END OF THE ROAD?

Competition pushes online retailer to brink

11street Thailand is desperate to find a strategic partner only 14 months after beginning operations.

Fierce online retail competition in Thailand has pushed 11street (Thailand) to try and find a strategic partner in order to survive, despite only having operated here only 14 months, e-commerce industry sources say.

They believe the wholly owned subsidiary of SK Planet, which operates under SK Telecom, failed to find a strategic partner in recent months, making it hard for the company to compete with its rivals — Alibaba’s Lazada and Shopee.

SK Planet exited its overseas business in Indonesia in August last year, and in Malaysia this month.

Last week, theedgemarkets.com reported PUC Bhd will invest RM90 million (727 million baht) in Celcom Planet Sdn Bhd (CPSB), which grants it managerial control of the 11street Malaysia e-commerce platform.

In a filing with Bursa Malaysia, PUC said it has entered into a term sheet with CPSB, Axiata Digital Services Sdn Bhd (ADS) — a wholly owned subsidiary of Axiata Group Bhd — and South Koreabased SK Planet Co Ltd’s wholly owned unit SK Planet Global Holdings Pte Ltd for the proposed investment.

CPSB is a joint venture between ADS and SK Planet, which owns and operates 11street Malaysia.

Indonesia was the first country where SK Planet started to streamline its overseas business in August 2017 by selling its 50% stake in a joint-venture online site Elevenia to Indonesia’s largest retail conglomerate, Salim Group.

Launched in 2014, Elevenia was set up by local wireless player PT XL Axiata in a 50-50 joint venture with SK Planet, a unit of Korea’s top wireless carrier SK Telecom. SK Planet invested 50 billion won (US$44.2 million) to create the market operator XL Planet.

In September 2017, after the report on SK Planet’s decision to exit the Indonesian market, rumours it will exit other markets including Thailand have spread.

Hong Cheol Jeon, chief executive of 11street Thailand, said the company is in discussions with business partners to explore strategic options in preparation for the next phase of accelerated growth after earlier bursts of rapid growth since it began operating in February 2017.

However, Nuttawut Lertsirmongkol, general manager of 11street (Thailand), told the Bangkok Post no changes are being made to the Thailand office.

On its first anniversary this February, 11street had over 800,000 members.

Business Online reported 11street (Thailand) lost 189 million baht in 2016. Unlike its operations in Indonesia and Malaysia, 11street (Thailand) is fully owned by SK Planet.

Pawoot Pongvitayapanu, president of the Thai e-commerce association, said the online retail market can only accommodate two or three big players.

“[They] use pricing strategies to attract customers, so only big players with huge capital can survive,” he said.

Local merchants still rely on big foreign players.

“There is concern about a Chinese monopoly as Alibaba is urging Thais to export using its platform, while Alibaba’s Lazada also offers Chinese products through the Taobao collection on its site,” he said.

Last year, Thailand was one of the top buyers during Lazada’s 12.12 sales campaign in Southeast Asia, snapping up $250 million in gross merchandise value, more than double last year’s sales.

The government should analyse the impact of Alibaba’s investment, pundits say.