Profitable Zus stirs Malaysia’s coffee chain scene

In The Checkout this week, we discuss the IPO plans of Malaysia's Zus Coffee and analyze Temu’s expansion into Thailand. [Read from your browser]( The Checkout 🛒  --------------------------------------------------------------- Welcome to The Checkout! Delivered every fortnight, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we spotlight: - [The listing and expansion goals of Malaysia’s Zus Coffee]( - How Temu’s Thailand entry could disrupt Southeast Asia’s ecommerce scene --------------------------------------------------------------- Hello {NAME} In Indonesia, coffee chains from local brands are becoming popular. Queues are long, especially for stores in the capital city, Jakarta. It seems that coffee is now part of people’s lifestyles, and beverages from these brands have become a daily necessity. Something similar is happening in Malaysia, where various homegrown brands are competing with those from abroad. One of the most well-known ones is Zus Coffee - it has 500 branches across the country, exceeding US-based Starbucks’ [360 stores](. Zus Coffee’s outsized presence in its home market is one of the reasons why it is primed to go public. If its plan pushes through, the company will be the first local coffee chain to list on the Bursa Malaysia. Moreover, Zus Coffee has been posting back-to-back yearly profits in 2022 and 2023. In this week’s Big Story, my colleague Emmanuel discusses Zus Coffee’s potential IPO as well as the coffee chain scene in Malaysia. Apart from going public, the company is also setting up shop in other countries including Singapore and Pakistan by the first half of 2025. Meanwhile, I analyze the impact of Temu's Thailand entry on the ecommerce sector in Southeast Asia. The Pinduoduo-owned firm is gradually expanding its presence in the region after launching in Malaysia and the Philippines. -- Jofie  --------------------------------------------------------------- THE BIG STORY [Uno Digital Bank takes detour to digitalize the Philippines’ sari-sari stores]( The Malaysian coffee chain is reportedly eyeing a valuation of up to US$336 million.  ---------------------------------------------------------------  THE HOT TAKE Will Temu disrupt Southeast Asia’s ecommerce scene after entering Thailand? Here’s what happened: - Temu officially [launched]( in Thailand on July 29. - Thailand became its third market in Southeast Asia after expanding to Malaysia and the Philippines in 2023. - As with previous market launches, Temu’s Thailand site features big opening discounts of up to 90%. Here’s our take: In the first half of 2024, Temu [recorded]( a global gross merchandise value (GMV) of US$20 billion, surpassing its total in 2023. Much of this growth came from outside Southeast Asia. GMV in the region for the discount ecommerce platform was still less than US$100 million last year, far lower than TikTok Shop’s US$16.3 billion, according to a [report]( from Momentum Works. In Southeast Asia, competition is indeed tougher as Temu goes head to head with incumbent players like Shopee, Lazada, and TikTok Shop. While Temu offers massive discounts on its platform, so do the incumbents. This makes it harder for Temu to get consumers' attention and to disrupt the region as it did the US. TikTok Shop was able to disrupt the market because it brought something else to the table: turning social media into a buy-and-sell space through features like livestreaming and video. See also: [Southeast Asia’s ecommerce players go low to get ahead in price war]( In contrast, Temu’s low prices do not seem too different from what consumers are already getting from existing players. The company also focuses more on cross-border ecommerce or shipping goods directly from China, which could trigger scrutiny from local governments. Thailand, for instance, will tighten regulations to protect local merchants from the influx of cheap products from China following Temu's presence in the country. In July, the Thai government also introduced a 7% value-added tax on imported products priced below 1,500 baht (US$42). Previously, Indonesia [banned]( imported goods that cost less than US$100 from being sold on ecommerce platforms. Alibaba-owned AliExpress ceased servicing shipments to the country shortly after the rule came out in September 2023. Another concern is that shipping times are often longer for cross-border ecommerce. In comparison, standard delivery from ecommerce platforms in Indonesia only takes one to three days. These concerns may mean that in Southeast Asia, Temu will eventually occupy a place similar to AliExpress’ position: not a market leader or a strong competitor to Shopee and TikTok Shop. ---------------------------------------------------------------  EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Tech in Asia Conference Jakarta on Oct 23 - 24]( Tech in Asia is at the forefront of uncovering the next big thing in Southeast Asia’s tech scene. Our flagship conference in Jakarta is where the region’s most promising trends converge. This year, we’re spotlighting Fintech, Cleantech, and AI – three sectors poised to revolutionize industries and create immense opportunities. 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Ready to be in the know? [Register your interest today]( for the latest on SYNC 2024. Stay tuned. --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you soon! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2024 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894