Robinhood app purchase to sustain healthy competition
text size

Robinhood app purchase to sustain healthy competition

Pundits upbeat on Robinhood's survival

Listen to this article
Play
Pause
Morakot Yip In Tsoi, chief executive of Yip In Tsoi, says as the leader of the investor group that is acquiring Robinhood, the group sees the potential in Robinhood's food delivery service.
Morakot Yip In Tsoi, chief executive of Yip In Tsoi, says as the leader of the investor group that is acquiring Robinhood, the group sees the potential in Robinhood's food delivery service.

Thailand's on-demand delivery sector should see healthy competition with the Robinhood food delivery app remaining in the market, say industry observers.

Alibaba's e-marketplace Lazada plans to launch its LazMart grocery delivery service this year, while social commerce giant ByteDance's TikTok plans a foray into the service sector in Indonesia and Thailand.

On-demand super apps and e-commerce platforms will compete in overlapping fields as their strategies to optimise their ecosystems seek additional revenue, according to several experts.

Sea's Shopee already has the ShopeeFood food delivery service and offers digital coupons for many types of services, though they currently represent only a small portion of its business.

According to a South China Morning Post report, TikTok is set to enter Southeast Asia's local service sector. Initially it will allow users in Indonesia and Thailand to receive vouchers for restaurants, flights and hotels through links on their feeds.

TikTokShop Thailand declined to comment on the report.

Muted response

This week SCB X Plc signed a deal to sell all shares of Purple Ventures Co Ltd, the provider of the Robinhood app, to a group of investors led by Yip In Tsoi Group.

The total value of the transaction is up to 2 billion baht, consisting of an initial payment of 400 million baht and an additional performance-based payment of up to 1.6 billion baht.

SCB X had earlier planned to cease the operation of the Robinhood app in July this year but later postponed the plan based on its ongoing consideration of acquisition proposals for the entire business from interested parties. The firm already closed other services on the app in July as originally planned.

E-commerce guru Pawoot Pongvitayapanu said the new investors, led by Yip In Tsoi, are unlikely to make Robinhood a game changer in the market, as it is expected to focus on small merchants.

He said he expects the new investors to impose a small gross profit (GP) fee on online merchants, whereas Robinhood did not previously impose a GP fee.

Mr Pawoot said TikTok is likely to enter the local e-service sector, leveraging live commerce to compete with Shopee, which has a strong ecosystem.

He said the dominant e-marketplace players and dominant on-demand super apps will expand services to optimise their ecosystems and will use artificial intelligence to enable them to better serve customers.

As e-commerce players enter the on-demand service arena, it will pose a challenge to dominant on-demand apps, said Mr Pawoot.

Simon Torring, co-founder of Cube Asia, a market insights company for online retail in Southeast Asia, said Shopee, Lazada and TikTok Shop are entering the non-physical online goods area by offering, for example, hotel and flight booking services. This is something both Shopee and Lazada have had in their apps for some time but they are now really starting to put resources behind it.

Mr Torring said Thailand is expected to gain a 16% share worth US$24 billion of the estimated net merchandise value sales (NMV) in Southeast Asia in 2024.

Alessandro Piscini, founder of e-commerce enabler CREA, believes the new investors will wish to sell their own technology to smaller or medium-sized business.

Thanawat Malabuppha, honorary chairman of the Thai e-commerce association, said he does not anticipate a more intense price war in the online food delivery business following the acquisition of the Robinhood app.

The new investors in the deal will benefit from access to the seller databases and millions of users, said Mr Thanawat.

He said SCB X had a dedicated team for Robinhood's development and marketing but the app faced accumulated losses. New investors from conventional businesses might not engage in a price war, according to Mr Thanawat.

With regard to Lazada's plan to enter the grocery market with LazMart, he said this might not impact the established hypermarkets and modern retailers which now already have expertise in digital business.

Paul Srivorakul, group chief executive of aCommerce, said the Robinhood deal is reasonable given the upfront payment of 400 million baht in exchange for millions of consumers and merchants on the app.

The remaining payment will depend on performance metrics, meaning they must generate enough revenue within a specified timeframe to cover the remaining 1.6 billion baht.

"Perhaps Yip In Tsoi plans to monetise it by developing and selling technology and services to the 400,000 online merchants. Other investors in the group will also offer services to consumers," Mr Paul said.

Do you like the content of this article?
COMMENT