[Update: Andi has written the English version of his blog. You can see it here.]

The demise of e-commerce site Multiply in both Indonesia and the Philippines is one of the biggest shocks of the year so far. We’ve written our thoughts about it, as have others. One blog post that I found interesting is this one by Ideosource founder Andi S. Boediman yesterday. The original is written in Indonesian; we’ve received permission from Andi to paraphrase it in English here.

Andi starts by talking about the e-commerce scene in Indonesia. He says that it is looking very good right now. In 2012, the internet users here has passed the 60 million mark, and five percent of them – around three million people – have bought something online. This figure is outside the purchases made for airlines, hotels, and concerts. And the future looks bright as the internet adoption rate, as well as the online transactions, will increase significantly in the next five years.

According to Andi, the decision to close Multiply came not from a lack of e-commerce growth, but from a strategic perspective of investment. He echoed our own explanation of Multiply’s business model as part of the problem, pointing out that Multiply’s shipping subsidies cost the company a lot of money.

Basically, Multiply wasn’t making much money and it was going to take a long time for it to reach a desired level of profitability. Even if Multiply’s persistence had come to fruition, it would have been easy for rivals like Tokobagus to simply copy the company’s business model at that point. Tokobagus is doing quite well anyway though, and it seems that it is investor MIH’s main e-commerce asset in Indonesia.

Multiply Helped Indonesia’s E-commerce Industry Grow

Multiply’s demise may not be a bad thing. In fact, Andi believes that it can benefit the e-commerce industry in Indonesia. Multiply’s downfall means that a lot of its high quality human resources will suddenly disperse to the other e-commerce businesses and they will share their knowledge and experience in running the business.

Andi recalls his own experience when he departed e-commerce site Plasa.com. The founding group that he gathered have now become leaders in various internet and e-commerce companies. The same thing happened when social network Koprol was disbanded and when news site Detik got acquired too. The industry grows more quickly when company breakups speed the proliferation of high-quality talents.

These high-quality human resources now have the option to either work at another company or start their own e-commerce startups. Either way, that’s a good thing for Indonesia’s e-commerce market.

(Source: Andisboediman.blogspot.com)

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?

We’ve received news from several readers that social network turned e-commerce marketplace Multiply is shutting down.

According to an email sent to Multiply merchants (see below), the site will be online till May 6, and will discontinue all operations on May 31. With further searching, you will find announcements on its Southeast Asia/Philippines and Indonesian sites.

Multiply’s merchants are advised to move to a new e-commerce marketplace. In Indonesia, there’s no shortage of choice of marketplaces, including Tokobagus, Kaskus, and Tokopedia. The news comes as a huge surprise as many would have thought Multiply is growing pretty well.

It was just last year that Multiply said it will discontinue its blog operations, move its headquarters to Jakarta, Indonesia, and move full force into e-commerce. Back then Multiply also revealed that it had 100,000 Indonesian sellers and around 75,000 Filipino sellers.

We’ve contacted Multiply’s country managers in the Philippines and Indonesia and will update if we hear from them. Here’s the letter sent out to merchants today:

Dear Multiply Merchant,

We regret to inform you that Multiply will be closing the marketplace on May 6, 2013 and discontinuing all business operations by May 31, 2013.

Multiply will maintain normal site operations through May 6th and will wind things down through to the end of the month. We will use the rest of May to make sure that all accounts are settled and that you receive all funds you earned on the platform. We hope this provides you time needed to identify and migrate to alternative ecommerce platforms, settle all payments on items bought and delivered, and try to minimize disruption to your business.

In order to ensure that all your earnings are disbursed to you in full prior to May 31, we will cut off buying activity on May 6, 2013. This will ensure that all orders have sufficient time to be completed and delivered to your customers before the end of the month.

If you have a Trust Badge, please contact our customer support team and we will ensure that you receive a pro-rated refund for the remaining time on your subscription.

If my team can be of any assistance to you during this transition, we will do our best to help.

Into the deadpool: the Shanda Everbox file syncing service.

