Lummo finds new revenue stream - just in time

In The Checkout this week, we look at Lummo’s financials and examine whether Douyin’s struggles in China may affect TikTok Shop. [Read from your browser]( The Checkout🛒 --------------------------------------------------------------- Welcome to The Checkout! Delivered every Thursday, 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](. Written by Putra Muskita Journalist Hello {NAME} I don’t know much Latin, but one phrase I know is ceteris paribus, which translates to “all other things being equal” in English. It’s funny to have learned it within the safe confines of the classroom (thanks, economics!) because as we’ve all experienced in the past few months, the real world is basically a jungle. Until recently, it was perfectly normal for a tech company to take their time to explore product-market fit at the expense of profitability and even revenue, in some cases. It goes without saying that those times have ended. Lummo, previously known as BukuKas, had been one of those companies: the Indonesian startup did not generate revenue in its first couple of years of operations. But as my colleague Jofie outlined in this week’s Big Story, that has thankfully changed - just in time. A major reason is the company’s broadened focus from bookkeeping to ecommerce enablement. While losses widened, it reported revenues of US$2 million for the financial year ending March 31, 2022. Meanwhile in the Hot Take, I examine whether Douyin’s struggles in China will affect TikTok Shop elsewhere. – Putra  --------------------------------------------------------------- THE BIG STORY [Lummo starts generating revenue in FYE 2022, but losses widen]( “We are optimistic about the next 24 months. Building a great business is a long-term game,” says CEO and co-founder Krishnan Menon. ---------------------------------------------------------------  THE HOT TAKE Live commerce in China is approaching a ceiling. Will TikTok Shop be affected? Here’s what happened: - Douyin, TikTok’s China counterpart, is expected to reach 1.5 trillion yuan (US$215 billion) in ecommerce sales this year, reported [LatePost]( last month. - An inside source told the publication that the overall gross merchandise value (GMV) for live ecommerce in China is 3 trillion yuan (US$430 billion) at most, suggesting that the model is hitting a ceiling. - At the same time, Douyin is reportedly struggling to balance between growing its ecommerce business while keeping users engaged on the platform. Here’s our take: If any platform can get livestreaming commerce right, it’s probably TikTok. While players like Shopee and Lazada also offer live shopping features, TikTok’s main value is that it is primarily a social media app that’s grounded on video content. That, of course, explains the sheer scale of TikTok’s user base compared to marketplaces. Its algorithm also makes TikTok more conducive to live selling than other social apps like Instagram, according to [some Indonesian sellers](. One Muslim clothing seller told VOA Indonesia that to get attention on Instagram, it’s important to be endorsed by a well-known personality. That’s not necessarily the case on TikTok - her streams get discovered as is, making it more cost-effective for smaller businesses. While TikTok Shop has set Southeast Asia [on fire]( its forays into other markets have so far generated mixed results. In the UK, it [failed]( to gain enough traction, with livestreams generating poor sales. TikTok ultimately decided to abandon a European expansion. The company may not have entirely dropped its plans for another key market. In October, TikTok was reportedly [rolling out]( a live shopping feature in the US. A month later, it [soft-launched TikTok Shop]( in the country. That’s despite the fact that American consumers have not warmed up to shopping while watching livestreams on ecommerce channels [the way their Asian counterparts have](. In the US, for instance, Facebook began trialing the feature from as early as 2018, but the platform [turned its focus]( to Reels instead as consumer viewing behavior shifted towards short-form videos. Perhaps these trends suggest that with livestreaming, TikTok’s best bet may be in Asia, especially Southeast Asia. But there is also a chance that Douyin’s struggles in China will be replicated in the region. A consistent challenge for Douyin - also owned by TikTok parent ByteDance - has been to strike a [balance]( between ecommerce and its bread-and-butter entertainment content as it pursues monetization. As China tech analyst and investor Rui Ma pointed out, researchers found that if over 10% of a Douyin user’s feed consists of ecommerce content, they may stop browsing or even leave the platform altogether. Poor shopping experiences on Douyin could also yield [the same result](. Though the company has denied it, Douyin ecommerce was [said]( to have a [net promoter score (NPS)]( of -12. Research also shows that over the past few quarters, Douyin has lowered the ratio of ecommerce livestreams relative to general ones - from 30% to 20%. It’s unclear what the corresponding numbers are for TikTok Shop in Southeast Asia. The Indonesian sellers, for their part, [did say]( that their livestreams don’t attract an equal number of viewers. Perhaps this is the result of TikTok Shop keeping a healthy ratio between ecommerce and general content to retain users. TikTok Shop is benefiting from its novelty status for now, but it’s likely to follow Douyin’s lead and eventually become a full-fledged ecommerce operation. Indeed, as TikTok’s homepage shows, signs are already pointing to a search-based marketplace model. – Putra  ---------------------------------------------------------------  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ Alibaba has [entered Spain]( with the launch of ecommerce platform Miravia. 2️⃣ Carousell has [laid off]( 110 employees or about 10% of staff. 3️⃣ Tiger Global-backed Ula has [cut about 23%]( of its workforce, sacking 134 employees. 4️⃣ Temasek-backed Haulio has taken a [controlling stake]( in Indonesian logistics startup Logol, its first overseas acquisition. 5️⃣ J&T Express investor Hidden Hill Capital has [closed a US$465 million fund]( aimed at making supply chain and logistics investments in China and Asia. 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? 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