Social Commerce in Indonesia - Empowering entrepreneurs with smart connected capital - AC Ventures
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Social Commerce in Indonesia
Empowering entrepreneurs with smart connected capital
The information contained within this Presentation is proprietary to Agaeti Convergence Capital III L.P. (ACV). It is confidential, legally privileged and protected by the relevant laws. It is not intended to be
distributed to any third party without the written consent of ACV. All of the information contained in the Presentation is subject to further modification and any and all forecasts, projections or forward-looking
statements contained herein shall not be relied upon as facts nor relied upon as any representation of future results which may materially vary from such projections and forecasts.
Research Agenda
Identifying New Consumer Models
Social Commerce: Market Overview
Segmentation
Success stories
Local Players
KPI & Valuation
Investment Timing
Impact of COVID-19
2
Consumer eCommerce models
4
Social Commerce is a subset of eCommerce that involves social-sharing,
allowing businesses to leverage on social networks to drive sales.
Consumer Commerce Models
Marketplace Directory/Listing D2C Platforms Social Commerce New Retail (O2O) Rental
Reseller/Agent Group- Media/Content MLM
Buying/Team
Purchase
“The fundamental driving principle behind social
commerce is trust, where individuals are
Online/Offline Influencer/ Dropshipper Offline Agent empowered to sell and recommend your products to
Agent Affiliate their community, network, followers, and friends.
Social commerce innovation empowers both online
and offline channels, allowing individuals to
commercialize their relationships with others.”
5
What is Social Commerce?
6
Indonesia’s eCommerce market is a US$12B sector, with the
potential to reach US$53B-US$200B by 2025
Indonesia E-commerce Market Size (US$B) Indonesia eCommerce Market (US$B)
60
250
53
201 50
200 43
40
35
150 134
28
30
23
100 90 19
20 15
60 12
50 40 10
27
12 18
8
- 0
2018 2019 2020 2021 2022 2023 2024 2025
2017 2018 2019 2020 2021 2022 2023 2024 2025
Source: McKinsey (2017) Source: WeAreSocial (2018)
eCommerce penetration is only 14% of total eCommerce User in Indonesia (#M) and
Whatsapp Users in Indonesia (#M)
population (2018, #M) ARPU (US$)
300 50 47.42 200
113.50 268.2 44.42
112.37 41.60 187
250 38.97
111.26 40 36.50 161
34.19 150
110.16 200 30 32.03 139
109.07 150 150
107.99 142 130 30 120
150 103 100
106.92
105.86 20 89
100 75
37 63
50 50
10
0
Indonesian Urban Internet Mobile Mobile eCommerce - 0
2017 2018 2019 2020 2021 2022 2023 2024 2017 2018 2019 2020 2021 2022 2023 2024
Population Population Users Internet Social Media Users
Source: McKinsey, Statista, WeAreSocial Users Users
Social Commerce is the amalgamation of eCommerce and Social; 49%
of the Indonesian population is active on social media.
• 130 million active social media users in Indonesia (120 millions of which are on mobile), comprising 49% of the population.
• According to Indonesia’s Ministry of Finance, 64 per cent of all e-commerce transactions in 2018 occurred through social media.
• With about 150 million internet users in a country of 250 million people, Indonesia’s internet population size is fourth worldwide after
China, India and Japan.
• Consumers are becoming more digitally savvy; people spend over 3 hours on social media browsing, discovering, and interacting with
friends.
• PayPal’s survey of 1.4K merchants in 7 Asian countries found that 80% of merchants were already selling through social media channels,
and 92% found that selling through social media improved their financial condition.
Source: WeAreSocial, PayPal 2017
8
Social, Economic and Technology trends demonstrate that Social
Commerce is well positioned to succeed in Indonesia
• Indonesians spend 3h23m on social media daily. • McKinsey forecasts state that online-commerce sales will grow
• 49% of Indonesia’s population is are active on social eightfold, with social commerce contributing to U$25B by
media platforms. Indonesia is ranked 3rd for social media 2022.
usage in the world. • 35% of online sales are generated by women; eCommerce has
• 76% of users shopped online in 2018 via mobile phone led to savings of 11 to 25 percent for customers outside Java.
