By Enricko | Tech in Asia – Sat, Apr 27, 2013
Friday’s news about e-commerce site
Multiply closing down is a shocker. No one could’ve predicted this. Just
last December
we met up with CEO Stefan Magdalinski and Indonesia country manager
Daniel Tumiwa, and they were enthusiastically talking about the future.
Everyone was geared towards 2013.
A lot of people in Indonesia’s startup scene are also in shock. They
told me how they’ve just met with the Multiply’s higher-ups and
discussed about the company’s plans and new features to be launched. It
seems even the people inside Multiply are in shock as much as we are.
Why on earth did this happen?
Multiply’s transitional setback might be one of the main reasons.
The chaotic transition
The e-commerce site officially rebranded
last month, complete with a brand new logo. But the transition was not a smooth one.
This comment made by one of the sellers explains how difficult it is to sell products under the new system:
- The site only shows some of her product listings since the transition. It is most probably an error.
- After a buyer orders lipstick, there is no information about which color she ordered.
- It is quite difficult for the seller to contact her buyer. The new
site no longer has comments or a private message feature. She can only
send an email to her buyer.
That comment was made on April 5th, around two weeks after the new
site launched. There was also the issue of sellers not receiving their
money from the sales made on Multiply. That case
has apparently been solved by the company, but a few people have lost faith in Multiply as a lot
of their phone calls and emails went unanswered even after the incident.
It also seems some sellers’ conversation history with their buyers went totally bust.
This comment
made by one of the sellers says that she has built her contacts for
over three years, and now it is all gone. She also added that her whole
product listings on Multiply, which were listed on Google’s first page,
is now gone.
On a personal note, even Multiply’s
terms and conditions page
now looks very confusing. The page mixes both Indonesian and English,
and it doesn’t make Multiply look like a company that has control of its
operations.
Two months ago, Multiply was ranked 17th in the Philippines and 47th in Indonesia.
At the time of this writing, the company is now ranked at 50th in the Philippines and 344th in Indonesia.
Very high burn rate
Credit: wondergressive.com
Of course, in the end it will always be about money. Besides lots of
money to fix the whole fiasco described above, Multiply would also need
time to reclaim the long-built reputation and faith from its sellers and
buyers alike. That’s a huge setback for sure.
According to an unnamed source, Multiply is the number one e-commerce
site for one of Indonesia’s largest bank BCA. In fact, the revenue
Multiply records is twice as much as the second placed BCA e-commerce
partner. That means Multiply is recording very huge transactions over
the past years, but because of Multiply’s business model it also means
that the company is burning huge amount of money too.
Multiply doesn’t take any transaction fees from its sellers. This was
originally done by previous CEO Peter Pezaris as Multiply’s promotional
program for its brand new e-commerce service
in 2011. But since then, it has been
extended up until today. So Multiply hasn’t taken any transaction fees from its sellers in the last one and a half year.
That is more or less similar to what rival Tokopedia does, but
Multiply offers something more. The latter site offers delivery fee
subsidy of IDR 25,000 (US$2.5) for every IDR 100,000 ($10.3) minimum
transaction on selected items. A lot of popular items get this offer,
and that would mean that Multiply is burning a lot of money in
subsidizing these delivery offers to a lot of its users. Thus the higher
the transaction, the higher the cost for Multiply. Just like the free
transaction fee, this subsidy offer has been in effect since 2011.
Refocusing efforts
According to the
explanation given by Stefan,
Multiply shareholder MIH remains optimistic about the e-commerce
industry in Indonesia and the Philippines, and has increased its funding
to other portfolio companies
TokoBagus and
Sulit.com.ph.
That “increased funding” could mean MIH’s strategy changed to focus its
funds on more promising companies. Perhaps MIH has decided that backing
up Multiply was no longer worth the effort.
The cost to propel Multiply into the kind of company it was before
the shutdown was quite high. Rebuilding its reputation and spending more
of that money may no longer be the logical option. Rather than patching
up your weaknesses, you might be better off putting that effort into
your strengths. For MIH in this case, its strengths are TokoBagus
(ranked
14th in Indonesia) and Sulit (ranked
8th in the Philippines).
A lot of Multiply users are also quite shocked and sad about this.
Just last month we saw more blood shed by Japan’s e-commerce company
Rakuten in its
joint venture project in Indonesia.
Besides those two companies, we’ve also recently seen two popular
Indonesian startups Koprol and Saling Silang
raising white flags too. Could these be just the start of natural
selection setting its course here in Indonesia? What do you think?
The post
An E-Commerce Giant in Indonesia Bites the Dust. What Happened to Multiply? appeared first on
Tech in Asia.
source: Tech in asia and
Yahoo News! Philippines
