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Growth in regional consumption happening outside megacities – study 

By Jennee Grace U Rubrico

Megacities are still the largest markets for popular products in Southeast Asia, but demand for the goods in smaller, lesser-known cities is becoming significant, a new report by consultancy company Nielsen and AlphaBeta reveals.

The report, called Rethinking ASEAN, found that while cities such as Jakarta, Manila and Bangkok still top sales for consumer products, small middleweight regions with a population of 500,000 to one million and large middleweight regions, which have one million to five million people, now make up a significant share in demand for products.

It also predicted that by 2030, the fastest growth for seven out of the 10 products examined by the study would come from by small and large middleweight regions.

The Nielsen/AlphaBeta report aims to dispel myths about consumer and marketplace dynamics within the region “to reveal the real ASEAN consumer landscape,” a statement from Nielsen says.

The study, which also forecasts growth hotspots in the region between now and 2030, looks into current and future potential consumer demand in more than 700 cities and regions within the seven largest economies of ASEAN.

It covers 10 of the most popular product categories: chocolate, instant noodles, carbonated soft drink, beer, cigarettes, shampoo, laundry detergent, baby diapers, facial moisturiser, and vitamins.

While Jakarta, Manila, Bangkok, Singapore, Ho Chi Minh, and Hanoi – which all have a population of over five million – still rake in the biggest revenues for the 10 products studied, the report shows that middleweight regions are also crucial markets for many items, being among their Top 10 sales generators.

The biggest markets for facial moisturisers in the region, for instance, are megacities, but also in the Top 10 are lesser-known places like Nakhon Ratchasima, Chonburi and Rayong in Thailand. Meanwhile, apart from Manila, Bangkok and Ho Chi Minh, Cebu, Cavite and Negros Occidental in the Philippines are also among the top sales earners for soft drinks, the study notes.

Middleweight regions will become even more important, with Nielsen noting that since 2010 demand in megacities was no longer the fastest growing for half of the 10 products studied.

“In the future, it will definitely not be the case. Across seven of the product categories examined, the fastest growth is likely to happen in either small or large middleweight regions,” the study states.

The report identifies six factors that drive the growth of middleweight regions in Southeast Asia. These include proximity to India, China and Japan, which allows the region to benefit from global flows, as well as the creation of the ASEAN Economic Community, which emphasises free flow of goods, services and investment; the presence of export processing zones and economic clusters which support sub-regional growth in the region; and the proliferation of “satellite” regions that are within commutable distance from megacities.

The study likewise credits the rich natural resources in the region, the demand for which has created benefits to cities that are resource rich; tourism; and a growing consumer base.

“While ASEAN has been enjoying economic recognition in recent years, businesses tend to view it as a single entity and surprisingly, little is known about the many cities and regions that make up the archipelago,” Patrick Dodd, Nielsen Growth Markets Group President, is quoted in the statement as saying.

“It’s time for companies to look beyond mega-cities to see the growth opportunity hotspots within middleweight regions. The diversity of its 625 million people represents a multitude of ethnicities, languages, and religion. This makes it crucial for companies to take a granular approach to understanding market opportunities in ASEAN.”

Image by Nielsen/ Alphabeta

Image by Nielsen/ Alphabeta

This article was written for B2B. Click here for the original story

S’pore ISP raising funds for new marts 

By Jennee Grace U Rubrico

Singaporean broadband provider MyRepublic is raising funds in a bid to consolidate its operations and later tap into new markets, an official of the company said.

Lawrence Chan, company vice president, told B2B in an interview that MyRepublic is looking to enter 50 fibre optic-ready markets around the world, including Brunei, Sri Lanka, the Philippines, China and the Middle East after it consolidates its operations in the four markets it is currently in.

MyRepublic provides internet services through leased fibre-optic networks under countries’ national broadband network programmes and promises to give subscribers 10 times more speed than the ones offered by mainstream telecommunications companies for the same price. It started operations in Singapore, where it rides on the fibre-optic infrastructure laid out by the government to provide faster internet service to constituents, in 2011.