(survey of ages 16-64)., of which 35% of users make • An estimated 90 million Indonesians will have joined the
online payments. consuming class by 2030.
• Annual consumption in other cities is 3x greater than
Jabodetabek, where offline consumption is 6.5x of online,
whilst Jakarta’s offline consumption is only 2x of online
• 100 million Indonesians purchased consumer goods online in
2018, growing at 5.9% YoY.
• Growing eWallet adoption – GoPay, Dana, LinkAja, and others,
with only 3.1% of Indonesian populatin owning a mobile money
account.
• eCommerce users only at ~40M users, with ARPU estimated to
be US$89.
Source: WeAreSocial, PayPal, CLSA
Social Commerce is more than social-media marketing; it is a go-to-
market strategy to acquire scalably, efficiently and effectively
Social Commerce
In the context of Asia, Social Commerce is NOT:
• Social media marketing
• Content Marketing
• Omni-channel software that enable SMEs to
sell on social media
Reseller/Agent Group-Buying Media/Content MLM
From traditional commerce: With examples like Pinduoduo, Meesho and Yunji, Social Commerce
has the use of social network in the context of eCommerce
transactions. It is the utilising of online and offline network, that
Principal Distributor Retailer Consumer
enables social interaction to facilitate online buying and selling of
products and services
Now with social commerce as an additional distribution channel:
Social Agents /
Principal Distributor Commerce Friends / Consumer
Platform Members Social commerce is a go-to-market model for platforms to acquire
customers in a faster, more cost-efficient (lower CaC) and effective
way, and allows for trust.
10Segmenting Social Commerce in Indonesia
11Social Commerce’s four main models are Agent/Reseller, Group-Buying,
Media/Content Driven, and Membership/MLM
Consumer Commerce Models
Marketplace Directory/Listing D2C Platforms Social Commerce New Retail (O2O) Rental
Reseller/Agent Group-Buying Media/Content MLM
/Team Purchase
“The fundamental driving principle behind social
commerce is trust, where individuals are
Online/Offline Influencer/ Dropshipper Offline Agent empowered to sell and recommend your products to
Agent Affiliate their community, network, followers, and friends.
Social commerce innovation empowers both online
and offline channels, allowing individuals to
commercialize their relationships with others.”
12Social Commerce’s four main models are Agent/Reseller, Group-Buying,
Media/Content Driven, and Membership/MLM
Reseller/Agent Group-buying
Offering products and discounted prices based on users sharing to their social
Platform that reaches out to end consumers that allows them to access product
network to form a team-purchase
through online/offline resellers, that are incentivized through monetary rewards
Value-Adds:
- Significantly reduced / discounted prices
Value-Adds:
- Lower CaC due to virality and sharing features
- Access (additional distributional channel, especially for Rural)
- Aggregating demand and high frequency allows for negotiating power with
- Lower customer acquisition costs
suppliers, and presents a good channel for brands to clear inventory
- High customer trust & loyalty
Challenges:
Challenges:
- Usually focus on products that are cheaper and have high frequency, making it
- Product cannot be easily comparable / must be more complex
difficult to monetize as margins are slim
- On-going agent acquisition, retention and education
- With rising middle class, demand for cheaper and unbranded products could
decrease over time
Content/Media Membership/MLM – offline/online
Utilising user-generated content, reviews and influencers to enhance discoverability, Platforms that empower members with training to manage own stores, promote
promote product and sell on platform product to communities, incentivized by aggregate discounts or cash rewards
Value-Adds: Value-Adds:
- UGC brings trust and authenticity, building positive brand perception - Trust and loyalty due to community and member’s feedback
- Focus on high value goods (high referral items) - Lower CaC, leveraging on community building
- An effective marketing channel through content and partnerships with influencers
Challenges
Challenges: - Reliance on members to generate revenue
- Product will be more complex and have lower purchase frequency - Difficulties in recruiting and retaining members
- Content becomes King, but content may be expensive (made in-house as UGC - Risk of being considered a Pyramid Scheme, as members must continue to
not always reliable) recruit to access rewards
- Sales are dependent on trustworthiness of KOLs
13Social Commerce was built to acquire users with lower CaC, utilizing social
networks to help other users discover product to bridge trust gaps
Reseller Group-Buying Content Driven
Discoverability
• Referral-based • Browse-based • Content-based
• Based on agent/reseller • Discovery from referral • Influencer-based content
referrals (offline and by friends (mostly online,
online) aspirational)
Social sharing
• Sharing on social media & F&F • Sharing to F&F network • Sharing on social media
network (mainly whatsapp, chat- • Affiliate marketing
• Accessing agent’s catalogue based)
• Gamification
• Agent-referral • Virality through sharing • Lower CaC due to UGC, but
CaC
• Lower CaC • Lower average CaC can have digital marketing
• Agent acquisition costs and content creation costs
required • Influencer marketing costs
Social Commerce is essentially eCommerce, but the go-to-market strategy (reselling, group-buying) utilizes social features which
helps bring the CaC down, hence decreasing the cost of GMV, allowing it to scale faster than traditional eCommerce platforms.
