PChomestore Inc (商店街) expects to return to profit next year as a war of attrition with rival Shopee Taiwan Co (樂購蝦皮) has begun to subside.
The dust is finally settling following a year of fierce battles between the two companies, whose profitability has been strained by massive spending to fund their respective free shipping policies as they vie to capture market share.
At the beginning of this month, the company raised the minimum purchase for free shipping to NT$99 (US$3.39) as Shopee eased off its aggressive subsidies program, PChomestore general manager Su Yun (蘇芸) told a news conference in Taipei.
“That gives us room to cut marketing and promotional spending on our end,” she said, adding that the hike has not deterred customers.
“Our customers found the change reasonable and have said that the new free shipping threshold would help in combating abuse and waste,” Su said.
PChomestore’s shipping rates are still lower than those of Shopee and other rivals, she added.
The company expects to see its spending continue to fall as its customer base expands, Su said.
To create new revenue streams, the company is set to roll out an advertising system on its shopping platform next quarter — a feature that has been requested by vendors, she added.
The company, a subsidiary of PChome Online Inc (網路家庭), is developing big data insights on trends in demand as a new service that could be purchased by sellers.
However, Su said the company is still focused on growth and its marketing spending would only be slightly lower than the NT$1 billion it spent last year.
Apart from shipping subsidies, providing online coupons as small as NT$20 has proven to be effective in stimulating purchases, she said.
A new feature to let customers send pictures on the platform’s messaging service would help in reducing disputes in consumer-to-consumer transactions, she said.
After posting a net loss of NT$1.11 billion last year, the company is planning a capital increase in the third quarter to bolster its war chest, pending approval by its board of directors, Su said.
“A larger market share would bring a larger revenue stream as we begin to introduce new charges, such as transaction fees,” Su said, adding that the timing would depend on moves by its competitors.
PChomestore shares yesterday gained 0.32 percent to NT$47.60 on the Taipei Exchange, outperforming the over-the-counter index’s decline of 1.87 percent.
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