A notice on the Everbox site suggests that users migrate their data this month before the closure deadline. New registrations, as well as new uploads for current users, have been ceased. The announcement says that the cloud storage capabilities will be “incorporated into the company’s other products.” So Shanda remains in the cloud business, but seems to have decided that a dedicated online file storage hub is not a good idea. That’s bad news for users of Everbox, who now have just a month to download and save their material.

Everbox has apps for Windows and Mac, plus iOS and Android (pictured right). But its iPhone app lacked development, and was not updated after November 2011.

The past year saw a surge in competing consumer cloud services, with a major new service from top search engine Baidu joining the fray last March, and that now has 30 million users. Plus there are rival file backup and sync services from Tencent, Kingsoft, Huawei, as well as startup offerings from Kanbox and Yun.io.

Shanda also runs an Evernote-esque service called Mknote, which is China’s largest notes syncing app in terms of users. Shanda is looking to spin off its e-book and cloud service division with a separate US IPO, called Shanda Cloudary, which is thought to be on track for an investor roadshow this Spring.

(Source: 36kr – article in Chinese)

Chinese group buying site 24Quan, once in the country’s top five deals sites, has been in the rough for some time now, and it suspended operations back in October. So the following shouldn’t come as a huge surprise to anyone: the site has now apparently shut down for good. The company’s site now appears to be inaccessible, and there are doubts about whether the company will be able to pay all of its outstanding debts with merchants.

24Quan founder Du Yinan (who we talked to about the company’s troubles way back in November of 2011) has yet to comment on the closing, and a 24Quan investor told Sina Tech that the board would need wait for instructions before speaking to the media.

Given that, I suppose it’s technically possible the company could rise, phoenix-like from the ashes to take on the world of group buy in China, but I wouldn’t bet on it. After months of inactivity, those ashes are going to stay ashes, and Du Yinan — like so many entrepreneurs — will move on to his next great idea.

[via Sina Tech]

Indonesian digital media group SalingSilang made an announcement yesterday that it is going to close down. This applies to SalingSilang’s family of products as well, including social media analytics platform SXindeks, Politikana, Ngerumpi, DagDigDug, BicaraFilm, KuFoto, and others.

The company, which was founded back in 2011, explained that this decision was made because the team now has a different focus, which sees them operating in fields like consulting, media and content, and mobile projects. Those Indonesian social media related projects, which include acting as a consultant for social media campaigns and holding prominent events like Social Media Fest in the last two years, were usually executed together under the same flag.

The last article posted on the SalingSilang site was back in November of last year, and you can still access the website at the moment. I found that SalingSilang’s products TuiTwit and #beritagar are still in operation. While the startup’s other websites, like DagDigDug and Politikana, cannot be accessed anymore.

The team apologized to all its users for the inconvenience caused, particularly to the communities who have supported them this far. Although SalingSilang’s operation is stopped now, the team still believes that the power of social media will continue to influence Indonesia to become a better country.

At the time of writing, SalingSilang’s Twitter account has around 30,000 followers with 22,500 likes on its Facebook page. We are sad to see one of the most well known Indonesian startups come to this point. But we wish the SalingSilang team all the best in their future endeavors!

(Source: Trenologi)

The 24Quan site is now offline, replaced with a statement that says, in both Chinese and (for some reason) English:

24Quan's homepage, before it suspended operations today. Click to enlarge.

Due to misalignment of interest and ideology differences between previous shareholders and management team of 24Quan, as producer of 24Quan’s service, and taking into account of the interests of all those whom we loved and cared, our website will enter into a period of “temporary excursion”. As a result, regrettably we will not be able to offer your service in the upcoming few weeks. We hope to resume our service after we resolve our matters with our shareholders.

The site then offers a customer service telephone hotline. The wording of the statement doesn’t mention financial difficulties directly, but it’s likely that cashflow issues – or even crippling debt – are at the heart of the apparent tension between the unnamed “previous shareholders” and the deal site’s management.