The company, which targets gamers and streamers – the biggest consumers of data – also has operations in Indonesia, New Zealand and Australia.

“Once we consolidate the four countries [that we operate in] and [raise funds], then we go into a new country,” Chan said.

The company is currently in a fundraising exercise and is in talks with investors, he said. It is also looking to conduct an initial public offering in two years’ time, he added.

“There’s so much opportunity in the world, so many countries needing good, fast broadband. We just don’t have the funding to be able to get into that. We have enough for four countries, we just want to go into more. That’s where the IPO and the current round of funding comes in,” Chan said.

He declined to say how much the company aimed to raise from the fundraising exercises. The venue for the planned IPO has yet to be decided, he said.

Chan admitted that raising funds for MyRepublic has not been easy, as its model can be difficult to grasp.

“A lot of people don’t understand our business. If you talk to the guy on the street, he doesn’t understand the telco business, when you talk to a telco guy, he doesn’t understand that the business could be done so cheaply because he is so used to spending so much more in capital investments. They don’t believe it can be done cheaply and effectively,” he says.

“That leads to problems on fundraising. Because our idea is not easily understandable, but is great for the country, we had to convince people on an individual basis,” he adds.

Chan said that this was what pushed the company to be innovative. “When you don’t have the big cheque book behind you, you’re forced to make money. You can’t afford to go too far and try to do too many things. You do things that make money from day one,” he said, claiming that the company is EBITDA-positive, so it posted profits before the deduction of income tax, depreciation and amortisation.

Unlike mainstream telecommunications companies, MyRepublic is not capital intensive because it does not take it upon itself to build the fibre-optic infrastructure it uses to deliver content, Chan explained.

The company also uses in-house software that is easy to migrate and deploy in new markets, allowing it to provide internet service in a new country in as little as two months, he added.

“We wanted to specialise on managing the content coming in and making sure that you get it very fast.”

MyRepublic has no plans of dominating the markets it is in – it only targets a five per cent share of the market of each country it operates in, Chan said.

“We can survive in any place with five per cent of the market because we’re so lean. We sell the same products, we have little manpower, our marketing is the same. We only have two or three products that we sell. We keep it very simple,” he said.

MyRepublic reportedly entered a bid to be Singapore’s fourth telecommunications company last year, after frontrunners SingTel, Starhub and M1, but lost the spectrum auction to TPG Telecom Ltd.

In May, it was reported that the internet provider was seeking a private-equity partner to bid for M1, after the publicly listed telco’s shareholders appointed Morgan Stanley to conduct a strategic review of their stakes in the company.

This article was written for B2B. Click here for the original story. 

EasyParcel open to Brunei expansion 

By Jennee Grace U Rubrico

Malaysia-based online courier services company EasyParcel is open to expanding its services to Brunei, Clarence Leong, the company’s chief executive said.

Leong said that given the number of online shoppers in the sultanate, it would make sense for EasyParcel to operate in Brunei.

The company currently operates in Malaysia, Thailand, Indonesia and Singapore.

“Everyone’s buying online, so the market is at least there. It doesn’t mean that the size is small. But this is a normal practice, so there’s a potential,” Leong told B2B in an interview.

He also said that the decision to enter Brunei would depend on the market’s reception. “If someone wants us to be here [Brunei], we’ll be here.”

Leong said that EasyParcel will also have to find people in the country who believe in the company’s business model.

“A lot of times, people ask the question, ‘why EasyParcel, and why we don’t go direct [to logistics companies]?’  Why do we need to go to the middleman and then we get the benefits? So we need a team that actually believes in what we do and only then can we actually think further,” he said.

“Talent is the thing that built [the business] to where we are today. These people actually believe in what we do.”

EasyParcel’s business model is to connect small-scale merchants like Facebook and Instagram vendors with logistics companies to give the sellers access to cheap shipping rates.

Through its website, the company pools the courier demands of small vendors and generates enough volume to get cheaper shipping rates for them from its logistics partners.

