E-commerce and step-backs

Today, we’ve got the deets on:

• Qoo10’s potential acquisition of Wish
• ShopBack’s step back from BNPL

Dear Garage reader, 

When news first broke of Singapore-based e-commerce marketplace Qoo10’s intention to acquire Wish, many market observers were shocked. So were some of my colleagues when they realised that Qoo10 was still operating.

One of the early movers in South-east Asia’s e-commerce space, Qoo10 got its start a good 14 years ago as Gmarket. The marketplace pioneer here also started its own logistics business Qxpress in 2011, a foreshadowing of what e-commerce majors Shopee and Lazada went on to do as they grew in scale. 

The intervening years have not been good for Qoo10, as rivals secured more funding and offered aggressive subsidies and discounts to gain market share in South-east Asia. It also didn’t help that Qoo10 was unable to staunch its losses during the pandemic boom, when all e-commerce players were making money hand over fist.

Now as even more better-funded disruptors enter the market, like ByteDance’s TikTok Shop, perhaps it was cognisant of Qoo10 to find opportunities elsewhere. With an Indonesian government ban cleared by a merger with Tokopedia, the e-commerce arm of social media platform TikTok is nearing total compliance with trade regulations. 

But going to the US is not going to be a walk in the park, as both TikTok Shop and Pinduoduo-backed Temu are starting to duke it out. Temu, in particular, has been aggressively courting US consumers with marketing and ad campaigns, including taking out ad spots during the annual Super Bowl sporting event, where a 30-second ad goes for millions. 

Meanwhile, ShopBack is the latest player to sound a retreat from the buy now pay later (BNPL) space, with a recent e-mail to customers announcing the shuttering of its PayLater service in Singapore and Malaysia. This follows news of Singapore-based BNPL player Pace going into liquidation back in Aug 2023.

BNPL players have been hit hard by persistently high interest rates, which makes the cost of funds expensive while offering interest-free payments for consumers here in Singapore. As interest rates crept up, BNPL players signalled their exit from new markets.

In emerging markets where interest rates are being charged on BNPL instalments, there are signs of some trouble, the latest being Atome’s chief executive stepping down to join GoTo Financial. In Indonesia, one of BNPL’s biggest markets, the country’s regulator there have been scrutinising this lending segment of late, even issuing a prohibition order on a BNPL player last year.

As rates remain high, BNPL might have to evolve to find a more proven business model. 

That’s it from us; check below for more stories. Have a good week!

5 things to know

• When one door closes THE start of 2024 saw layoffs continue to roil the tech sector, but recruitment experts report some bright spots of hiring emerging in the local startup ecosystem. Read more
• Risk hedging INVESTMENTS in private technology companies in South-east Asia fell 34.5 per cent to US$5.5 billion last year despite a rise in the number of deals, as venture capitalists redirected funds to younger companies. Read more
• Funding boost FLUID, a Singapore-based startup enabling business-to-business purchase financing, has raised US$5.2 million in Series A funding led by early-stage investor Insignia Ventures Partners. Read more
• Rationalisation GOTO Group chief Patrick Walujo said Tokopedia‘s market share has been diminishing – especially among price-conscious consumers – as the group cut down on incentives to achieve profitability. Read more
• License for that Yen GIC and Temasek-backed payments startup Nium has secured a payments licence from Japan’s financial regulator to handle large transactions in the country. Read more