Things once looked rosy for 24Quan. In market share stats for October 2011, it rose to become China’s fifth-biggest daily deals site, with six percent of the industry’s revenue for that month. But, in this fierce sector characterized by tiny profit margins and huge marketing spending, it’s likely that 24Quan was burning through cash – or piling up debts – in order to grab share in the market. But by the time of figures (from the same source) for 2012 Q2, 24Quan had crashed to 19th place with a meagre 0.6 percent market share.

In late November, 24Quan CEO Du Yinan responded to our afore-mentioned article about layoffs and debt, and told my colleague that he was, even back then, struggling to make “transformative changes” to the site. It’s not clear what those were, since it continued to plough on as a fairly conventional deals site long after the first reports of its business being in turmoil. He said the site was seeing “in excess of [US]$12,000,000 of cash turnover – every month” at that time.

Groupon-clone deals sites have been pulverized in huge numbers, like so many mosquitoes in the night, in the past couple of years. Indeed, in just the first six months of this year, 2,859 such sites have closed. Perhaps 24Quan can be added to that deadpool, if it doesn’t reappear online as promised within a few weeks.

Yaodian100's frontpage, before it vanished offline.

At the end of last month we reported on how one long-standing Chinese e-commerce site, Yaodian100, had vanished off the face of the earth. And now comes the sad and messy aftermath as suppliers find themselves unable to recover millions of RMB in unpaid orders for the B2C e-tailer.

Yaodian100 still hasn’t filed for bankruptcy; its Shanghai offices are locked but not yet fully cleared out; but the site is now totally offline, and its official Weibo account is untouched since July 17th. The Beijing Business Today paper estimates that there are just over 50 suppliers of the B2C e-commerce site who are owed money, with the amount totaling over RMB 10 million ($1.58 million).

Digging deeper, the paper found warning signs way before the Yaodian100 site put up a mis-leading notice on its site at the end of July saying it was suspending orders for a few days as the company “relocated” its offices. It turns out that senior staff had gone unpaid for three months prior to that, with the rest of the staff unpaid for two months, causing widespread internal worry and disarray. There had been rumors as early as March of this year that the site was in trouble and angling for an acquisition.

One company in Zhejiang province, south of Shanghai, says that it sold RMB 40,000 to 50,000 worth of items via the clothing retailer, but now it is left owed RMB 20,000 ($3,160) by the AWOL Yaodian100 execs.

Aside from the issue of debt collection – and where’s the CEO in all this? – it also raises the broader question of how a young but fairly established site got into so much trouble, apparently bereft of cash for months before its ignominious collapse. Is the B2C online model of retailing broken, involving far too great an amount of overheads – warehouses and inventories; marketing; some rivals are even preparing to do their own express deliveries – to be sustainable on such slim profit margins. Just last week, the specialist e-tailer VCotton suspended operations amidst news that local authorities had seized its warehouse over unpaid debts. It’s going to make some suppliers wary of working with some smaller B2C sites, especially ones which pay as late as 60 days after sales are made.

Who else might stumble and fall so spectacularly?

[Source: Beijing Business Today; via QQ Tech - article in Chinese]

Ba-da-boom-boom-boom, another one bites the dust. Yes, the big-spending, low-margins world of B2C Chinese e-commerce has claimed another victim. This time it’s the specialist e-tailer VCotton, which sold only socks and underwear. A notice on the homepage (pictured above) alerts users to the “suspension” of sales, which went into effect on August 17th, due to a claimed technical error in logistics. But some fine snooping by Marbridge Daily reveals that VCotton’s Beijing warehouse has been seized by authorities.

A former VCotton employee then explained that the notice on the site is nonsense, and that, to quote Marbridge, the warehouse and all its stock has been “seized by government authorities after the company’s suppliers sued VCotton for failure to pay outstanding debts.” That’s quite a logistics failure. Apparently out of funds, it seems sadly impossible for the company to recover from that.

