerce trends

(Source: Minzayar Oo / BuzzFeed News)

This has already been proven effective in Thailand where an estimated one-third to half of ecommerce transactions are happening on Facebook, Instagram and LINE. One would expect chat commerce to be even more pervasive in Myanmar.

“Facebook’s influence in Myanmar is hard to quantify, but its domination is so complete that people in Myanmar use “internet” and “Facebook” interchangeably.”—Sheera Frenkel in a BuzzFeed report on Myanmar.

10. On-demand in Southeast Asia will whittle down to a few industries where the model actually makes sense

Once hailed by pundits as the holy grail of ecommerce thanks to zero burden of costly physical assets, on-demand seems to be nearing its end in the US. Other than Uber itself, many Uber-for-X clones have shut down or are struggling such as Homejoy, SpoonRocket, DoorDash, and Postmates to name a few.

Poor unit economics, platform leakage, and a stronger economy in general are all issues that have plagued on-demand startups over the past year.

In Southeast Asia, things haven’t been much brighter for on-demand startups. Happy Fresh, a groceries on-demand service, recently shut down its Taipei and Manila offices while going through a round of layoffs. It also quietly replaced its former founder and CEO Markus Bihler with a new guy. In Thailand, Inspire Ventures-backed Tapsy, a personal services marketplace, also shut down only few months after launching.

Go-Jek, Indonesia’s bike-hailing and now on-demand everything unicorn, suffered through an exodus of founders, with both its co-founder and VP of product leaving the company in October, triggering suspicions of internal turmoil.

While general sentiment for on-demand startups has taken a hit both globally and across Southeast Asia, in reality this is only the start of a natural process of weeding out all the “me-too” players in verticals where the on-demand model doesn’t make sense.

“The issue isn’t with the concept of something being available “on demand”. It’s whether a consumer or a business will pay a premium in order to have access to it immediately. Just because you make something available on demand, it doesn’t mean people will pay for it,” said Mathew Ward, co-founder and CEO of Helpster, the Bangkok-based company that matches employers with candidates seeking blue-collar jobs.

He continues,

“Home services is one area that is ‘nice to have’ access to instantly, but not a ‘must have’.  People won’t pay a premium for it and your unit economics don’t work, this is why we have seen so many of these fail. If you focus on things that have urgency such as transport or in Helpster’s case, access to qualified staff to fill an urgent staffing need, people will pay a premium and therefore you can build a business that actually works. The “on-demand” model isn’t broken – you just have to look for areas where speed of access is incredibly valuable. If you do, you can build a successful, thriving “on-demand” business.” 

2017 ecommerce trends

With Southeast Asia’s funding sentiment shifting in 2017 from growth at all costs towards sustainability and profitability, we expect to see on-demand startups thrive in verticals where the model works while other “me-too” ones fizzle out. The process will only be exasperated by the likes of Uber and Grab doubling down on Southeast Asia with their massive war chests.

11. Amazon to enter Southeast Asia (finally)

“Keep your friends close but your enemies closer.”—Michael Corleone in The Godfather Part II

2017 ecommerce trends

BY SHEJI HO, CMO AT ACOMMERCE.

iFashion Group, Singapore-based platform, has announced the acquisition of online fashion store Dressabelle for $5.5 million, reports Deal Street Asia.

iFashion Group covers varied market segments from offline to online ventures in Southeast Asia. Their ventures include:

  • Invade: Real-Time retail booking system with over 35,000 retailers
  • Flea Where: Flea market organization
  • Space Invasion: Pop-up retail concept with a collection of labels

iFashion Group only has presence in Singapore, and Dressabelle has a strong presence in Malaysia and Indonesia with annual revenue run rate of $3.24 million. It is not surprising then, that iFashion Group has Southeast Asian expansion plans in the pipeline.

By joining the iFashion Group, Dressabelle now has a wider product selection and looks forward to forming exciting collaborations with other brands under iFashion.

Aside from regional expansion, Dressabelle customers can expect more frequent collection launches, a wider selection of clothes and collaborative projects under iFashion Group’s management. Dresssabelle’s acquisition suggests that following the ecommerce trends for 2016, companies are choosing to acquire companies rather than build a whole new platform.

A version of this appeared in Deal Street Asia on July 19. Read the full version here.

Food Panda's Profitability

Food Panda’s riders. Source: Skyscrapercity.com

Rocket Internet’s food delivery startup, Foodpanda, is projected to make profit in most of its Southeast Asian markets reports Digital News Asia.

The company has presence in Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. It states Singapore as the key market in the region, but also states that other countries are catching up.

The startup also says that it grew 400% in terms of orders and revenue in 2015, but declined to provide any figures. Jakob Angele, Senior Vice President & CEO, Foodpanda Singapore

In 2016, Foodpanda is continuing to grow 25% month-on-month in orders and revenue, which is considered rapid growth for emerging markets.

Despite the positive outlook on Foodpanda’s growth potential and profitability, the startup is not without its hurdles.

The food delivery scene growth challenge

One of the biggest challenges is maintaining restaurant quality as new restaurants that join the platform are often overwhelmed by their Foodpanda orders in addition to their everyday customers in the establishments.

