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Company Update

A path to profitability: aCommerce’s updated strategic plan to build a marquee Southeast Asian Ecommerce enabler company

Executive Summary:

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:

Introduction 

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.

Market Perspectives 

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.

Our Future

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.

Sincerely,

Paul Srivorakul, CEO


About aCommerce

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.



product information management ecommerce
Case Study, Ecommerce Insights

What is PIM and Why Should Brands in Ecommerce Care?

When your brand decided to start selling on online channels, whether it’s brand.com or official store on e-marketplace — or both, uploading the product information on the channel is a crucial step for this venture and a lot of information need to be included to make up the product detail page.

For example: technical information about the product size, color, weight, and materials; usage information as to where to use, how to use, and instructional videos; as well as enriched emotional information to set the scene and lifestyle of the product’s users, including stories and imagery to help create an emotional connection with potential buyers.

Reebok website - PIM

A product page on Reebok’s website shows multiple angles of the product on the user and a brief description to help consumers establish an emotional connection with the product. Source: Reebok Thailand.

All of the above are what we called “digital assets” and you can imagine the mountain of digital assets you have to store somewhere in the cloud the wider your product selections are. Not to mention if your brand is selling on more than one online channel or if there are multiple teams from different markets needing to reuse the same materials for different purposes.

These are the scenarios many global brands can relate to and PIM is the solution to make sure brand’s ecommerce process is optimized.

What is PIM?

PIM is the acronym for Product Information Management or the process of managing product data, its information, and materials that are needed to sell and distribute your product.

Having a good, centralized PIM system provides you with a single place to collect, manage, enrich, merchandise, approve, and distribute information to multiple sales channels easily.

It’s an important aspect of scaling ecommerce business because it improves the product catalog management process and ensures the quality, accuracy, and completeness of your product information across all channels are the same.

Here is a way to visualize how PIM works:

How PIM system works

Does your brand need PIM?

If your brand is in the business of selling products online, needing to grow, as well as customizing and localizing product in different markets — while doing it all quickly and efficiently — you should be looking at PIM solution to prevent any further struggles while scaling the business.

Take a look at the quick calculation of product assortment below:

Assuming the administrative task of 1 SKU per channel per year is 46 minutes. If your brand is selling each 100 SKUs on three different online channels (a website and two e-marketplaces), you need 232 hours just to do product assortment per year.

(PIM) can automate up to 80% of the manual tasks, reducing the previous example of 696 hours per year down to 139 hours.

If you have a presence in three different markets, it reaches a total estimation of 696 hours (assuming all SKUs are active that year). Imagine if your brand is a fashion brand that releases hundreds of new SKUs each season.

PIM has the ability to boost product team productivity because, without it, your team will be spending most of their time going between multiple applications and platforms doing manual, repetitive tasks to keep up with the pace of growth and success.

It can automate up to 80% of the manual tasks, reducing the previous example of 696 hours per year down to 139 hours, clearing up your product team’s time to finally do what they were hired to do: which is to create new desirable products and sell them across different channels.

PIM also speeds up the time to market, as the product enrichment process can often be a busy flow between suppliers, offices across multiple geographies, and an intricate approval process workflow. Enabling a clear guide in a PIM system can offer each of the working teams a visible next step, improving productivity and collaboration between product information creation, approvers, departments and countries.

Why is PIM so hot right now?

PIM software market is growing at a rate of 25.3% annually and it’s estimated to reach $15.8 billion USD by 2021. The top reasons for adopting PIM are addressing customer expectations through the accurate distribution of product images and digital media.

Today shoppers are tech-savvy, attention-short, and cash-rich. Success in retail is all about the detail and if shoppers can’t find what they want or don’t see the information they need from one retailer, they will go to another website — and it might not be yours. An investment in making it fast and easy to collect then distribute information will ensure accurate product information and keep your consumers engage with your brand.

How to choose the right PIM?

Now that we established the importance of PIM for scaling an ecommerce business, there are few considerations that can help your brand determine the right PIM platform based on your business’ needs and make sure it helps them sustain your ecommerce business.

1. How many sales channels my products listed and published on?

If your products are solely on your own webstore then you possibly do not need a PIM system. But if you are selling on other sales channels (e.g. marketplaces, social media) then you need to have a centralized place to store, maintain and manage consistent information across all sales channels. More points to consider is how data are extracted and what are sales and marketing channels connected to drive impressions and sales?

2. How complex is my product information, taxonomy and relationship management?

It is not always about how many SKUs do you have, but also how many types of product information do you have? How they are structured, categorized and the hierarchy relation?

How can related products be associated (e.g. accessories, replacement parts, upsell, cross-sell, components, substitutes)? These factors need to be addressed and handled when choosing PIM.

3. Does the PIM offer the customization options?

Your PIM platform should be flexible enough to support content information that matched to your supply chain, exchange data with your ERP, system workflows and be able to present analysis data available to indicate the effectiveness of the product information.

4. Does the PIM workflow adaptable with your working process?

How easily can product information be tracked to maturity for approval and visibility of tasks to each department along the approval process. Which roles are allowed to create new content, approve content etc. How easy is this to administer ?

5. Where is the product content source for PIM to get from?

Generally, product information is generated internally in the company but there may be a case where it is from external source. PIM system should be able to handle all of your sources without manual intervention. How do we get product information into the PIM and how easy is this to do?