The writing was on the wall earlier this year when we profiled VCotton’s CEO, Lin Wei, as he spoke of how he was struggling to raise some series A funding. In two prior seed rounds, VCotton had pulled in 10 million RMB (US$1.59 million) shortly after launching and then 30 million RMB ($4.77 million) a short while later. Though some very specialist online retailers do well in China – such as the Uniqlo-like Vancl for cheap clothing, or the Walmart-controlled Yihaodian for food and domestic supplies – it would appear that going down to the undergarments was a bit too focused for VCs. Yes, socks and underwear need to be replaced very often, but the site was in a sector where there’s zero reason for store or brand loyalty.

Just three weeks ago we reported the demise of the Chinese e-commerce site Yaodian100. At the time, the store said it was suspending sales due to “relocation,” but it has not re-materialised since.

[Source: Marbridge Daily]

Yaodian100's frontpage, before it vanished offline.

That was quite a vanishing act. The Chinese e-commerce site Yaodian100 – which has, over the years, received over $50 million in funding – has gone offline, leaving users and even industry insiders wondering what’s going on. The Yaodian100.com site now redirects to its official Sina Weibo account (see it here) – but that hasn’t been updated since July 17th.

Before going offline on July 28th, Yaodian100 posted a short notice saying that it would be down for an unspecified duration due to its “relocation.” After three whole days, concerns are growing that the rumors earlier this year that the company was near the point of bankruptcy were actually true. QQ Tech and several other Chinese tech blogs have tried to contact several senior executives at the company, but with no luck so far.

Shanghai-based Yaodian100 was started up in 2009, and was one of the earliest specialist B2C e-commerce sites in China, selling mostly cheap clothing. It wrapped up a major first-round of funding of $40 million in August 2009, led by Qiming Venture Partners. That was followed by a round in May 2010 that was worth 60 million RMB ($9.5 million at today’s rates), courtesy of Chinese search engine Baidu (NASDAQ:BIDU) and local shoe brand Daphne. Intel Capital later led a smaller series C investment.

Yaodian100 was taking 30,000 orders per day back in late 2010, it had boasted at the time, with monthly sales worth 30 million RMB ($4.75 million). But things got quieter thereafter, and rumors of massive layoffs, and even possible bankruptcy, were all that was being said of the website by the start of 2012. When we looked at the most recent market share stats for the B2C e-commerce scene in China just last week, we noted that the top five sites had consolidated their lead upfront, and now accounted for about two-thirds of the entire nation’s e-tailing business.

We’ll update if the site reappears; or if we can officially add it to the deadpool.

[Source: QQ Tech - article in Chinese]

After months of rumours floating around, finally the news is out: Yahoo is shutting down its social network Koprol effective August 28, 2012. Most people saw this coming after it laid off thousands of people, including most of the Yahoo Koprol team back in April. Once hailed by Indonesia’s president, Susilo Bambang Yudhoyono, Koprol now is being retired by the internet giant.

Koprol is an Indonesian location-based social network founded by Satya Witoelar, Fajar Budiprasetyo, and Daniel Armanto. It was bought by Yahoo back in May of 2010. It was one of the few success stories here in the Indonesia startup scene and is often mentioned when discussing the tech scene here. But even with recent new features, millions of total users, and business pages to create revenue, they are being thrown into the deadpool. Yahoo’s official statement explained:

In line with Yahoo!’s focus on more quickly innovating with our core products and properties, over the coming quarters, we are shutting down or transitioning a number of products that did not meaningfully drive revenue or engagement. After carefully reviewing its product portfolio, Yahoo! has decided to discontinue Koprol effective 28th August, 2012. Users will be notified of the shut-down and the process of retrieving their online data starting June 29th, 2012.

I guess this is the way startup life goes, right? It’s a roller coaster ride with ups and downs, and for every startup that closes down, more than a few new startups are born. I’m definitely expecting a lot from the Koprol alumni in the near future. As for Yahoo Koprol users that are still active and want their data (posts, check-ins, images, and reviews), they can export the information through m.koprol.com/export.

[Photo: Digital Trends]

Founded by Saumil Nanavati and Bernard Leong, Chalkboard was in my opinion one of the more promising startups in Singapore. But news about them closing shop hit me hard yesterday. The Chalkboard founders held a party to mark their closing, and it was fun hanging out with friends. But I have to admit that I was shocked to learn the news in this manner — through a pizza party.