The Foodpanda team has taken initiative to screen the quality in order to maintain customer satisfaction.

Currently, Foodpanda fulfills 90% of all deliveries from the restaurants on its platform, this is a significant increase from 2015’s 60%. In Singapore, the startup has approximately 2,500 riders, but increased competition and labor shortage has made it tough on further recruitment.

The landscape food delivery startups in Southeast Asia is getting crowded, recent entries such as UK based Deliveroo have become key competitors for local players in the region. However, in Singapore, Foodpanda still claims its market leader position.

The main priority for Foodpanda is to maintain its path to profitability and concentrate on turning markets such as Thailand and Malaysia profitable as well.

This is good news for Rocket Internet as media speculation has been brewing regarding its companies’ profitability, following various news of possible M&A’s.

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

tech investment in Singapore, Malaysia and Indonesia

Ninja Van was classified under ‘Industrials’ in the tech investment report. Source: Vulcanpost.com

Technology is the third most invested sector in three Southeast Asian countries, Singapore, Malaysia and Indonesia according to a recently released report by finance advisory firm, Duff & Phelps (reports Tech Wire Asia). The technology category includes sub-categories such as “hardware, semiconductors, software, design, manufacturing and distribution of technology, technology services”

Technology venture capital deals amounted to 16% of total investments made in the three countries in Q1 of 2016, following behind industrial and banking/financial sectors.

However, there were no significant tech-related IPOs in the first half of 2016, highlighting a concern that tech startups get stuck in a rut and are unable to expand past a certain point.

The report also highlights rising M&A deals

  • Singapore recorded the most M&A deals, with 591 secured in 2015 valued at $101.2 billion. Domestic deals only contributed to 8% of the total deal value, a significant drop from 2014 when domestic deals accounted for 24% of total value.
  • Malaysia recorded 331 M&A deals, valued at $8.9 billion, with domestic deals accounting for more than half of total transacted value, a contrast to Singapore.
  • Indonesia only recorded a total of $1.6 billion for M&A transactions. However, Indonesia’s market is still developing, and its economic growth is not as high as the other two countries.

The first half of 2016 has given us mixed signals with slowing growth in the developing markets, modest growth in the mature markets, fear of interest rate hikes, possibilities of recession in certain economies, but at the same time, a robust M&A and investment climate. -Srvidya Gopalakrishnan, MD of Duff &Phelps, Singapore

According to Tech In Asia, the report doesn’t offer a completely clear view of the tech landscape as startups such as Ninja Van raised $30 million in Series B, but was categorized under the “Industrial” sector. However, it can be seen as a small testament to the diversity of industry in which tech startups are targeting.

Despite the fact that the numbers aren’t as high as from 2015, which resulted in 128 deals across the region, worth $2.7 billion in total, the firm is positive about 2016. That is, if the second half of this year is equally active.

A version of this article was published on Tech Wire Asia in June 6. Read the full version here.

Source: roposo.com

Source: roposo.com

Jabong,Rocket Internet’s Zalora for India, may be up for a merger, reports The Economic Times. The Indian fashion marketplace is allegedly in talks with competitors such Alibaba Group, Future Group and Flipkart owned Myntra, however the Jabong CEO, Sanjeev Mohanty, refused to comment.

Jabong was reportedly worth $1 billion in 2014. Now the fashion e-tailer’s valuation is barely worth $100 million. 

This is the second time that rumors of a Jabong acquisition made the news. In the same article, The Economic Times reported that Amazon was in talks to acquire the company for $1 billion in attempt to counter local player Flipkart’s acquisition of Myntra in 2014. However, the company’s current valuation is a fraction of that, approximately at $100 million. Although vastly different in numbers, the drop in valuation is reflective of Zalora Thailand and Vietnam’s modest acquisition by Central Group, for what was said to be $10 million for each country.

As commented by Quartz, 2014 was Jabong’s peak year, as the company was among the top two online fashion retailers in India, sharing the winning spot with Myntra. Since then, Jabong has struggled to regain its steam.

Myntra leaped ahead with funding from Flipkart, whilst Jabong struggled to attract funds to further fuel its business, making it harder to stay in the race with the other marketplace giant.

This news follows a string of M&As in India, as the ecommerce landscape in the country gets overcrowded with competing players. In a weakening investment environment, M&As have been increasingly common, especially in ecommerce.

Rocket Internet Jabong's possible merger

Ecommerce is leading the way in India’s M&As. Source: Quartz

In the last three months, online fashion retailer Voonik acquired four startups. Craftsvilla, an online store for ethnic product, acquired four.

[The M&A trend] will continue because the big players are now scouting for companies that compliment their offerings or add new segments. Rishabh Lawania, Founder of Xeler8

Due to the current tight investment landscape in India , small startups are struggling to raise funds like they have done in the past, which means they have to be more open to acquisitions. The money is beginning  to run dry in Southeast Asia as well as there are less and less Series B and above investment rounds happening.

If the speculation regarding Jabong is true, it will be the third Rocket Internet backed company to get acquired within the past month, after Lazada, Zalora and as Daraz & Kaymu recently announced a merger.

A version of this appeared in The Economic Times on July 4. Read the full article here.