14Social Commerce is also meant to increase consumer reach, both
offline and online, with users incentivized to continue to share
Reseller Group-Buying Content Driven
• Strong offline component, starts • F&F and social network • Social media audience
with F&F • Mostly online • Mostly online
• Mostly focused towards tier 2-4 •
Reach
Sharing to result in virality
cities due to low eCommerce • Use of community leaders for
penetration logistics
• Logistics hub built around agents
Incentives
• Agent commission fee • Discounted prices for high • Affiliate marketing fee or
frequency items % commission fee
Nature of Product
• Medium complexity, products • Low complexity, commoditized • High complexity
that require trust • High frequency • Various frequency levels
• Lower frequency • Lower margin • Various margins
• Higher margin • Unbranded items • Stronger brand recognition
The multiple models of social commerce will specialize in different products and utilize different incentivizes to increase customer
reach and transactions, selling different products that vary in complexity, frequency and margins.
15In Indonesia, majority of Social Commerce players are targeting the
Agent/Reseller space, focusing on different product categories
Global/Regional Local
Reseller/Agent
Group-Buying
Media/Content
MLM
16Most Social Commerce players focus on mid to high frequency
products; Fashion all the way to FMCG and Fresh Produce
Frequency Customer Motive
High Frequency Cheap/Discount
Reseller Consumer Reseller Consumer
Low Frequency Access/Referral
17The platforms that focus more on high frequency products are likely to
suffer from lower margins, although CaC will still be lower than
marketplaces due to sharing via personal network
Margins High Margin Awareness
Via Friends / personal network
Reseller Consumer Reseller Consumer
Low Margin Via influencer / “aspirational”
18The challenges for the Agent/Reseller Model include agent
acquisition and retention, as well as high competition
Without negotiating power, social commerce platforms start out by working directly with
retailers generate sales or scraping catalogues from existing eCommerce platforms,
Establishing negotiating power with Principals
negotiating bulk discounts or generating bulk discounts by purchasing SKUs upfront (and
taking on the capital risk).
Cannot be too complex requiring professional intervention (real estate, etc), but also
Products offered must be complex to require cannot be too simple such as products which can be made without much trust (pencils, etc).
trust and validation element Need to focus on product that require trust, reference and advice (i.e. fashion)
Offline presence is required, as the individuals that need agent intervention are ones that
Offline presence required to tap into areas cannot access or do not trust traditional eCommerce platforms, which could be expensive as it
with lower eCommerce penetration requires local community leader recruitment and agent management, and “landgrabbing”.
Although platforms do not have to incur a high CaC, recruiting and retaining agents have been
one of the greatest challenges for a reseller platform. Many platforms adopt a “controlled
Acquiring and retaining agents/resellers agents” model, where retention is stronger, however investment in training and agent
management is essential.
There are many platforms in the agent/reseller space – the landscape is crowded with players
Strong competition from agent/reseller testing with different consumer products, raising lots of money, going-to-market through
community leaders, and working on a strategy called “landgrabbing”, as they are trying to
platforms
“grab” one city/area first, to have a strong presence there. E.g. Dagangan’s territory is Jogja,
but Super’s territory is Surabaya.