Want to learn more about choosing the right ecommerce platform and PIM system? Contact mandy@acommerce.asia for more information.

LINE partnered with aCommerce
Company Update

aCommerce Partners with LINE to Help Brand Enterprise do Social Commerce

LINE has announced the partnership with aCommerce last week at LINE Converge Thailand event, the company’s largest showcase of the year. As the new Retail Solution Partner, aCommerce will work together with LINE to help more brands using LINE platform as their online sales channel.

To mark the occasion, Chief Executive Officer of aCommerce Thailand Phensiri Sathianvongnusar joined Norasit Sitivechvichit, Chief Commercial Officer of LINE Thailand on the stage during the presentation to unveiled a range of LINE’s professional solutions for business.

The new partnership is in line with aCommerce’s commitment to deliver greater value for our brand clients and accelerate their growth through great products and services.

“This innovation will help consumers to shop online much easier on LINE. In addition, it will help bridge the gap between consumers and brands with data that could be used to improve customer experience on the platform.

Phensiri Sathianvongnusar, aCommerce Thailand CEO

The importance of social media for brands to reach their consumers only increases overtime, notably in Thailand where the social media penetration is above the region’s average at 71% of the population and LINE’s penetration in the country is the second highest in the world with 44 million monthly active users.

The widespread usage of LINE in the country has it evolved from a platform where people connect with their friends and family into a convenient tool to navigate their everyday lives. The company’s new vision ‘Life on LINE’ showed the commitment to bring the best experience for their users as mentioned by the Senior Vice President of Global Business at LINE, Eunjung Lee:

“LINE is committed to bringing truly ‘Wow’ experience to all its users. Under the theme of ‘Life on LINE’, we believe our three key strategies can help fix people’s common pain points and make daily life more fun and convenient for all our Thai users.” 

L'Oréal Social Commerce aCommerce
Case Study, Client News

How L’Oréal Uses aCommerce’s Social Commerce to Simplify Transaction and Increase Customer Engagement

For most consumers in Southeast Asia, social shopping is not a new concept. In the region where social media penetration rate is at 55%, the line between social networks and ecommerce is completely blurred. It has also become a key platform for B2C and C2C transactions. Unfortunately, only 17% of the analyzed brands around the world have made use of Facebook’s shoppable page.  

Our explanation to the surprisingly low number is rather simple — brands tend to shy away from social commerce because of the lack in integration to its existing ecommerce system.

But L’Oréal is an exception.

All over the region, the French cosmetics company has been fore-fronting at employing technologies to enhance the experience of its shoppers, including the recent partnership with Watsons which allows consumers across Asia to try on makeup virtually. In Southeast Asia, L’Oréal is capitalizing on the burgeoning Facebook of 338 million through the launch of the social commerce platforms with the region’s leading brand ecommerce enabler, aCommerce.

Why Social Commerce by aCommerce?

Given that social commerce in Southeast Asia is expected to flourish even more, it makes now the prime opportunity for brands and retailers to jump on board, experiment and lead ahead of the curve of social shopping.

aCommerce introduces the social commerce service to help brands find the right way to convert the existing followers on the brand’s social platforms into potential purchasers by allowing the targeted audiences to discover, browse, and buy directly from Instagram, Facebook, or LINE posts. The service also provides on-demand communication and a virtual interaction through chats, whether it be Facebook Messenger, Whatsapp, or Line. Keeping all of the brand’s communication in one thread.

Growing social commerce demand pushes L’Oréal to look for an integrated tool

Understanding the growing demand for social shopping and the numerous introductions for features such as Facebook Marketplace and Instagram’s shoppable features, L’Oréal turns to aCommerce, who has been overseeing L’Oréal’s Facebook page in terms of ads and posts from the beginning, for a solution.

The brief from L’Oréal was straight-forward. The company wants a consolidated platform that will be able to integrate the orders and fulfillment of the social commerce demand into its existing ecommerce system.

The Implementation and Success from L’Oréal Social Commerce Facebook Page

With an integrated social commerce tool, L’Oréal is able to allow its potential shoppers to make a purchase via Facebook, Facebook Messenger, LINE official account. They will be able to order through discreet chat windows (as opposed to a phone call or a website).

L'Oréal Social Commerce - Facebook Platform
L’Oréal’s shoppable facebook page enables shoppers to order and make a purchase with the assistance on Facebook Messenger; L’Oréal Thailand

aCommerce also supplements the brand with content, messaging and tone-of-voice that are exclusively personalized to the consumer. It also allows them to have a direct chat with a Customer Service agent or “Beauty Expert”. In return, L’Oréal is able to secure the customer data that can be used to strengthen the relationship between the brand and customers, as well as increasing the engagement with the brand.

By offering a quick and responsive response through Facebook Messenger, L’Oreal is able to fasten the process of transactions and lower the Cost to Serve (CTS). The presence of its shoppable features also reduces the amount of investment that goes into setting an ecommerce website.  

Over a period of 5 months since its initial launch, the new social commerce platform powered by aCommerce seen a surge in customer engagement on L’Oréal Facebook fan page, with an average inquiry-to-sale conversion rate of 22%.

Want to learn more about what social media can contribute to your sales performance? Contact mandy@acommerce.asia for more.