aCommerce, a regional end-to-end e-commerce logistics and service provider for Southeast Asia, has closed a Series A funding round of $10.7 million. According to the company, this is the largest Series A for a Thailand-based startup and one of the largest Series A rounds in Southeast Asia to date.
The funding was organized by founding investor Ardent Capital, and led by Inspire Ventures, a Bangkok-based firm, with participation from NTT DOCOMO; Sumitomo Corporation Equity Asia Limited; Sinar Mas Indonesia; Asia Pacific Digital; Cyberagent Ventures; and JL Capital, as well as angel investors and executive staff.
Paul Srivorakul, regional CEO of aCommerce, explains logistics in Southeast Asia is challenging for vendors because the market is extremely diverse with multiple distribution channels. Low credit card penetration also means customers in up to 90 percent of local markets prefer cash-on-delivery payments.
“Southeast Asia is made up of many different countries, laws, languages, currencies, and complicated geographically, like the Philippines and Indonesia islands. We make it easy for brands and retailers to sell online by providing ‘turnkey’ end-to-end e-commerce services and products across the region, from customs, web development, and digital marketing to local language customer service support, payments, fulfillment, and collection-on-delivery,” he says.
“We also help brands acquire and manage the end customer and provide them with deep data/analytics across the entire customer experience and touch point, i.e. tracking everything from content/marketing all the way to packing orders and collecting payment/delivery.”
Founded in June 2013, aCommerce has four offices with fulfillment centers and over 250 employees in Thailand, Singapore, Indonesia and the Philippines.
Their Series A will enable aCommerce to expand its logistics infrastructure, delivery fleet, technology platform, and channel management in each of its current markets and seek partnerships with other logistics and e-commerce companies.
aCommerce will also invest in customs clearance, FDA certification, and local business operating licenses for international companies that want to break into the Southeast Asia market. The company already provides services for brands like cosmetics conglomerate L’Oreal, HP, Line Chat and Groupon.
Srivorakul compares Southeast Asia’s e-commerce market to China back in 2010, “which means the market is about to explode.”
Despite Internet penetration of about 25 percent in Southeast Asia and mobile penetration as high as 40 percent in certain markets, e-commerce is still less than 1 percent of the total retail market, he says, while advertising is roughly 3 percent of total ad spending, or $18 billion across the Southeast Asia region. The Southeast Asian e-commerce market was worth about $4.5 billion in 2014 and will grow to about $6 billion in 2015, Srivorakul says.
Alibaba recently invested $249 million in Singpost, which was formerly the state postal service for Singapore, but has recently repositioned itself as a profit-generating entity with a logistics network that extends across Southeast Asia.
Singpost competes with aCommerce in terms of order fulfillment and delivery, but aCommerce differentiates with services like channel management and Popshop, a platform that sends brands’ products to first- or third-party websites, apps and marketplaces. It also offers cash-on-delivery in markets that Singpost doesn’t or has low penetration in, like Thailand, Indonesia and the Philippines, Srivorakul says.
“Singpost has always had more capital than us (i.e. a market cap of $3 billion) so them raising more money isn’t going to change much. It’s all about execution and we think we have the advantage because of our passion, local experience, tech, local teams, and head start.”
Additional competitors include delivery services like DHL. On the other hand, aCommerce see e-commerce companies with their own logistics networks, like Rocket Internet’s Lazada, as a “channel management partner to feed and manage our clients’ brands and products in their Marketplace.”
“I think the market is too small to really take any competitor too seriously because I think it’s still early and we need to work with everyone to grow the market as a whole rather than undercut each other for a small share,” he adds.
Part of the funding will be used to “reinvent the last-mile customer experience for receiving a package and choosing their preferred payment at their doorstep.
Srivorakul says this means aCommerce’s “delivery fleet will function as an extension of our customer service, and they will be equipped with smartphones with our software that is connected to our cloud platform to plan their delivery routes, get help from our dispatcher, communicate with the end customer, process cash or credit card payments, and handle questions, returns, or complaints at the door. We have to scale up with technology and physical staff until credit card penetration increases and customers are more comfortable with online transactions in our markets.”
In a statement, Tom Kim, partner and co-founder of Inspire Ventures, said “In just one year, aCommerce has built a stacked team of players from Amazon, Walmart, DHL, eBay, Apple, Oracle, McKinsey, Microsoft, and Rocket Internet and expanded into four robust Southeast Asian markets. With their global experience and local expertise, we are confident in this team’s ability to execute and become the dominant e-commerce solutions provider in the region. E-commerce is growing rapidly, and these guys are well positioned to capitalize on this disruptive global trend.”