Grab | Sea group | TikTok Shop: A Glimpse into Southeast Asia's Digital Economy

Salutations, Olio aficionados! 👋

Happy Hump Day and welcome to the 81st edition of Weekly Olio - your trusted source for giggles, wisdom, and a dash of intrigue, courtesy of our tantalizing thought piece (yes, buckle up for Publisher's Parmesan). 🧀

This edition of Weekly Olio is brought to you by ClickFunnels.

Work With Daymond? For FREE →

BREAKING NEWS: 5 days of FREE value from Russell Brunson, Daymond John, and 20+ other elite entrepreneurs!

We’re hosting a virtual 5-day challenge called, Your First Funnel Challenge!

In the challenge, we’ll walk you through step-by-step on how to launch your business idea into the world with a funnel!

⏰ But hurry! Seats are filling up fast and this is a closed-door event.

Save your seat

The Quote󠀢 💭

The Tweet 🐦

Spanish football legend Gerard Pique has launched a new 7 a side football league called the Kings League. Instead of relying on traditional media for distribution, they have tied up with some strategically chosen streamers on Youtube, Tiktok, Instagram and Twitch. Fans don’t need cable TV or pay per view to watch the matches - they can just catch them for free on the streamers’ channels anywhere in the world. This unlocks unlimited global demand without any geographical lock-in. Genius, isn’t it?

The Infographic 💹

Launched in Sept 2019, Mint's Emerging Markets Tracker provides a summary of economic activity across 10 large emerging markets based on seven high-frequency indicators. With a composite score of 83, India topped the EM league table in April. China & Brazil were second & third, respectively. #MintEmergingMarketsTracker

The Short Read 📝

How Waymo outlasted the competition and made robo-taxis a real business - by Fortune

Many mighty players have fallen at the altar of self-driving cars and robo-taxis. Both upstarts like Uber and tech titans like Apple have tried their hand at solving the problem but have not managed to get anywhere. Uber ended up selling their autonomous vehicle division while Apple abandoned efforts after spending billions in R&D. In the midst of all this chaos, one company has managed to sustain and thrive: Alphabet’s Waymo.

Spun out as an independent company from Google’s moonshot factory called X, Waymo is the first company that has managed to put robo-taxis to daily use. In Phoenix, Waymo’s robo-taxis complete more than 50K trips every week. What seems to have worked for them is a slow and steady approach over the last 15 years. Tesla’s upcoming robo-taxi launch is the only real competition on the horizon.

The Long Read 📜

Google just updated its algorithm. The Internet will never be the same - by BBC

Over the last couple of years, Google has made dramatic changes to the way it’s search algorithm works recognizing the need to clean up search results clogged with ‘SEO optimized’ content. It was expected that these changes would help drive more traffic to websites creating high quality content instead of websites churning out low-quality programmatic content. However, the changes seem to have done the opposite. Many websites/creators working in specific niches have reported massive declines in traffic despite having high quality content.

The winner post these changes seem to websites hosting user generated content with Reddit topping the list. Even Wikipedia, Instagram, Quora and LinkedIn have seen spikes in traffic. With Google’s announcement of its AI overview feature, some of the small bloggers feel that they are likely to be completely wiped out. While Google refutes the point, this could provide more fuel to the anti-trust fire questioning its control over the internet.

Publisher’s Parmesan 🧀

Grab | Sea group | TikTok Shop: A Glimpse into Southeast Asia's Digital Economy

In the fast-paced world of Southeast Asia's digital economy, companies like Grab and Sea group are pivotal players. This article dives into the highlights from their latest earnings reports for Q1, painting a picture of growth, recovery, and strategic maneuvers. Through this narrative, we'll explore how these companies are navigating the post-pandemic landscape, competing in a vibrant market, and edging closer to profitability.

Both Grab and Sea group have shown strong recovery and growth in Q1, earning positive responses from the market. This optimism suggests that the worst may be over for tech companies in the region, with leading players poised to capitalize on the recovering economy.

Grab's Performance in Q1

First off, their revenue saw an impressive 24% year-on-year growth. Additionally, their mobility MTU has been steadily increasing, marking a new metric in their reporting. This metric has been showing recovery from the pandemic, especially in Q1 when the pandemic hit and Q2 when lockdowns started. The end of 2021 saw a turning point as the market began to recover.

It's fascinating to note the correlation between market trends and people's mobility. As the market went down, more people were out and about. In Q1, there was a 3% growth, and several events in Singapore, such as concerts, likely contributed to Grab's visibility.

Speaking of Singapore, it's a significant part of Grab's mobility business in terms of GMV. For foreigners visiting Singapore, Grab is probably the go-to option due to its widespread availability. Other alternatives like Gojek might not be as well-known or easily accessible.

Foreign travelers may also find it challenging to navigate other local services due to outdated maps and lack of familiarity. Grab's implementation of directions for pickup points could be a game-changer for tourists, setting them apart from other service providers.

Tourism volume has played a role in Grab's recovery, and the company's integration with services like SPLYT has expanded their reach even further. This integration allows users from other countries to access Grab without the need to download a separate app, making it highly convenient for international visitors.