Saumil and Bernard are my friends who also taught me how to be a better entrepreneur. They are a few of the key people who I can trust to give me honest feedback from time to time about our own progress. It’s sad to see Chalkboard closing doors.

CEO and co-founder, Saumil Nanavati told me that sales were actually growing and there were VC options on the table. But the founders’ goals are ambitious. They wanted to be the best location-based ad network in the region. Like what the Samwer brothers would say “either be number one or let’s not bother at all.” So even with the resources and offers available, they still chose to fold because they believe it can’t help them reach their goals. Like any entrepreneurs, Saumil insisted that Chalkboard is disruptive and thought that the market isn’t ready for it. It is more suited for the U.S market where Saumil actually spent 300 days a year to build its base there. Unfortunately, things didn’t go well.

I believe the best is yet to come for them. This experience, as I see, is just a learning phase. It’s painful but perhaps a necessary medicine to become even better entrepreneurs. There is no shame in closing down and I believe Saumil and Bernard will one day connect the dots and point to this Chalkboard experience as one that contributes greatly to their future success. After all, the journey of an entrepreneur isn’t a sprint, it’s a marathon. Chin up, guys.

E-commerce in China is such a boom industry that virtually every story on the subject on our site this year has been about growth, profits, and potential. But there’s no such luck for Netease (NASDAQ:NTES), which has announced that its high-end fashion store, Luxury163, will not survive into 2012, vanishing off of the web just before midnight on December 31st.

Netease is better known for its 163Mail service or its online gaming titles – but success remained elusive for its Luxury163 site, despite rising incomes in China and growing demand for designer brands. The online mall – at l.163.com – has genuine products from the likes of Hermes, Coach, and Victoria’s Secret; but it apparently was not profitable enough to maintain. The site will go offline on Saturday night, and will maintain customer service for two weeks longer in case any recent purchases need to be refunded.

Despite Netease’s failure, the high-fashion e-commerce party is rocking for everyone else at the moment, with new rivals including 360Buy’s recent move into couture brands, 360Top, Sina’s (NASDAQ:SINA) own ‘Luxury’ online mall, more funding for The Luxury Club, and the late arrival of Gaojie. And that’s to say nothing of VIPStore, Xiu, iHush, or iHaveU.

No very specific reason was given for Netease’s shuttering of Luxury163 except the announcement saying that it’s “due to business restructuring.” It launched in January of this year.

[Source: Techweb - article in Chinese]

MSN's YoBrand e-commerce site before it closed.

MSN China has shuttered its MSN Mall, a B2C e-commerce site, in an apparent restructuring of Microsoft’s (NASDAQ:MSFT) approach to China’s cut-throat online shopping sector. It was established in 2009 with a local company named YoBrand, and focused on women’s fashion items, such as clothing, bags, and skincare products from numerous brands.

The shutdown means that both the standalone yobrand.com site and the msn.yobrand.com domain have now closed, and contain only an official notice telling consumers what’s going on (pictured below). It advises people to find one certain jewelry brand on its Taobao Mall storefront.

That’s an unintended giveaway as to how fierce the e-commerce industry is in China – especially for women’s fashion and luxury brands – where B2C market leader Taobao Mall battles with Tencent’s (HKG:0700) QQ Buy and lots of other more specialist e-tailing sites.

Thank you, and goodnight...

Nonetheless, it’s quite surprising that one of China’s most high traffic web portals couldn’t sustain its e-commerce venture. Microsoft takes MSN China – at cn.msn.com – very seriously, and it’s filled with local content that’s put together in China. YoBrand was one such local initiative. Just last October it gained a US$10 million round of funding from US-based Richmond Management, to say nothing of the backing given it by Microsoft.

Now that the MSN Mall in China is dead in the water, we’ll have to wait and see what else Microsoft has to offer in the B2C segment. Likely, the catchy ‘MSN Mall’ name will resurface pretty soon.

[Source: TechWeb]