Line Man Wongnai looks beyond food delivery in road to IPO

In The Checkout this week, we look at Line Man Wongnai’s ambitions beyond food delivery and Instacart’s steep valuation decline ahead of its IPO. [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: - [Line Man Wongnai’s quest]( to become the GoTo of Thailand - US-based Instacart’s shrinking valuation ahead of its IPO --------------------------------------------------------------- Hello {NAME} Even in Singapore, where the Line messaging app isn’t as widely used as WhatsApp or Telegram, many would recognize Line mascots like Brown the bear. More endearingly called “Line Friends,” Brown - together with Cony the rabbit and other characters - were created as stickers for the Naver-owned messaging app. They have fronted various [collaborations]( such as ones with luxury brand Furla and footwear retailer Melissa. So popular is the Line brand that famed South Korean group BTS has even created its [own set of Line characters](. Such is the power of a strong brand name. In Thailand, Line Man Wongnai - the all-in-one platform for food delivery, ride-hailing, restaurant reviews, and point-of-sale solutions - is betting that its sister company’s ubiquity as the country’s most popular messaging app will set the stage for new inroads it’s making in financial services. In this week’s Big Story, my colleague Simon details the firm’s plans to become a dominant player in its domestic market, despite falling behind regional rival Grab in its primary food delivery business. Delivery companies are certainly having their moment in the sun. Just this week, US-based Instacart disclosed its targeted valuation ahead of its upcoming IPO on the Nasdaq. That said, its target valuation of roughly US$8.6 billion to US$9.3 billion for the listing is a far cry from the US$39 billion it was valued at in a 2021 fundraising round. What does this bode for Southeast Asia’s food delivery players? More in this week’s Hot Take. -- Melissa  --------------------------------------------------------------- THE BIG STORY [Line Man Wongnai looks beyond food delivery in quest to become the GoTo of Thailand]( Recent acquisitions are paving the way for the company to IPO in 2025.  ---------------------------------------------------------------  THE HOT TAKE Instacart’s valuation falls sharply ahead of upcoming IPO, but biggest test lies ahead Here’s what happened: - US-based grocery tech firm Instacart is [targeting a valuation of US$8.6 billion to US$9.3 billion]( for its upcoming IPO, The Wall Street Journal reported. - The company and its shareholders are aiming to sell 22 million shares at US$26 to US$28 apiece, raising US$572 million to US$616 million, according to filings. - Instacart’s shares will be listed next week on the Nasdaq. Here’s our take: Launched in 2012, Instacart popularized the concept of on-demand grocery delivery, wherein orders are fulfilled at speeds of under an hour. The San Francisco-based firm came to inspire a generation of grocery delivery providers that sprouted up across the world. Some examples from Southeast Asia include HappyFresh, RedMart, and GrabMart. Such firms, including those specializing in quick commerce, will now be looking toward Instacart as a bellwether of their future prospects. The American company offers a variety of products from over 1,400 supermarkets, pharmacies, and cosmetic stores, including Costco, Kroger, and Walgreens. “Shoppers," comprising gig workers and Instacart employees, pick out items in stores and deliver them to customer doorsteps within a selected time frame. Large supermarket chains have developed their own delivery services in the years following Instacart’s founding. For example, Walmart started providing its own deliveries in 2018. But Instacart, which calls itself a “grocery tech company,” says its investments in “technology custom-built for online grocery” are more than what any single grocer can manage on its own. After its gross transaction value (GTV) surged at a [compound annual growth rate of 80%]( between 2018 and 2022, Instacart now has to prove that it can sustain itself beyond the pandemic-driven boost in demand for online groceries. Last year, for instance, the firm tapped new income streams such as [catering](. Not all of its investors, however, are convinced. In 2022, amid “volatile market conditions,” Instacart reportedly [slashed its valuation thrice]( to about US$13 billion. The figure stood at US$39 billion during a fundraising round a year prior. Still, the firm managed to log a net profit of US$428 million in 2022, which included a one-time tax benefit of US$358 million. This was boosted by advertising and other revenue, which contributed close to a third of the company’s overall revenue last year. In Southeast Asia, the quick commerce trend has proven to be [hard to crack](. Last year, Grab [discontinued]( its 30-minute delivery service in Bandung, which was fulfilled through a network of dark stores. It chose to focus its efforts on GrabMart, its marketplace that sources goods from third-party suppliers, instead. See also: [The rise of quick commerce in Indonesia]( Indonesia-based HappyFresh, meanwhile, has [ceased operations]( in Malaysia and Thailand. While there isn’t a 1:1 equivalent of Instacart in Southeast Asia that offers delivery services across multiple major supermarket and grocery chains, those operating ecommerce marketplaces are paying heed. Instacart offers a membership program called Instacart+ through which customers can enjoy unlimited free deliveries on orders over a certain size, along with reduced service fees and other benefits. According to the firm, an Instacart+ member generates 6.2x more GTV on average. Similarly, Grab has been focusing its efforts on retaining “high-quality” customers that tend to spend more on the app through its GrabUnlimited subscription program. Like Instacart, which has touted the potential of its ads business, Grab has also called ads an area with [“lots of upside”](. Significantly, the firm’s ads unit boasts the highest profit margins among its ride-hailing and food delivery businesses. Instacart may have missed its chance to launch its IPO at a much higher valuation. But as it grapples with a dampened economic outlook that’s expected to slow US consumer spending and grocers like Walmart launching [competing]( delivery services for third-party merchants, Instacart’s biggest test may lie ahead. -- Melissa  ---------------------------------------------------------------  NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ [TikTok calls for ‘level playing field’ as Indonesia mulls ban on social commerce]( A representative from ByteDance said that a ban on the sale of goods through social media platforms would “hamper innovation” and “disadvantage Indonesian merchants and consumers.” 2️⃣ [Neso Brands buys stake in Paris-based eyewear brand in $4m deal]( The investment by the subsidiary of Indian eyewear chain Lenskart will be used to expand Le Petit Lunetier’s presence in Europe, Asia, and the Middle East. 3️⃣ [Experts weigh in on Indonesia’s proposal to ban imported goods below $100]( Among several policies being considered is a proposal to set a minimum limit of US$100 per unit of goods traded on ecommerce marketplaces, which will be applicable to foreign sellers. 4️⃣ [TikTok’s new Amazon copycat is full of cheap Chinese goods]( The social media app’s Shop marketplace, which has gone live in the US, recommends a never-ending scroll of random products, from makeup to home goods. 5️⃣ [Temu enters Malaysia, its 2nd market in Southeast Asia]( Its entry comes just weeks after it launched in the Philippines in late August.  --------------------------------------------------------------- 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 © 2023 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894