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Asian e-commerce enablers becoming money magnets

JAKARTA -- The spread of Internet shopping in Asia is giving rise to a new breed of company. These e-commerce enablers, as they are known, usher retailers and brands into the online marketplace. And they are attracting plenty of investment.

     Thailand's aCommerce, established in 2013, is one such company. It offers a variety of services, such as logistics, online marketing and warehouse management. It made a splash by landing a deal to handle logistics for a new online shopping service launched by Line, the popular Japanese messaging app.

     Recently, aCommerce has been expanding in Indonesia. It plans to raise $30 million at the end of the year, with a portion of the money to go toward new operations in Vietnam and Malaysia.

     "We want to aggregate all the retail and logistic channels," regional CEO Paul Srivorakul said in an interview with the Nikkei Asian Review. "Then, when you look at Southeast Asia, we want to aggregate all six [major] countries."

Paul Srivorakul, regional CEO of aCommerce, says Indonesia will soon surpass Thailand as the company's top revenue source.

A different game

In an industrial park in Southeast Jakarta, aCommerce is working with one of its largest clients so far: the Chinese-Indonesian conglomerate Lippo Group. In the coming months, Lippo intends to launch, an online mall. It hired aCommerce to help streamline operations at its 5,000-sq.-meter warehouse, which is expected to manage 100,000 products when the site goes live. Lippo is to invest $500 million within three years, aiming to generate $1 billion in sales and become the "Alibaba of Indonesia."

     Lippo is already one of the country's largest retailers. Affiliated companies include the operators of more than 130 department stores and 100 hypermarkets.

     Still, online retailing is a different game. Logistical challenges are trickier because products are sent directly to customers, rather than stores. It gets even more complex for companies that allow third parties to sell products via their sites. And those sites need to be constantly polished.

     This is where the enablers come in. Instead of spending time and capital on building online operations from scratch, companies can turn to the likes of aCommerce, which says it can build up an e-commerce business in as little as four weeks.

     "What's unique about Indonesia is that there are so many players on the starting line," Srivorakul said. Among aCommerce's other Indonesian clients are Mitra Adiperkasa, a franchise operator of nearly 1,900 stores for foreign brands including Starbucks and Zara, and Kawan Lama Group, which runs the country's largest hardware store chain.

     Online shopping is estimated to account for only 1% of Indonesia's retail sales at the moment, but existing retailers are rushing to enter the market. They fear that the expansion of e-tailing companies, such as Lazada, will disrupt their bricks-and-mortar businesses. Lazada Indonesia, backed by Germany-based Rocket Internet, is now one of the nation's largest e-commerce operators.

    Srivorakul said Indonesia will overtake Thailand as aCommerce's biggest source of revenue by the end of the year, although he did not disclose figures. The overall number of clients is expected to triple from the current 100 or so, he said, with most of the growth coming from Indonesia.

Hoping for a big payday

E-commerce enablers are also gaining momentum in India.

     SSN Logistics, which operates under the brand Delhivery, handles logistics for e-commerce companies and delivers to 175 cities. Established in 2011, the Delhi-based company says it works with more than 800 clients, including major online retailer Flipkart. As smaller retailers increasingly look to go online, delivery demand is constantly increasing.

     In May, SSN Logistics snagged $85 million in a round of fundraising.

     Many see e-commerce enablers in India and Indonesia -- the world's second- and fourth-most populous countries -- as having similar prospects to those in China. Baozun, an Alibaba-backed company founded in 2007, raised $110 million from an initial public offering on the Nasdaq market in May. The company helps international brands such as Nike, Microsoft and Haagen-Dazs sell their products on Chinese online platforms, such as Alibaba.

     Investors are making big bets in hopes of cashing out handsomely later on. It has happened in the U.S., where eBay bought online advertising consultant GSI Commerce for $2.4 billion and renamed it eBay Enterprise.

     At the same time, there are murmurs that the e-commerce enabling market may be a bubble in the making.

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