Mergers and Acquisitions of E-Commerce Startups Will Rise Next Year
Several high-level venture capital officials predict that e-commerce startups will have massive mergers and acquisitions next year. This is to increase efficiency. BRI Ventures Investment Director William Gozali explained that consolidation usually focuses on efficiency.
“I see that the e-commerce sector will be massive (mergers and acquisitions),” he said in a virtual media gathering event for the Venture Capital Association for Indonesian Startups (Amvesindo) entitled ‘Exploring the Dynamics and Trends of Startup Funding 2020-2021’, Monday (2/11).
E-commerce startups in Indonesia such as Tokopedia and Bukalapak are supply aggregates. “There are too many now. The values are no longer aggregated but curated. So if you look at mergers and acquisitions, it is certainly an efficient sector,” he said.
In addition, he sees that social commerce startups will continue to grow. Moreover, GlobalWebIndex data shows that Indonesians have an average of 10-11 social media accounts in the first quarter of 2020. William also assessed that the prospect of other e-commerce derivatives, namely digitalization of shops or online to offline (O2O), will grow.
“The effects of the corona pandemic, a startup that drives the supply chain, have very good prospects,” he said. Based on research by securities company CLSA, customer acquisition costs (CACs) through a shop partner are US$ 2 per customer, or only 10-20% compared to the general method.
In addition, O2O services contribute 10% to total new users in e-commerce. Meanwhile, Euromonitor International 2018 research shows that the majority of Indonesians, Indians, and Filipinos prefer to shop at grocery stores.
Startup Mergers and Acquisitions are Predicted to Start Happenning This Year
Previously, CEO of Mandiri Capital Indonesia Eddi Danusaputro also predicted that mergers and acquisitions in the e-commerce sector will begin to occur this year. “The future direction seems to be towards consolidation between players,” said Eddi, last October (26/10). “This year has started, because only those with large capital can continue to burn money.”
This is because consumers in Indonesia are very sensitive to prices, so e-commerce requires large funds to provide promotions. In addition, it is necessary to strengthen the platform from the product supply side, display and also logistics. Even so, in general, the online trading market in Indonesia is still very large.
Research from Google, Temasek and Bain and Company entitled e-Conomy SEA 2019 also estimates that the gross merchandise value (GMV) of e-commerce in Indonesia is US$ 20.9 billion in 2019. The same thing was conveyed by Managing Partner Kejora Ventures Eri Reksoprodjo.
“Mergers and acquisitions, industrial consolidation will be more prevalent,” he said. This is because the company will start to improve the efficiency of the supply chain.
Previously, It was Reported that the Softbank’s Boss Is Pushing the Merge Between Grab & Gojek
SoftBank CEO Masayoshi Son is reportedly increasingly pushing Grab to complete the merger agreement with Gojek. The two decacorns were also said to be actively discussing online during the corona pandemic.
The news of the Gojek and Grab merger has actually been blowing since last February. Discussions between the two are reportedly continuing, because their competitors are losing money due to restrictions on activities outside the home due to the coronavirus.
“The two most valuable startups in Southeast Asia are actively involved in Zoom’s call after months of discussion and making progress towards an agreement,” said several Bloomberg sources, yesterday evening (15/10). An important point that is still being discussed is whether the two of them will combine all operations or Grab just acquiring the Gojek business in Indonesia.
Sources said that Grab CEO Anthony Tan chose to acquire a narrower market. That way, the company has more control. “This allows him to do business in Indonesia as a subsidiary of Grab,” said the source. However, he did not specify the market in question.
Meanwhile, Gojek shareholders encourage the combination throughout Southeast Asia. “This is because they will end up with more businesses combined,” said the source. Reportedly, Son agreed with the suggestion of the Gojek shareholders.