Local Taiwanese e-commerce Momo is laying out a Southeast Asia expansion

Source: PiqselsSource: Piqsels

Momo, the Taiwanese Amazon, is one of the top three e-commerce platforms in Taiwan established by momo.com Inc.(富邦媒體). The group had been proactively searching for business partners in Southeast Asia to expand their online e-commerce business. 

Seeing the huge potential of Southeast Asia, fostered by a windfall of e-commerce due to the pandemic, momo is aiming at doubling its revenue to reach 100 billion by 2022, with several strategies in place including the ongoing Southeast Asian market expansions, and a tighter domestic logistic network.

One of the top two B2C sites 

Momo provides mainly B2C service in a full range of products, including cosmetics, food, home appliance, etc. and has set up an efficient logistic network in the north, middle and south of Taiwan. 

Although it was only launched in 2005, several years later than PChome and Yahoo, momo was able to take the leading position of e-commerce domestically as of 2018.

According to a survey by MIIC in 2019, it is currently ranked among the top two go-to sites when consumers consider B2C goods, following behind Shopee (蝦皮購物), it’s largest competitor.

The potential of Southeast Asia

Southeast Asia has been a new hotspot for e-commerce. According to worldometer, the total population of ASEAN has reached over 670 million in 2021, with the median age being 30, a relatively young population with huge online shopping potential.

According to Pew Research, mobile penetration and smartphone adoption are climbing rapidly in emerging countries, such as Indonesia and the Philippines. Great commercial opportunities that would emerge as digital infrastructures gradually take place is foreseeable.

However, expansion is met with greater competition and needs to adapt to local shopping habits. Take Thailand for example, the average time spent online per person reaches 9 hours, of which 5 hours come from mobile connection.

Thai consumers are said to largely rely on online search and individual live stream to form purchase decisions.

Thailand is the first stop in Southeast Asia

Having spotted the emerging hot market, momo has been rushing into local business since 2014. Thailand was their first stop, momo signed a joint venture with TVD (Thailand’s TV Direct Public Company Ltd) establishing TVD shopping co., a tv shopping channel which is now the second largest in the country. 

In the following years, momo has also been talking with companies in Malaysia, Philippines and Vietnam.

According to the chairman of momo, Lin Chi-feng (林啟峰), the expansion will follow the model of Thailand in forming a joint venture through cooperation with local parties, instead of becoming a cross-border e-commerce, which can be tougher and unsustainable in the long run. Rather, they intend to use local resources and labors for localization and provide the technology and know-how. He believes this will give way for a better shot at succeeding.

Many challenges lie ahead

Despite thriving in becoming the second largest tv shopping channel in Thailand, the conversion rate into online shopping profit hasn’t been as successful, which is currently only contributing to a single-digit percentage of the total income.

Momo commented that with the fast-changing environment, utilizing a tv shopping channel to drive e-commerce profit is no longer a suitable path for entering a market. For future actions, momo will directly dive into live stream as a mean to reach potential consumers, which is also comparably lower in cost.

The talks to form a joint venture with Pavilion Trading Enterprise in Malaysia wasn’t successful, so the process had slowed down, but hasn’t stopped, said Lin Chi-feng.

The domestic e-commerce market is limited

Bringing the lens back to Taiwan, momo had an increase of 28% revenue partly attributed to the pandemic, but e-commerce only takes up 12% of the total retail landscape which is much less compared to occupying 25% of retail shares in China, South Korea and the US.

President of momo, Jeff Ku (谷元宏), said the main strategy of momo is to “base in Taiwan, look towards Southeast Asia.”

Aiming to be the top e-commerce in Asia in the post-pandemic era along with various competitors treading one after another into Southeast Asia. It is worth noticing how the situation will be played out.

 

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