19Group-buying also sees challenges in establishing negotiating power with
suppliers, and also competition from established eCommerce giants
Without negotiating power, social commerce platforms start out by working directly with
Establishing negotiating power with Principals retailers generate sales, negotiating bulk discounts or generating bulk discounts by purchasing
SKUs upfront (and taking on the capital risk).
Focus for group-buying usually starts with fast-moving and high frequency goods as this will
Products sold has to be low complex, fast- result in frequency of sharing and virality, but margins are low and monetization from this will
moving, and thus have low margins not be enough (though there is opportunity to white label).
To overcome the challenges facing Indonesia in online commerce, priority moves include
Requires streamlining of logistics and cash less
resolving logistical bottlenecks, encouraging more cashless payments, and getting more micro,
payments small, and midsize enterprises online.
As growth is driven by price and discounts, One of the concerns about Pinduoduo is product quality, due to Pinduoduo capturing supply
unbranded items result in issues of counterfeit from unbranded FMCG suppliers, which creates concerns around product quality and
counterfeit products.
product
Tokopedia, Shopee, Bukalapak and the other giants are well-funded and have reached a
Strong competition from well-funded certain level of scale – users, merchants and GMV, building out their network effects. Shopee
marketplaces/platforms already offers a ”group-buying” option, although it’s still in the early stages.
20In Indonesia, the highest grossing consumer category in eCommerce is
Travel & Accommodation, with Fashion coming next
Margins High Margin Breakdown of Online Consumer Goods (2019)
0% 3%
15%
14%
40%
Reseller Consumer
10%
9%
10%
Fashion & Beauty Electronics & Physical Media Food & Personal Care Furniture & Appliances
Toy & Hobbies Travel & Accommodation Digital Music Video Games
~ ~ ~ ~
Source: WeAreSocial
Low Margin
21The industry gross profit margins for different consumer products vary,
with beauty and fashion presenting the highest margins
Beauty & Skincare Fashion FMCG Personal Care FMCG Packaged Foods
~ 60 - 90% ~ 30 - 50% ~ 3 - 5% ~ 20 - 30%
Furniture Agriculture Electronics Travel & Accommodations
~ 30 – 40% ~10 - 25% ~ 30 – 40% ~ 30 – 40%
22The gross margins for different consumer products vary, with some social
commerce platforms focusing on one category more than others
Homemade Packaged Goods Snacks F&B Sembako
~ 12 - 15% ~ 8 - 9% ~ 5 - 15% ~ 5 - 6%
Cigarettes Fashion Beauty Skincare
~ 0 – 3% ~30 - 40% ~ 80 - 90% ~ 70– 80%
23Success Stories
24We have seen high value companies adopting each of the four models
we identified in Social Commerce in both India and China
Reseller/Model Group-Buying
EST: 2015, India EST: 2015, China
Valuation: US$575M Valuation: ~US$47B market cap
Category: Fashion & Lifestyle Category: Fashion, FMCG, Electronics,
Business Model: % GMV take Fresh Product
rate Business Model: Advertising (90% of
Traction: 2M+ resellers, 21K revenue) & Merchant Services
suppliers Traction: 536M active buyers, 135 DAU,
US$142B GMV, US$4.2B Revenue
Content/Media MLM/Membership
EST: 2013, China EST: 2015, China
Valuation: US$2.7B Valuation: US$690M market cap
Category: Fashion & Beauty Category: Fashion, Beauty,
Business Model: Advertising & Household, Travel, Electronics
Commission Business Model: Direct sales
Traction: 713M users, 100M commissions (87% of revenue)
active users, 29K brands Traction: 23.2 million buyers, 7.1
million members
25Group-buying/Team Purchase Case Study: Pinduoduo
User Offering Merchant Offering Products: lesser known, cheaper brands, small ticket
• Marketplace that adopts a group- • Helping merchants boost GMV through size strategy
buying / team-purchase mechanism larger volume orders • Household Items Apparel is PDD’s
to allow for discounted prices • Lower barriers to transact online (lower take • Fresh Produce largest grossing
• Gamified experience to enhance rate, brand requirements) • Apparel / Clothing category
shopping experience • Inventory management and analytics to • Electronics
• Women make up 70% of user-base help merchants reach targets
Key Moats 5.2% PDD 2018 Expenses Breakdown
Risks Market Share
12%
• Clear use-case in tier 3 / 4 cities and • Inconsistent suppliers that platform 5%
