| digitalnewsasia.com | Mar 25, 2018
AMONG the first questions he got asked was about the timing of an IPO. This brought a smile to Ganesh Kumar Bangah’s face. Urging patience, he reminded the journalist who posed the question, that he had only launched his new company, Commerce DotAsia Ventures Sdn Bhd (Commerce.Asia) about a year ago.
The company has been operating in stealth mode until the March 21 launch of its flagship offering Commerce.Asia Enterprise, targeted to help small and medium enterprises (SMEs) move their business online.
The timing of the launch couldn’t have been planned better. Coming on the heels of Alibaba’s announced US$2 billion additional investment into its Southeast Asian (SEA) e-commerce platform, Lazada, the message to SMEs is clear. They have to make digital part of their business strategy now and start adapting to the reality that the world is already moving towards the digital economy.
For Ganesh, who was among the pioneers in promoting the O2O (online to offline) concept when he was building MOL Global Inc, an omnichannel strategy is the new reality of doing business in a digital world.
With SMEs in SEA being clear laggards in adapting to digital and with an aggressive global player like Alibaba already here, eating into their markets, this is the pain point that Ganesh is targeting to solve.
Targeting his home market of Malaysia first, Ganesh will then roll out to other SEA countries. With plans to raise US$1.27 million (RM5 million) through an equity crowdfunding (ECF) that goes live on Wed, March 27 and followed by plans to raise a US$25.5 million (RM100 million) fund to invest specifically in e-commerce technology enablers, Ganesh has a lot cooking. No wonder the DNA Digerati50 says “watch this space”.
But I wonder what the retail SME and e-commerce space will look like with Alibaba doubling down on e-commerce in SEA. Is it game over for local Brick & Mortar stores and e-commerce merchants in the six SEA countries Lazada operates in? Especially those who are selling products that are made in China. Because they won’t have the scale Lazada does nor the marketing budget.
You just know that most of that US$2 billion in new investments is going to go into customer acquisition which simply means Lazada will be selling more items for a loss. How does anyone compete with such a competitor?
Already its international e-commerce business is growing rapidly. It saw Q42017 revenue rise 93% year on year to US$727 million, powered by strong growth in Lazada and its global retail marketplace AliExpress.
Chan Kee Siak, president of the Internet Alliance of Malaysia and also a DNA Digerati50, is less concerned about e-commerce sellers. “They know how to survive in the digital world and can adapt to the bigger waves coming.” He is concerned about physical retailers however. “With US$2 billion pouring in, this will mean more deals, better options for consumers,” he says.
Short term, that’s a great deal for consumers, many of whom are struggling with the reality of their wages not keeping pace with the cost of living. What about in the mid term when we get hit with what’s already happening in the United States with store closures and layoff in retail? And what about in the long term if Alibaba becomes the dominant retail channel in SEA and, has pricing power as well. Interesting questions to ponder over, especially for policy makers. Here Chan hopes that governments in SEA will apply fair and reasonable treatment to both online and offline sellers.
Interestingly, in terms of market dominance and pricing power, we may soon get a taste of that in public transportation if Grab indeed acquires Uber’s SEA operations. How much will our Grab rides cost then when it is the only player in the space?
Lots for us to ponder over on this Sunday night. I hope you had a restful weekend because I didn’t, pondering over these scenarios. Have a productive week ahead and do share your thoughts on this matter.