ezbuy raises US$17.6m – what happens next?

Could be grooming up for a purchase.

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ezbuy raises US$17.6m – what happens next?

This article was originally published in The Low Down by Momentum Works.

Since ezbuy’s CEO, He Jian’s meltdown last year, accusing Alibaba of playing dirty – we were in doubt if ezbuy would ever raise funds again – since their primary backer, Vision Knight Capital (VKC) has close links to Alibaba. It is also rumored that founder of Vision Knight Capital still maintains close links with Jack Ma, and uses VKC to manage some of Ma’s monies.

He Jian’s open letter to Jack Ma was a akin to poking the lion – but as business goes,it did nothing to help ezbuy. Once-loyal customers got tired and abandoned using their services altogether

However, kudos to ezbuy for managing to raise the latest round – amidst fears of Alibaba stepping in for the final swing on the axe. Indeed, many investors are weary about competing against titans as we have covered before.

Overseas expansion – an expensive dream?

It was quoted recently that they would eye further overseas expansion – after this round’s fundraise. However, we believe the funding would not be enough for an aggressive expansion by the company. Finding appropriate “franchisees” could be the way to go, since in any expansion plan, familiarity with how things work locally, and considerable upfront investment is needed.

Take for example ezbuy’s two expansion overseas – Australia and Indonesia. Both have been underwater for a long time, and have ceased full-time “active” operations due to lack of traction (and funds). Therefore, it could be probable (and wiser) for ezbuy to work with local franchisees – like what China-based Kikuu does for Africa.

CTO’s departure

ezbuy is known to be running a tight ship from the start. Most of their employees have been working in the company for the past many years. However, in the recent month or two, ezbuy’s CTO, Weng Wei is rumored to have started a new job. What happened there?

According to some investor circles, the massive mess up – first during the furor on Singles Day 2016, and then the subsequent banning of Taobao accounts by Alibaba put the tech teams on edge. Many blamed the team’s inability to manage issues fast enough.

It is also widely known that the core verticals have always been tightly managed by the 4 original founders – each helming a vertical (product, marketing, global operations and china operations). While each vertical deserves some blame in the massive “screw up”, it seems that finally, the outsider helming the tech department is the first to go. What happens next – is anyone’s guess.

ezbuy clearly left behind – regionally

ezbuy was clearly taking the lead, up till the end of 2016. Since the bumper misfortunes, and Carousell’s bumper fundraiseFacebook’s entry, and Lucy Peng taking over Lazada – one even wonders how can ezbuy survive? Look, it’s not that we love (or hate) ezbuy, but we love to look things from different perspectives.

Lazada SG vs ezbuy SG (source: similarweb)

We think it’s clear that ezbuy does not have much room to maneuver. Talents are leaving, funds are insufficient for aggressive overseas expansion, all the while when they have considerable presence in quite a few markets. These markets also need funds to grow, and defend their position.

Grooming up for a purchase?

Investor circles who talked to us also shared their dissapointment that ezbuy could have been a unicorn if only they were more aggressive from the start, and built a more solid business model. So it’s clear that ezbuy is never going to be a unicorn right now, which brings us to ask – what are the plans, when existing investors decided to pile in more money?

JD CEO, Richard Liu sets his eyes on Southeast Asia in 2018 – could he be ezbuy’s saviour?

It is quite possible that ezbuy’s alignment with JD (after the spat with Alibaba) spells a possibility that it could be sold to JD down the road. Hefty valuations (for ezbuy) are in question, but JD does eye a regional entry by this year. Whether that happens or not, remains to be seen. ezbuy has really come so far, and of course as fellow entrepreneurs ourselves, we’d like to see the owners/founders do well.

Conclusion

We don’t expect ezbuy to be able to grow very aggressively even after this new round of funding. Also, partnering with JD is not a solid strategy to counter Alibaba’s influence. One thing’s for sure, ezbuy still has to build its own capabilities to source for good products – and the market has not seen it yet.

Perhaps they should take a lesson from SgShop’s (also a fellow daigou competitor) playbook – who launched IUIGA, with plans to bring affordable premium goods to Southeast Asia. This segment is quite the rage these days in China.