Watching the Indonesian e-commerce scene in the past two years is like watching independence day’s fireworks: exciting in the beginning, breath-taking at its peak, and then slows down, and then you feel like “Oh, God, no …”
E-commerce in Indonesia has begun to enter what most would call the consolidation era. Funding news for companies that build online marketplaces are few and far between. The government’s e-commerce roadmap is set but you are yet to witness anything concrete coming out of it. Smaller companies are fading. Even the bigger guys had to lay off up to hundreds of employees as part of an effort to stay in the path to sustainability.
But yesterday, seemingly out of nowhere, fashion e-commerce platform Sale Stock announced a gigantic US$27 million Series B+ funding round from Gobi Partners, Convergence Ventures, Golden Equator, Alpha JWC Ventures, KIP, MNC, and SMDV.
The news was a big deal because it was the Sale Stock — the fast-growing online mall for middle to lower segment of fashion enthusiasts which made people curious due to its mysterious nature.
The founders had been known for being media shy; I once talked to the company’s PR consultant after a press conference to help us arrange an interview for a profile, and he sighed saying ‘let me try but I’m not promising anything, okay?’. The firm’s previous fundings had never been made public (Series B+?? When the heck was their seed, Series A, Series B funding round?).
The second reason why this is a big deal is because despite the shift of investors’ focus to fintech in the past year, e-commerce maintains a special place in their heart.
And we can thank Amazon for that.
Since we first heard of the possibility of e-commerce giant Amazon entering Southeast Asia (SEA) via Singapore, the e-commerce industry in the region has started talking about how to best deal with this.
Excitement also stirred up in the North as Chinese e-commerce giant Alibaba took a big step into SEA by acquiring majority stake in Lazada las year.
This follows the Chinese e-commerce giant’s joint venture with Indonesian media mogul EMTEK Group. Then came the most anticipated news of the year in the region’s startup communities: its possible investment into Indonesian e-commerce major Tokopedia, which had also been reported to be in talks for investment with Alibaba’s rival JD.com. Stories of triangle love have always been exciting, eh?
Meanwhile, at the other corner, Tencent has been reported to invest in ride-hailing giant Go-Jek.
If this is what led Sale Stock to finally come out in the public about their funding rounds, then I can totally understand the decision. After all, you need to show your competitors what you are capable of, as indicated by the capital you have acquired.
While this may seem like a great prospect to speed up fundraising efforts for e-commerce startups, we must also take a little side note.
Because I believe that in the last quarters of 2017, any fundraising announcement that we are about to see will be on the later stage. Series B or C, or perhaps even an exit.
And this will only happen to companies that we are already familiar of.
Because sustainability is the name of the game that we play today. Companies no longer need investment to jumpstart their business; it is all about strengthening focus in the segments that they are already strong in. Sale Stock in Tier II and Tier III cities; Berrybenka in O2O segment. Tokopedia and Bukalapak with their strong ties to local SMEs. The other guys with … whatever they are strong in.
I know some people who are just thinking about entering the e-commerce industry this year. People with zero experience in tech industry, who have a false notion that doing e-commerce is a great idea because everybody seems to succeed in doing so.
While I usually try to be supportive, I would like to whisper into their ear: Too late. The race is on and you are still searching for the right shoes to wear?
Go ahead and join the race, but don’t tell me I haven’t warned you when the only group of people excited about your participation is your own parents.
For guys in the earlier stage of fundraising, this means that you really have to be creative now. Go back to the drawing board and discover where your true strength lies; offer something that the big guys don’t, as this might be your best chance to compete with them.
Like Sale Stock, Tokopedia had also talked about reaching out to Indonesian islands outside of Java, because that is where the untapped opportunities lie. And this is a battleground that only local players can (and should) understand, while foreign players are still struggling to map the diversity of this market (230 million of potential users? LOL. Assuming everybody eats and shops like people do in Jakarta. But they don’t).
Though being acquired by the likes of Alibaba does not sound so bad after all.
But for the time being, just focus on your homework. Shoo, shoo.
The worst part of watching a firework show is understanding its fleetingness — mono no aware, the Japanese says.
The worst part of working in Indonesian e-commerce sector is understanding the slim chance that you get to succeed, even when you have seen a glimmer of hope.
But the best part is that, even when this year’s firework is over, there will always be next year’s. Or in the context of e-commerce, there is always opportunity lurking around the corner, as the country continues to embrace the digital as a way of life.
So open up the mobile app of your favourite online marketplaces and shop away. Bet there are plenty of independence day discounts around.
Image Credit: bugphai / 123RF Stock Photo