Deal focus: Tapping complexity in e-commerce

Part of the rationale behind aCommerce’s $65 million Series B round is geographical expansion: the company, which provides retail, distribution, and marketing solutions to e-commerce customers, needs at least $16 million to extend its extend its infrastructure into Malaysia and Vietnam, adding to an existing coverage of Singapore, Indonesia, Thailand, and the Philippines.

Arguably the bigger challenge is delivering an end-to-end service that addresses the complexities of multi-channel retail in Southeast Asia and also targets a wider variety of user types. While B2C is the foundation of aCommerce’s business, the company is experiencing rapid growth in B2B, which accounts for 30% of revenue, up from 10% last year. Business-to-government (B2G) and business-to-corporate employers (B2E) are seen as having potential as well. 

“If you work with traditional distributors on a B2B order, it takes 7-10 days to deliver. They’ve got old systems, so the inventory isn’t in sync. They haven’t got multiple delivery providers who can deliver the next day and also collect COD [cash on delivery]. B2C has driven innovation and B2B is just starting to catch up,” says Paul Srivorakul, co-founder and group CEO of aCommerce. “It’s happening in the US as well. Small businesses are ordering from Amazon because the logistics is faster.”

Emerald Media, an investment platform created by KKR, led the Series B round, while existing backers Blue Sky Alternative Investments, MDI Ventures and DKSH re-upped. Srivorakul started talking to Emerald more than three years ago, prior to a period of rapid expansion over the last 18 months during which aCommerce’s client base went from 100 to 260 brands. Net revenue grew by 130% in 2016 and is tracking above 100% so far this year.

However, Srivorakul notes that the investors were most impressed by the company’s ability to develop existing clients by upselling, cross-selling, and taking them into new markets. For example, if Johnson & Johnson wanted to sell its products on a third-party online marketplace in the Philippines, aCommerce would not only provide services covering marketing through delivery, but also offer B2B and B2G, and then pitch the company on replicating the arrangement in other markets.

As such, the number of brands might not accelerate as quickly over the next 18 months, but the level of engagement will. This approach is seen as reinforcing aCommerce’s value-add.

A client that uses Amazon doesn’t own data pertaining to its transactions, so it doesn’t fully understand the buyers. ACommerce positions itself as an outsourcing partner that has the means – through fulfillment centers, technology platforms and partnerships with local logistics providers, retailers, and social media platforms – to turn data into increased sales.

Srivorakul believes this will become a more prized quality in an increasingly nuanced retail environment. “A lot of people talk about omni-channel, where you have online and offline, but it’s more complex than that. It’s about multi-brand retail sites, marketplaces, chat commerce and social media. The way we see the future, every advertising spot is going to become a retail channel.”

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• Topics
• Southeast Asia
• Early-stage
• Technology
• Consumer
• Thailand
• KKR
• Blue Sky Private Equity
• TMT
• Venture