“If you’re a [seller], you might not just be sticking with company A. You might want an option of A,B, C, and D. How are you going on board with A,B,C, or D with the best price?  Because you definitely have to commit to a certain volume to reach that. With a normal business I don’t think you can do that,” Leong explained.

Leong said EasyParcel does not think of logistics companies as competitors, but as partners.

“We consider them our partners… We are always the platform where you can choose multiple [courier services]… [but] they are all our partners because they are the ones who would actually be doing the work. We are just linking customers to them. In the end, it’s still their job,” he said.

Leong also said that EasyParcel at the moment enjoys monopoly in the region for its business model, adding that this is the time for the company to expand rapidly.

He also said that there had been initial plans to expand to more markets in Southeast Asia, but that at the moment, the company’s focus has shifted to growing the business deeper in the markets that it is already in.

“We actually receive a lot of enquiries coming from other countries, like the Philippines, even Vietnam, Cambodia, but I think for now, we want to focus on four [existing markets] because it’s not easy to manage different language. That’s the most difficult part,” he said.

This article was written for B2B. Click here for original story.

iflix to allow users to comment on shows 

By Jennee Grace U Rubrico

Video streaming company iflix is looking to incorporate a feature on its website that would make the user viewing experience more interactive.

In a presentation during the first Brunei CEO Summit held last May, iflix chief executive Azran Osman-Rani said a feature that enables users to comment on the shows they watch is now under consideration.

The idea, he said, was inspired by applications like Twitch, a livestreaming video platform and community for gamers that focuses on video gaming and playthroughs, and is aimed at the younger market.

“For [the younger audience that plays video games], it’s not just that ‘this is me and the video game’, but that ‘I’m part of a community’. That creates a more social and interactive experience. So taking inspiration from applications like Twitch is the ability for people to comment and engage others while watching TV shows,” Azran said.

The feature will not post comments in real time, Azran said, noting that iflix shows are not live.

“What we do is we time the comments,” he said, explaining that after a user comments on a particular scene, the comment would subsequently come out on the same scene when other viewers hit the exact point in the video that the comment was made.

iflix has also started talking to Hollywood studios to get actors and directors to also comment on their own shows, he said.

“It’s the 21^st century, so let’s move on to 21^st century television.”

Azran said that the feature could drive traffic away from pirated services towards iflix.

“This provides a unique feature you would not get using pirated services or cable and satellite services,” he said.
He also said the the move is in line with iflix’s focus on “the next generation”. He notes that 80 per cent of iflix users are under 30 years old who primarily use a mobile phone as their mobile phones as their entertainment device.

“They want to be able to engage with people,” he said.

He did not give a timeframe for the deployment of the feature.

Azran said the feature is the latest of several that the company constantly comes up with to keep up with the “giants” in the video streaming and entertainment industry.

“We always have to recognise that we are small and we’re competing with giants… The only way to stay alive as a small player is to move along faster. Moving fast, constantly trying new things,” he noted.

He added that that while not all of iflix’s ideas worked, iflix continues to try new things to stay ahead of competition.

“That’s the spirit of constantly innovating: having the mindset to say, six or seven or eight [ideas] didn’t work, and that’s okay because it’s the speed of trying things – that’s the only thing that keeps us ahead of the big global giants of Silicon valley or the big lumbering satellite TV giants that still charging a lot of money when the reality is that the phones that we are carrying today have far more computing power,” he said.

Based in Kuala Lumpur, Malaysia, iflix was established in 2015 as a subscription video-on-demand service that is focused on emerging markets. It allows users to access TV shows and movies through different platforms, including mobile phones. With a focus on localising content, the company prides itself for providing access to regional and local programmes, as well as for providing subtitles for these programmes in the languages of the localities they are accessed in.

iflix is reported to have more than five million subscribers around the world as of May 2017. The service is currently being offered in Malaysia, the Philippines, Thailand, Indonesia, Sri Lanka, Brunei, the Maldives, Pakistan, Vietnam, Myanmar, Saudi Arabia, Jordan, Iraq, Kuwait, Bahrain, Lebanon, Egypt and Sudan.