A path to profitability: aCommerce’s updated strategic plan to build a marquee Southeast Asian Ecommerce enabler company
aCommerce announces “aCommerce 2.0,” a new strategic plan that will deliver greater value to enterprise brand clients, accelerate the company’s path to profitability in the next 12 months, and position the business for long term sustainable growth as the leading Ecommerce enabler company in Southeast Asia. Key elements of the plan include:
- Prioritizing and enhancing end-to-end Ecommerce services for enterprise brand clients to build and strengthen long-term relationships.
- Focusing on aCommerce’s existing core markets – Thailand, Indonesia, the Philippines, Singapore, and Malaysia.
- Transitioning away from providing piecemeal or single service solutions to clients that are commoditized and where there are other service provider partners already in place.
- Continued funding and support from existing investors, including over US$10 million from existing major shareholders.
- Achieving group profitability during the next 12 months by growing profitable core Brand Ecommerce End-to-End business and streamlining operations.
Letter to the aCommerce Community from CEO Paul Srivorakul:
On August 20, 2018, we celebrated our five-year anniversary as a business. Five years can seem like a long time. For us, it represented a rapid journey from startup to a more mature business – from US$0 in revenue to well north of US$100 million. It was a major milestone for myself, our founder team, and the 1,000+ employees who work so hard to support our 200+ brand clients.
As a business, we marked the occasion with a celebration. As an individual, I marked the occasion with reflection, on our milestones, goals, and the state of the market in which we operate. I recall a sense of uneasiness – uneasiness about the rapidly changing market, concerns about how we could maintain our market position and the existence of some competitors willing to enter into unsustainable business practices, and wariness over whether we were doing everything possible to best service our clients and motivate our employees.
Acting on these concerns, over the past twelve months my team and I, along with our board and investors, have spent time reflecting on what can make our company great and what, ultimately, needs to change if we wish to be the next great home-grown Ecommerce business in Southeast Asia.
We are therefore pleased to unveil our new strategic plan, aCommerce 2.0. Under this plan, we will position aCommerce to deliver sustainable profitable growth, great products and services to our clients, value to our shareholders and employee shareholders, and a bright future with more opportunities for our dedicated employees.
In many respects, the continued evolution of the Ecommerce markets in which we operate served as the catalyst for us to take a critical look at our business. Southeast Asia Ecommerce continues to grow rapidly, and at times, the evolving ecosystem of partners, service providers, and go-to-market channels can create challenges.
In recent years there has been a rise of marketplaces, social, omni-channel logistics and demanding “24-hour” consumers. While these trends make aCommerce’s end-to-end services even more important for brands looking to effectively manage their resources and implement successful Ecommerce strategies to reach Southeast Asian consumers, the same dynamics have created inherent challenges for the Ecommerce services industry.
Our Business As It Stands
Since our founding in Thailand in 2013, we have built one of the first truly regional Ecommerce businesses in Southeast Asia. We are now fortunate enough to serve over 200+ global brands as a true omni-channel partner in five of the largest markets in the region.
In addition to geographic expansion over the past six years, we have also expanded our services and capabilities to support a broad set of clients in Southeast Asia’s fast-moving and rapidly-expanding US$23 billion Ecommerce industry. We have grown into a business that will generate well north of US$100 million in revenue this year, and our most mature market, Thailand, is already profitable on a standalone basis.
Our business continues to experience rapid growth, with revenues from our core Brand Ecommerce solutions business (the vast majority of our business today) growing at a Compound Annual Growth Rate (CAGR) of 188% over the last 2 years to exceed US$90 million for the calendar year 2018. We are proud of our many accomplishments but believe we have only just laid the foundation for what could be a long-term, sustainable technology company. In order to continue building we need to ensure that our growth going forward is executed on sustainable economic terms. As the “first mover” of scale in this space, we have a responsibility to help steer away from unsustainable loss-making practices that are to the detriment of brands and all service providers in the long run.
Retooling to Build “aCommerce 2.0”
Over the past 12 months, we have conducted a thorough strategic review of our business to determine the best path to delivering greater value for our brand clients while also achieving sustainable long-term growth. In short, we want to figure out how to leverage our core business and figure out “what comes next.” After careful consideration, the company has decided to sharpen its focus on the following strategic priorities which we believe will accelerate aCommerce’s path to profitability:
- Better supporting our global enterprise brands with end-to-end Ecommerce services, including scalability, security, interoperability and data ownership, by enhancing aCommerce’s services and technology.
