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An E-Commerce Giant in Indonesia Bites the Dust. What Happened to Multiply?

Enricko Lukman
Enricko Lukman
9:00 am on Apr 27, 2013

multiply-shut-down

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

multiply fix

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

burn-money-joker

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?


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Have Your Say
  • Thinker

    Is usual for startups to fail. But multiply isn’t really a startup with its huge traffic and resources. Still confused about why they closed down.

  • the man

    Multiply was just badly managed… a lot of bad calls, wrong marketing decisions, an incredible late to delivery this new platform (and what a platform…!). This is just natural selection, like any industry. Not so surprising to see it closed. The only surprising point is just the sudden way.

  • Bill Purkayastha

    Absolutely everyone – except presumably the writer of this article – knew, and predicted, that Multiply would crash and burn. When they threw us bloggers out we told them that without us they never would have any traffic. They essentially wrecked their excellent blogging platform, which was their USP, and tried to compete with Amazon or eBay. Even a kid knows that nobody wants to watch TV if all they air is ads. Multiply killed itself, and we bloggers are vindictively vindicated. Good riddance Multiply.

  • Andi Sukiman

    One of the reason that I think lead to this decision was although big investment, yet Mutiply fail to compete with local startup like Tokopedia in terms of traffic. Just quick check to search result, # of SKU for several categories also lack compare to the competition.

  • http://stechienotes.com Abet Israel

    So does Multiply Philippines closing on May 6 and completely stopping operations in the end of the month. Meanwhile, I have listed some of the potential e-commerce site Multiply users may use as an alternative http://stechienotes.com/alternative-e-commerce-sites-to-multiply-com-ph/

  • FM

    You can try this as an alternative, without any obligation:
    http://www.tripleclicks.com/11842866/ECA

  • http://edwinlives4ever.com Edwin

    We’ve predicted this months ago when Multiply announced the shutting down of their social networking features. We’ve also tried to appeal to the new management, but they just wouldn’t listen.

    They just couldn’t get it through their thick skulls that e-commerce in Multiply was actually started informally as an extended activity of online friendship. Sellers and buyers were online friends who were not only doing business but were sharing stories as well, as most sellers were actually bloggers (or at least started as bloggers). The business in Multiply back then relied on human touch. This human touch was actually the best attraction to shop, and eliminating this human touch means burning the shop. That’s what kills Multiply.

    That, and the incompetence and arrogance of their personnel; their customer service in particular.

  • http://edwinlives4ever.com Edwin

    Anyway, I wouldn’t trust them to refund the accounts. When they closed down the social networking features, they’ve promised to refund the previous Premium account and they failed to do it.

  • http://edwinlives4ever.com Edwin

    Here’s a theory that a conspiracy-theorist would love: Multiply was purchased by MIH to be killed. Its casual e-commerce growing popularity could be a threat to other MIH’s investments in Indonesia (Tokobagus) and the Philippines (Sulit). So they bought it, changed the casual environment into a stiff one with a system that rarely worked, and shut it down.

    Interesting theory, although rather implausible.

  • Sam

    time for multiply.com users to move to http://www.filipreneurs.com where it brings back the old glory of multiply.com and sell as well.

  • fyb3r0ptic

    Who to blame? Jack Madrid. The same person who sold Dell International Services MOA site to Teleperformance. His port folio includes making good impressions to investors then milk money out of its sh1t.

  • Pepper

    That’s a very interesting theory Edwin and now you got me thinking… yes, that’s really possible.

    Anyway I was a Trusted Seller in Multiply and could attest to the many issues that came about the transition. However, Multiply has been true to their word to refund the prorated Trusted Seller Badge I purchased and I must say despite what happened, they’ve been a big help to me over the years.

    Unfortunately, now I rely on Facebook and Sulit. It’s so hard to get the same market compared to Multiply that was so reliable. Other sites offer too much membership fees or charge high transaction fees. Others offer free usage but usually have low market / no. of visitors.

  • mui

    How to I retrieve my pictures?!

  • Usha Bhatta

    How can I get all my stored photos and videos ?? Anyone please suggest. I Need them.

  • http://facebook.com/hassanfm Hassan

    How to retrieve my photos from multiply account? :( please tell me at hassanfm@live.com

  • Tanya Santana

    i am not happy all the Groups i moved over from msn to Multiply r gone if i had knew sooner i could have moved them. is there way i can get to them even thought they shoutdown?