for price sensitive user groups are dependent on
• User acquisition costs is much • Reliance on existing social media
lower than other major eCommerce platforms (WeChat)
56%
platforms due to snowball effect of • Intense competition from giants 27%
group-buying and retailers
• AI for user screening, engagement • User loyalty due to high price
data sensitivity
Sales & Marketing G&A R&D Cost of Revenues
Traction FY 2019 Revenue generation is similar to Alibaba’s marketplace play Revenue Model
Advertising /
536M 135M US$142B US$4.2B 3.6M CAC Merchant
Premium
Active Buyers DAU GMV Revenue Merchants US$2 Services
Listing
Online advertising take rate now 2.6%
26Agent/Reseller Case Study: Meesho
User/Agent Offering Merchant/Seller Offering Products: household purchases, driven by women at
• Suite of tools that enable resellers • Sellers have additional online sales
home
to sell products to their friends via channel, expanding their reach to • Apparel/Clothing Apparel is
social media, mainly fashion tier 2-3 cities • Home Meesho’s largest
• Network of • Logistics and supply chain support • Kitchen grossing category
wholesalers/manufacturers/sellers • Beauty
to give vast supply for resellers to
sell
• Resellers can set prices
Key Moats Risks Meesho 2018 Revenue Breakdown Meesho 2018 Expenses Breakdown
3% 19%
• Resellers bridges trust gap in • Logistics costs is high, spending
eCommerce and creates stronger 91% of its total revenue in 2018 on
interaction, as online shopping is still deliveries, and 41.5% of total 3% 45%
governed by personal networks in rural expenses 46% 51%
India • Agents require training and 17%
• Meesho carries no inventory, as sellers retention/re-engagement actvities
send products to Meesho’s last-mile 12%
fulfillment center Logistics Advertising & Marketing
• Negotiating power to go direct to Comission Delivery Fee Penalty Income
Seller Bonus, Rewards, Discount Employee Benefits
manufacturers to source supply
Traction FY 2018 Revenue Model
10-20%
2M US$200M US$11.7M 22K Return
commission Delivery fees
Resellers GMV Revenue Merchants Penalties
from sellers
51% of Revenue comes from Commission Income
27Membership/MLM Case Study: Yunji
User/Member Offering Supply Offering Membership Model: decentralized network of
• Initially, Yunji is more a platform than “members” who help sell products
• Social commerce company relying marketplace, acting as a retailer by
mostly on WeChat sharing in order to holding own inventory instead of • Members signup to be able to access the platform
generate sales by “members” connecting suppliers to buyers • They can then access special discounts/offers along with the ability to open their own
• Members access special discounts/offers • Now, Yunji is focusing on building up their stores
along with the ability to open their own marketplace model • Members promote their products to other users (mostly via WeChat)
stores, and receive incentives through • Apparel is the highest GMV generating • If they manage to sell products or recruit new members, they receive a share of
discounts for future purchases category revenue (not directly through cash but through discounts for future purchases)
Yunji 2018 Expenses Breakdown Yunji 2018 Expenses Breakdown
Key Moats Risks 1%
1%
7% 1%
12%
9%
• High network effect through • Yunji has been under scrutiny from
membership model Chinese authorities because of
• Yunji’s decentralized model enables it suspicion of operating a pyramid
to grow with lesser marketing expense. scheme.The company warns in its
• Yunji operates 41 warehehouses across prospectus that China could at any 82%
China, operated by 3rd Party 87%
time redefine what constitutes
Cost of Revenues Fulfilment
pyramid selling. Merchandise Sales Membership Program Revenues Other Revenues
Sales and Marketing Technology & Content
General & Adminstrative
Traction FY 2018 Revenue Model
Revenue generation
7.1M 23.2M Active US$3.2B US$1.6B Merchandise Return is similar to JD.com’s
members, 6.1M Delivery fees retailer play (holding
transacting members Buyers GMV Revenue sales Penalties
inventory)
Members contribute to 11% of annual revenue and 66.4% of transactions. 87% of Revenue comes from Merchandise Sales
28Content/Media Case Study: Xiaohongshu (RED)
User Offering Leveraging UGC & Content to convert users to transact:
• an ecommerce platform for luxury goods
from overseas – primarily fashion and Advertising UGC Content eCommerce
beauty products.