- Recruiting, developing and retaining key talent is a top priority and important for supporting our fast-growing enterprise brand clients and channel partners
- Focusing on aCommerce’s core markets – Thailand, Indonesia, the Philippines, Singapore, and Malaysia – to provide new and existing brand clients with distribution channels, enterprise platform & data insights and local expertise.
- Achieving group profitability during the next 12 months, including by growing the profitable core Brand Ecommerce business and implementing a series of cost-cutting measures.
Our Path Forward
Achieving sustainable business economics will secure aCommerce’s position as a market leader in Southeast Asia’s Ecommerce services sector and enable the company to better serve its clients over the long term. Having worked hard to build an organic growth engine with strong topline growth, a core focus for the company will be to achieve profitability and become cash flow generative during the next 12 months.
While the company continues to invest in its people, core services and technology, aCommerce is implementing a series of initiatives to streamline operations, reduce loss-making business and optimize margins which will accelerate its path to profitability and sustainable growth, as well as supporting its strategic priorities. Many of these changes have been underway for some time, and others will be implemented in the coming days and months.
Some of these decisions will affect a portion of our employee base – while this is a very difficult decision and not one I enjoy as the CEO, it will allow us to become a more sustainable and profitable business. On behalf of the entire company, I want to personally thank each of these colleagues for their hard work and service.
These specific initiatives include:
- Focusing on core Brand Ecommerce and scaling back single service clients for stand-alone services such as web development, marketing, and account management. These changes in strategy and services will impact approximately 60 employees across the 5 markets we operate in, which equates to around 8% of our total workforce.
- Working with trusted and experienced service providers to outsource some of our non-core operations including call center, fulfillment, and delivery. This will allow aCommerce to focus our resources on the core Brand Ecommerce services and key markets, as well as become more effective in cost management. As a result of this change, up to approximately 170 blue-collar employees, or 13% of our total workforce, will be impacted by the above-mentioned initiatives.
- Ensuring all contracts are on sustainable economic terms and stick to our first principals for all trusted Brand clients. We are proud that the majority of our cohort of Brand clients provide us with a path to profitable growth, however, we may more actively cease doing business with those that are uneconomical and/or willing to work with competitors on unsustainable terms.
We as a company must continue to invest in our future in order to stay ahead of the curve and relevant with our clients. Accordingly, we are pleased to announce a new financing round of over US$10 million, led by existing investors Blue Sky, Emerald Media, DKSH, and SMDV, as well as plans to raise up to an additional US$5 million. The funds will be used to enhance the Company’s demand generation solutions, optimize logistics operations and balance its resources to increase efficiency across the business to better support enterprise brand clients. We are confident this fundraising will fund our operations until the group reaches profitability in 2020.
The new funding, labor rationalization, and focus on Brand Ecommerce will allow aCommerce to innovate and dedicate more resources to support growth for our enterprise brands. We will need to invest more in recruitment, training, and development of our staff as the Ecommerce industry matures and gets more technical and sophisticated. We are committed to building a long-term business, and will not be distracted by chasing near-term, vanity metrics.
I know that aCommerce employees are committed to relentlessly focus first and foremost on delivering amazing results for our clients, teams, partners, and shareholders. To achieve this, we will continue to innovate, optimize, and be sustainable such that we remain best positioned to serve our stakeholders for the long term as the market matures.
To all our staff, I thank you for your incredible dedication and contributions to aCommerce. I am deeply grateful for all you’ve done; we would not be where we are today without you. Thank you #aTeam.
Paul Srivorakul, CEO
Headquartered in Thailand, aCommerce is the largest brand Ecommerce enabler in Southeast Asia, delivering localized online retail, distribution, and marketing solutions for global brand clients such as Samsung, Unilever, Nestlé, L’Oréal, Philips, Adidas, Mars and many more. Founded in June 2013, aCommerce provides end-to-end Ecommerce technologies and solutions including performance marketing, channel management, webstore design and operations, content production, order fulfillment and warehousing, delivery and logistics and localized customer care. For more information, please visit www.acommerce.asia.