Shares of PChome Online Inc (網路家庭) surged 6.52 percent in Taipei trading yesterday, as investors responded positively to the management team’s optimism that it would win an e-commerce battle with major rival Shopee Taiwan Co (樂購蝦皮).
Taiwanese e-commerce platform operator PChome’s stock price closed at NT$171.50, above its 60-day average of NT$144.90, with more than 1.97 million shares changing hands, Taipei Exchange data showed.
“We are not afraid of the competition from Shopee. You will gradually see the difference between us and the competition,” PChome chairman Jan Hung-tze (詹宏志) told an investors’ conference on Monday afternoon.
THREAT
Acknowledging the threat that Shopee poses over the next five years, PChome responded by adding a new business-to-consumer-to-consumer (B2B2C) operation under its subsidiary PChomestore Inc (商店街) at the beginning of last year, Jan said.
“The best way to compete against this future threat is to do something nearly the same, so we started to subsidize shipping costs last year,” he said.
In just one year, PChomestore’s number of merchants boomed from 24,000 in December 2016 to 70,000 in December last year, he said.
More than 10 million packages were collected at convenience stores nationwide in January, a new record, he said.
Those figures have largely surpassed Singapore-based Shopee’s record in Taiwan, Jan said.
LOYALTY
PChome aims to retain the loyalty of individual merchants and buyers this year while gradually phasing out the shipping subsidy, he added.
Individual merchants were recently required to become members of PChome’s payment service provider, PChomePay (支付連), and PChome will offer buyers subsidies through these merchants’ PChomePay accounts instead of directly providing them, Jan said.
Buyers will also be able to redeem vouchers for shopping if they have PChomePay’s accounts, he added.
PChomestore plans to introduce a “final value fee” and a “service fee” later this year to collect fees from merchants after a transaction is completed, Jan said, adding that PChome’s goal is to turn profitable next year.
IN THE RED
Due to the shipping subsidies and marketing expenses, PChomestore reported a net loss of NT$1.01 billion (US$34.49 million), or a loss per share of NT$43.25, last year, compared with a net profit of NT$18.93 million, or earnings per share of NT$0.87, a year earlier.
PChome has not yet released its earnings results for last quarter.
In the first three quarters of last year, PChome’s net profit plunged 47.43 percent annually to NT$325.69 million, or NT$2.78 per share.
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