Focus Areas:
• content-based, social commerce
• premium quality and exclusivity; it has built a highly-engaged community of
platform to discover and review
savvy users who research and review their products extensively on the app
products, utilising influencers/KOLs.
• trusted source of advice and recommendations for its community, working with
Focusing on user-generated content to
China’s biggest influencers
build trust and word of mouth
advertising
Key Moats Risks
• High AOV due to target consumers, • Some users who are window
which have mid-high consuming power shoppers finding products on RED
as 57% of users are from Tier 1 but purchase from other platforms
like Taobao Girls are big purchasers when it comes to cosmetics and fashion.
• The site also includes a high focus on
• complaint from some users that The conversion rate of Xiaohongshu users is as high as 8%,
security, with qualified brands and
the site has become too compared with only 2.6% on Tmall, the biggest ecommerce
retailers having to submit an
commercial and no longer platform for official brands in China. In addition, every customer
application before being accepted on
encourages the same originality on Xiaohongshu makes 3 orders per month on average.
the platform.
from users.
Traction FY 2018 Revenue Model Products: high-end, luxury items
• Fashion
5-10% • Beauty
200M Registered US$105B US$212M 15-20%
Users 30M MAU Commission Fee
Advertising
• Skincare
GMV Revenue Campaign Fee
• Nutritional Supplements
90% of users are middle to upper class women, a lucrative market for global fashion
29Local Players
30Indonesia landscape – Reseller/Agent Model
Founded January 2019 March 2018 November 2018 April 2018 2015
Team Size 10-15 11-50 100+ 500+
HQ Jakarta, Indonesia Jakarta, Indonesia Bandung, Indonesia Jakarta, Indonesia Mumbai, India
Countries
Founders Coal & mining, game development/ Ex bobobox, UrbanIndo, Politeknik Seasoned Media entrepreneur, ex Ex Sony Corp, Seasoned
Background animation, traveltech graduate Colombia Entrepreneurs
Description Digital MLM, social reseller platform platform for creating online Social commerce platform to agent-led commerce group buying online reseller network of
shop websites empower individuals to sell that enables community leaders to housewives and SMBs, who sell
Muslim products, connecting become retailers within their products within their network on
Muslim brands to resellers communities social channels.
Offering Agents – order management Agents – order Agents – order management Super’s main service, SuperAgen – Agents – order management
platform, own online catalogue store management platform, platform, store front Shahria compliant, profits from platform, own online catalogue
Users – view catalogues and make own online catalogue store reseller, order management store
orders Users – view catalogues Users – view catalogues and make
and make orders orders
Target Demographic Tier 1 cities Middle income women, Tier 1 & 2 SMEs, Tier 1 & 2 cities Middle income women, Tier 1/2/3
cities cities
Category Fashion, Lifestyle Fashion, Lifestyle Muslim Fashion, majority for FMCG, packaged food Fashion, Lifestyle
women
Business Model % GMV take rate % GMV take rate % GMV take rate % GMV take rate % GMV take rate/commission
Traction 800 SKUs, 200 Agents, 70 Brands US$10M Annualized GMV 17K resellers 1.1K Agents 2M+ resellers, 21K suppliers
Funding Seed (US$1M) - East Ventures (US$3.2M) - Altos Ventures Series A (US$8.3M) – Jungle Undisclosed – Y-Comb, Insignia, SAIF, Sequoia, DST, Facebook,
Ventures Alpha JWC, B-Cap Partner’s, Arrive Naspers
31Indonesia landscape – Group-Buying/Team-Purchase Model
WeBuy We haven’t seen that many players in
Indonesia that adopt a group-buying
Founded November 2019 2018 October 2018
model. Many players in this space
Team Size adopt the reseller/agent model,
HQ Jakarta, Indonesia Singapore Jakarta, Indonesia focusing on apparel and lifestyle
Countries products.