Looking at Grab's monthly transacting users (MTU), the numbers have seen a significant increase, but it still represents only about 5% of the Southeast Asian population. This indicates a substantial untapped market for Grab to explore, which is why they're introducing initiatives like the saver program to attract price-sensitive consumers.

Grab's financial arm has also seen steady growth, particularly in their lending operations. Although the specifics of loans to merchants and drivers versus consumers were not detailed, the overall increase in loans disbursed suggests a thriving segment. With an average loan tenure of about two months, Grab's micro-financing approach aligns with typical internet financing models.

Despite the positive earnings, Grab remains on the journey to profitability. While they are narrowing their net income losses, they are yet to become net income positive. However, their consistent quarter-over-quarter improvements and substantial cash reserves provide a foundation for optimism. The management's conservative yet relentless execution strategy is gradually steering the company closer to profitability.

Sea group's Q1 Highlights

When we think about Sea, we often focus on Shopee, and it's clear that their GMV, gross orders, revenue, and take rate have been on a consistent rise over the past few quarters. What's intriguing is that this is the first time in a while that Shopee has disclosed their take rate, and it's actually on the upswing compared to the previous two quarters.

But, why did they decide to reveal their take rates now? Perhaps they are feeling quite confident about these numbers. Take rates can be quite complex, and in Q1 2023, it stands at 12%. Naturally, investors would anticipate further increases, but Shopee must also navigate an environment where many countries are keen on protecting small and medium enterprises (MSMEs). Charging high take rates could lead to political backlash.

Furthermore, TikTok Shop's aggressive market entry posed significant competition for Shopee. However, Shopee's investments in sales, marketing, and live commerce have helped them regain ground. Interestingly, TikTok Shop has been increasing its commission rates, suggesting a shift towards more sustainable growth. For example, TikTok Shop's seller and admin fees increased up to 6.5% as of May 3rd.

People are wondering if TikTok shop is giving up on overtaking Shopee and if e-commerce in Southeast Asia is worth the effort and investment for TikTok. It seems like TikTok shop has initially burned a lot of money to gain scale and negotiation power in the market.

But now, as they aim for significant volume, they need to optimize their operations and start looking at revenue potential more closely. Despite the challenges and uncertainties, it's unlikely that they've given up on overtaking Shopee. In fact, their approach seems to be more about optimizing their operations and setting sustainable KPIs for their managers.

Let's take a look at SeaMoney's loan book. This financial arm of SEA is showing steady and impressive growth. Their loan book is about 10 times larger than Grab's, totaling a whopping $3.3 billion. It's a business that has been quietly thriving for the past few years, flying under the radar. While most people associate SeaMoney with digital payments, their consumer lending business is massive and becoming a major player in the industry.

Unlike Ant's risky leverage strategy, SeaMoney seems to be more cautious and controlling their growth to avoid increasing delinquency or non-performing loan ratios. They're still raking in around $500 million EBITDA, giving their digital entertainment business a run for its money. There's even some healthy internal competition going on. It'll be fascinating to see how this all plays out over the next few quarters.

Sea Group is really looking to up their game with Shopee Express, their very own in-house logistics service. They're handling over 50% of Shopee's orders in Southeast Asia and a whopping 70% in Brazil. By taking control of their logistics, they not only have more bargaining power but also ensure consistent service levels. Initially, Shopee Express had some hiccups, but they're definitely making strides to improve. It's clear that Shopee's focus on cross-border business and customer experience is setting them apart from the competition. However, the question remains – is this enough to build an impenetrable moat?

Let's talk about Shopee Express and its major competitor in this region, J&T. Their average daily parcel volume has been steadily growing over the years, reaching a whopping 11.3 million parcels per day in Southeast Asia. That's a huge number! In Q1 2024, TikTok Shop went back live in Indonesia, but it's unclear how many of those 11.3 million orders are from TikTok Shop. If it's a significant portion, it could pose a strategic problem in the future.

Grab and Sea group's Q1 performances offer a snapshot of resilience and strategic adaptation in Southeast Asia's digital economy. As these companies continue to innovate and expand, they not only drive their own growth but also shape the region's digital landscape. With robust strategies and a focus on sustainable growth, they are well-positioned to thrive in the post-pandemic era.

Despite the positive outlook, challenges remain. Both companies must navigate competitive pressures, regulatory environments, and the ever-evolving digital landscape. However, their strategic focus and operational improvements provide a solid foundation for future growth.

Olio Jobs 💼

• Arize AI | U.S. Remote - Backend Engineer, Frontend Engineer

• Cribl | U.S. Remote, Canada Remote - Principal Software Engineer, Backend, Senior Software Engineer, Stream (Backend)

• Weaviate | Remote - Machine Learning Engineer, Senior Software Engineer Database

Sick of the boring delivery from thought leadership articles? Danny Healey, an entrepreneur in the sports media landscape, is taking a unique, energic and comedic approach to teaching fun lessons from real-world experiences.

That’s all for this week. If you enjoyed this edition, we’d really appreciate if you shared it with a friend, family member or colleague.

We’ll be back in your inbox 2 PM IST next Wednesday. Till then, have a productive week!

Peeyush and Mohit

Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.