The COVID-19 pandemic has propelled e-commerce into everyone’s lives around the world. Yet, is there room for more opportunities? Join Techsauce Global Content Editor Chaowarat Yongjiranon as she gains insight from aCommerce Co-Founder and Group CEO Paul Srivorakul on the future possibilities of e-commerce.
Here is a summary of our Techsauce Global Podcast with aCommerce, is a leading e-commerce platform and solutions provider in Southeast Asia.
After starting its business in 2013, aCommerce has grown its homegrown Thai business as an end-to-end e-commerce enabler, providing everything from digital marketing, store operations, to logistics and fulfillment.
It has supported brands through a unified e-commerce platform called “ECommerceIQ”, which enables brands to get end-to-end operations with full visibility of data and analytics of their business. Since then it has expanded to Indonesia, Singapore, the Philippines, and Malaysia.
Paul admits the past nine years have definitely been challenging as the company pioneered in an industry that not many people knew about.
However with e-commerce now maturing, Paul sees opportunity for fast growth in the enablement industry. The growth of e-commerce will expand even more as brands and retailers accelerate their digital transformation.
At the beginning the company had a pretty large founding team of five, working in three major industries: retail, logistics, and technology. What the company has learnt over the past years is it is important to specialize as your business scales. This enables the company to increase its efficiency and innovate. As the business gets more complex, solid senior management is needed to manage departments across a multitude of different countries.
Paul says he actually worries when the company does not have problems. He says he is the guy that goes and hunts for problems.
“A business is about solving problems so when there are no problems, we are in trouble.”
Paul says it is important to get the whole company used to seeing problems as a norm and that they will enable you to grow, innovate and consistently optimize. This is why Paul thinks it is important to have constant fixing and problem solving are the key DNA of a company.
The hunt for talent has always been a challenge and it is even more challenging now as traditional companies seek to transform. Therefore Paul says it is important to create a culture to retain and attract talent.
A large number of young executives are looking for companies that provide a multitude of discipline and areas to grow as many aspire to be entrepreneurs themselves. aCommerce is fortunate to run an end-to-end business where it is like running 5-6 startups within one company.
In addition to offering the right culture for talent, aCommerce is also seeking talent overseas. Remote working has opened up the door to leveraging talent in Vietnam, India, and Europe. However, to pull this off Paul says you need a good managing team. All in all, things are going to change.
“We think that paying double or maybe 30 or 40% increase in poaching will slowly start to go away.”
Paul adds as some startups are challenged in terms of fundraising in a new macroeconomic climate, there will be more talent freed up in the region too.
In giving advice to others wanting to follow the footsteps of aCommerce, Paul says it is important to have patience, especially when pioneering in an industry.
“A lot of founders tend to have that mentality of moving fast and kind of breaking things. The reality is you also have to be patient with the market.”
E-commerce takes time to develop and you have to be patient, read the market well, spot the trends, and coordinate with your team to grab opportunities when you see them. Paul says it is important that when you do not see immediate results, not to give up as some industries take time. Instead of burning a large amount of cash up front to show top line growth metrics, you should understand the problem and know that it will take time to fix it.
“I think it is important in conserving your cash to give you time to solve those problems.”
Once you have the right economics in place and you really understand the model, then you can think about accelerating growth capital and this really excites investors and VCs.
Paul says high tech growth stocks are getting punished today because now it is about the fundamentals. aCommerce has from day one been a protocol-led type of business where it makes sure to grow a little faster than the market. This is not about growth at all costs like online B2C players, which focus on gaining market share at all costs and burn a ton of money. As the market dries up in the next couple of years, Paul says it will be painful for companies that do not have fundamentals.
For startups up to date, Paul says it will be a different game when compared to the past. Companies will have to be more frugal and a lot more bottom line focused. It will be about seeking a path to profitability, not growth at all cost.
Paul says it all depends on your business model. When looking at Thailand, there is big competition from conglomerates, but there is room to really go deep into the market and grab a large market share. Companies have to be ready to go toe-to-toe with the big guys.
When looking abroad, Paul says there is market opportunity in Indonesia, Vietnam, and the Philippines as investors like the fact that you are diversifying the risk of just one market. When it comes to playing in the Southeast Asian markets, Paul believes it is important for investors to diversify and minimize risk.
However if you expand into big markets like Indonesia and Vietnam you should have a unique model. If you are going into these markets as number 4 or 5, you might have to rethink your strategy. You might need to consider things like consolidation, joint ventures, and so on.
With aCommerce operating in Thailand, Indonesia, Malaysia, the Philippines, and Singapore, Paul shares insights on the region.
Thailand like Malaysia and Singapore is a mature market with good consumer economics, purchasing power, mature infrastructure in terms of logistics, and is fairly easy to do business given its fairly small size. In these markets, you can operate profitably.
Whereas in Indonesia and the Philippines, these large markets hold incredibly complex infrastructures and the basket size of purchasing power is lower. You need to be prepared to sell at a lower price for a longer timeframe to get that economy of scale.
Paul believes technology will enable brands to create really new experiences. The metaverse will allow for more customer engagement whether through entertainment or gaming. What makes it interesting is there is no manufacturing issue. Paul says every brand in the future will become a tech company to innovate, create, and design.
Paul gives the example of the Indian Government empowering SMEs by creating an open network for digital commerce where there is a logistics network. It is like blockchain, free, open, and transparent. Paul says the addition of the democratization of the internet with Web3 will also empower the masses so they are not forced into silos or platforms where they have to pay high commissions. Paul can see Southeast governments looking at this model.
Thailand's successful Prompt Pay can lead to QR codes being used to pay e-commerce. Paul believes more will come from this.
Ultimately Paul sees a generational and transformational opportunity for e-commerce in Southeast Asia for this decade. It’s going to be exciting, not only for startups, but investors.
"I know post-COVID-19 is brutal for some industries, but I think it is going to be exciting in the next few years.”
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