Founders Background Seasoned Entrepreneur, ex 2x entrepreneur, Chicago Booth MBA
Investment Banking
In the past, we’ve seen players such as
Description Group-buying platform based in Group-buying platform based in Group-buying platform based in Indonesia DealKeren, Disdus (acquired by
Indonesia Singapore (also recently launched a reseller Groupon), LivingSocial (said to rebrand
platform)
to Ensogo, after being acquired by
Category FMCG – essential items FMCG, baby products Fashion, Lifestyle DealKeren), Maiplay (Eduordo Savern
was an advisor) and Dskon.com.
Target Demographic Middle income customers, Tier 1/2/3 Low to middle income customers, Tier
cities 1/2/3 cities None of the players in the services
category have failed to find ways to
Business Model % GMV take rate % GMV take rate % GMV take rate
Advertising & Merchant Services Advertising scale. Assumption is that they focused
on non-essential services such as
Traction US$2.5 AOV, 5.9 orders per Undisclosed 270K monthly active users
transacting users,, April GMV US$22K
travel, restaurants, hotels, spas, etc.
Mucho is the only established group-
buying platform currently present in
Indonesia, sourcing product directly
Funding Seed (US$1M) – East Ventures, RHL Undisclosed - GFC Seed (US$3M) – Qiming Venture Partners from China.
Ventures, AC Ventures
32Indonesia landscape – Group-Buying + Agent (Hybrid)
Founded July 2019 April 2018 October 2018
ChiliBeli’s model is an agent-model,
Team Size 246 100+ however there is a group-buying
Founders Background Serieal tech entrepreneurs, ex Seasoned Media entrepreneur, ex Jakarta, Indonesia component to it, where Agents can be
consultants, ex Ant Financial, ex MIT, Colombia incentivized by discounts, and not just
ex Nanyang, Ex Lazada, Ex Tmall
financial incentives.
Description social commerce platform that agent-led commerce group buying that 2x entrepreneur, Chicago Booth MBA
connects manufactures/farmers with enables community leaders to become
agents directly through various instant retailers within their communities
messaging tools
Similar to ChiliBeli, Super also started
Model Marketplace model connecting Super’s main service, SuperAgen – Group-buying platform based in Indonesia
farmers with agents, with agents then Shahria compliant, profits from (also recently launched a reseller platform)
as an agent model for FMCG and
sharing it with their network and reseller, order management packaged foods products for Mom &
earning a comission Pops. However, they now have an
Category Fresh produce FMCG, packaged foods Fashion, Lifestyle element of group buying.
Revenue Model . 3.5% gross margin, -6.8% CM2 margin. % GMV take rate % GMV take rate
GMV take rate
Mucho has two separate platforms –
Traction US$600K Feb GMV, Undisclosed Undisclosed one for group-buying (Mucho) and the
other for agent/reseller (Milliku).
Mucho’s group-buying platform is for
fashion items, whilst Milikku is for
FMCG/Sembako items. This is quite
opposite from both Meesho and PDD.
Funding Seed (Undisclosed) Undisclosed – Y-Comb, Insignia, Alpha Seed (US$3M) – Qiming Venture Partners
Series A (US$10M) – Lightspeed, JWC, B-Cap Partner’s, Arrive
Kenesys, Golden Gate, Surge
33Valuation 34
The Valuation Comps for Social Commerce platforms are are 0.6x – 1.6x
EV/GMV and 7x – 25x for EV/Rev
Model Monetization
Agent/Reseller Model Group-Buying Model
10.0 Agent-Reseller % GMV take
14.0 13.3
7.7
Model rate/commission
12.0 8.0 % Agent fee
10.0
6.0
8.0
6.0 4.0 Group-Buying % GMV take rate
Model Advertising
4.0 2.0
0.6 Merchant Services
2.0 0.9
0.0
0.0
EV/GMV EV/Rev
EV/GMV EV/Rev All Social % GMV take rate
Commerce Advertising
Models Merchant Services
India – All Social Commerce Models China – Social Commerce Models
8.0 7.4
30.0
25.1 7.0
25.0
6.0
20.0 5.0
15.0 4.0
3.0
10.0
2.0
5.0 1.6 0.7
1.0
- 0.0
EV/GMV EV/Rev EV/GMV EV/Rev
Confidential and proprietary to CV 35Is the opportunity now?
