Buoyed by the flourishing sector, Southeast Asia e-commerce enabler aCommerce plans its initial public offering (IPO) to drive business expansion in the region and invest in new technologies to improve services.
Headquartered in Thailand, the eight-year-old startup offers a broad range of e-commerce solutions, including digital marketing, IT development and store operations, consulting, customer care as well as fulfilment and delivery.
Roughly two-thirds of its revenue comes from Thailand, with the rest from Indonesia, the Philippines, Singapore and Malaysia, respectively.
The firm's last external equity fundraising round was a Series B in November 2017, which was led by global investment firm KKR.
The total amount of new capital in that Series B was US$44 million (1.47 billion baht), plus a pre-Series B convertible bond that converted to $22 million.
Mr Paul says the firm sees new retail formats and channels today that will become mainstream in the near future.
The company also took a senior secured loan from an institutional lender called Indies in late 2019. The total net fundraising to date by the company is just over $100 million (3.34 billion baht).
The company recently appointed three new independent non-executive members to its board of directors as part of its IPO plan.
"We don't consider ourselves a startup anymore. We are in a stage where we have a solid business model and a strong client base in a proven industry," Paul Srivorakul, co-founder and chief executive of aCommerce, told the Bangkok Post.
The company does not need to keep doing fundraising rounds in the private markets to fund large operating losses and expansion, he said.
"We can drive a very health growth while remaining sustainable," said Mr Paul.
With a strong corporate infrastructure, governance and protocols, he said the firm is better suited to being a public company.
"If we IPO in Thailand, we would be very proud to be one of Thailand's first homegrown and independent technology companies to achieve the milestone of a main board IPO," said Mr Paul.
"It would also provide an opportunity for liquidity to some of our very early shareholders who invested between 2013 to 2016."
Although he has an IPO plan in sight, he did not go into details.
The company's major uses of funds in the long run will be for inorganic expansion in Asean through selective acquisitions and further investment in technology services, said Mr Paul. It also plans to usher in more software as a service (SaaS) products and fund more organic expansion in the region.
He said the company embarked on its 2.0 strategy in mid-2019, which included refocusing on an "end-to-end" brand commerce business and enterprise-grade solutions for brands.
Under the strategy, aCommerce outsourced non-core operations to save on operating expenses and increased its relative economics on contracts with customers.
This strategy allowed more profitability and focused on cash flow and operating leverage in the company's business.
Despite the pandemic surging in March 2020, the company managed to thrive in terms of top line and experienced rapid improvements in the bottom line, said Mr Paul.
"This brought forward our planned break-even point significantly, with profitability planned for the majority of 2020," he said.
The firm also made great advancements in SaaS products, which are serving brand clients, said Mr Paul.
The pandemic has led to a massive rise in e-commerce penetration, and not only new customers, but also repeat users, he said.
"Our new consumers were up almost 90% year-on-year in 2020," said Mr Paul. "We also recorded a massive strategic shift, with brands focusing on online commerce and increasing their investment in direct-to-consumer strategies, distribution, social commerce, as well as marketplaces."
The company's revenue grew 60% year-on-year in 2020 and reported a profit.
The rise of e-commerce in Thailand will help create jobs and economic activities, helping to future-proof the country's economy, he said.
"We are not complacent as there are possible longer-term macroeconomic issues, but we believe given our focus on sustainability we should be well-placed regardless of what happens," said Mr Paul.
FUTURE OF E-COMMERCE
The country's e-commerce landscape is changing substantially, with consumers spending more time online for various activities, such as socialising, entertainment and shopping, he said.
This shift has forced companies to adapt their marketing, distribution and retailing strategies online.
Brands and retailers are combining digital and offline strategies to provide an omni-channel experience for consumers to engage and buy their products and services from anywhere.
The retail experience is pivoting to multiple seamless options, such as pick-up in-store and home delivery, said Mr Paul. Thais already engage and shop for brands across various online platforms.
"We see new retail formats and channels today that will become mainstream in the near future, such as chat commerce, live-streaming, video commerce, social selling and group buying," he said.
To better serve customers, aCommerce engineered a cloud-based e-commerce IQ platform, integrating with multiple channels, operating services and different fulfilment providers.
"We want to help brands manage, track and distribute their products across as many channels and platforms as possible while centralising the data and customers," said Mr Paul.
The company is partnering with multiple delivery partners, such as DHL, Kerry, CJ, Thailand Post, Ninja Van and Flash Express.
It also integrates with Lazada and Shopee inventory and fulfilment systems to enable some brand partners to leverage the marketplaces' fast in-house logistics.
"Centrally tracking and managing data and inventory across all these platforms is vital for brands to operate profitably in e-commerce," he said.
According to Mr Paul, in the future aCommerce may look into acquiring some of its smaller competitors if such a purchase fits with the company's strategic plan.
"The increased competition is a good thing for us. We are a partner to all the players and look to work with them all," he said.
"Increased service coverage and better market penetration is a benefit to our customers and our bottom line."