36The long-term goal for Social Commerce platforms would be to aggregate
demand, optimize operations and establish a powerful supply side
Lower number of SKUs that are Social commerce is highly
selling at a higher frequency allows operational, especially in
for platform to negotiate better logistics and marketing.
prices, thus reducing costs. Key is to Improving efficiencies
dominate a category of SKUs. operationally is necessary to
continuously improve
Aggregating demand allows for economics.
platform to optimize operations and Large network of
agents or White-labelling popular SKUs
logistics. Potential to utilize based on customer data is also
agents/community leaders/mitras to users/eyeballs that
allows for an option for future, through
carry out last-mile delivery, or build manufacturing or repackaging,
last-mile logistics hubs around these monetization via
advertising or as it increases margins up to
communities. 30%, depending on SKU.
premium listing
Supply side access has to be strong,
through bringing offline businesses Agent and merchant
online, or acquiring supply that have stickiness is essential, so
yet to succeed in current platforms, add on services such as
to help them gain significant marketing, analytics and
customer access, and in return also micro-financing can
obtain products at better prices. help with retention.
37Social Commerce in Indonesia presents an interesting opportunity for
investment, although there are risks to consider such as competition and
current logistics infrastructure
Score (1-10) Description
Funding Requirements 7 Funding requirements are high due to the need to build scale, supply defensibilities and compete
with eCommerce giants
Fundraising Landscape 9 Space has seen traction from notable investors due to the tier 2/3 opportunity, especially in the
reseller space
Competitive Landscape 4 Landscape is crowded with multiple players, however no clear winner yet
Market Potential 10 eCommerce will hit US$200B by 2025, with opportunities for social to drive that growth
Consumer Behavior 9 With more users spending time online, social commerce is well positioned to tap into social
behavior and eCommerce activity
Supply Chain 6 Need to achieve scale first to build supply chain, but more brands are keen to build stronger
online presence
Logistics Infrastructure 4 Not quite there yet, especially in remote areas. Logistics costs will continue to be a challenge
Tech Infrastructure 8 Simple and straightforward
Growth Vs. Risk 5 Potential to scale with funding discounts and marketing, but competition is high risk
Regulatory Environment 10 Only concerns will be around MLM / Pyramid scheme
Note that each of attribute above is weighted equally, with 0 being most unfriendly factor and 10 being most friendly factor.
Market Timing Score 71/100 Overall timing score is 71, indicating that there is strong opportunity but also risks
38So why is Social Commerce interesting NOW?
Is it because there is more
opportunities in tier 2-4 Is It because social Is it because social commerce platforms
cities, and the current commerce models has had high interest form investors
eCommerce solutions are have been successful worldwide, and would be able to
not tailored to that? in other countries? continue to raise?
Is it Indonesia’s eCommerce
space is massive but still have
untapped potential that there is Is it because there a valid pain
still much space for Social point that social commerce
Commerce to grow, and scale Is it because social commerce platforms effectively solve
faster than traditional platforms have the potential to better than other eCommerce
eCommerce platforms? scale faster through their reach platforms? I.e. trust gap?
than traditional eCommerce
platforms?
39Impact of COVID-19
40Impact of Co-Vid 19
Strengths Weaknesses
• Selling via online network, social media • Offline agent recruitment will be challenging, so
(Whatsapp, Line, etc) reduces the need for marketing via online channels is essential
offline presence. Both agent and team • Increase competition from eCommerce players with
purchase model strongly depends on online funds to burn via discounts, marketing and logistics,
sharing. as well as stronger merchant base
• Can scale faster than traditional commerce, as • Supply chain disruptions due to factory closures and
people spending more time online and on import challenges
social media • Fall in demand for non-essential items
Opportunities
• Doubling down on essential/FMCG/sembako items, as well as medical supplies
• Renegotiating contracts merchants, retailers, factories and distributors
• Potential to onboard more businesses, as SMEs are now looking to build stronger presence online (also
supported by the government)
• Opportunity to scale and capture eyeballs, through gamification and social media sharing
41Michael Soerijadji | Managing Partner Adrian Li | Managing Partner
michael@acv.vc adrian@acv.vc
Confidential and proprietary to ACVYou can also read
