Local e-commerce solutions startup Shopmatic is acquiring brick-and-mortar solutions specialist Octopus Retail Management as it pursues an omnichannel retail strategy.
Shopmatic co-founder and CEO Anurag Avula told The Business Times that through a cash and share swap, Shopmatic Holding now owns a 50.1 per cent stake in Octopus. Shopmatic Holding wholly owns Shopmatic Pte Ltd, the operating entity. Mr Avula declined to reveal the size of the deal.
The combined entity is projected to achieve a revenue of S$10 million in FY2019, as well as a gross merchandise value of more than S$2 billion.
Mr Avula, who spent close to five years at PayPal before leaving to start Shopmatic, also told BT that he expects Shopmatic to turn profitable next year. The firm currently has 50,000 live businesses on its platform and has recorded an average 3 times annual growth in revenue over the past three years. It is currently fundraising for its S$15 million Series B round and expects to close it by the end of April. It announced its Series A fundraise of S$5.7 million in June 2017.
Shopmatic is often referred to as the Shopify of Asia – it helps individuals and small businesses to kickstart an e-commerce store, from setting up a website to managing cross-border transactions and customer engagement across different social media platforms.
Singapore-based Octopus, on the other hand, has begun to carve a name for itself by offering cloud-based omnichannel management software to physical stores, ranging from small boutiques to large retail chains with several hundred stores.
With the merger, customers will be able to tap on a holistic suite of services to manage their online and offline businesses, said Shopmatic and Octopus in a joint press statement.
While Shopmatic and Octopus will continue to operate as separate entities, their B2B solutions will be increasingly integrated into each other’s systems.
Shopmatic is targeting to increase the number of live businesses on its platform to 500,000 by March 2020, driven by its omnichannel play and its newly launched transaction model.
Mr Avula said both parties differentiate themselves from their competitors because most companies’ omnichannel management solutions are geared towards large businesses. “There is really no player doing this for small brands (in emerging markets in Asia),” he said.
Ong Whee Siong, founder and managing director of Octopus, said in a statement: “It has become critical for retailers to implement an efficient omnichannel retail management system to enhance business productivity – this is where our partnership with Shopmatic will come into play. Together, we cover markets spanning Asia-Pacific, the Middle East and the United States.”
Shopmatic also expects its transaction model, launched last week, to drive further growth. The model is aimed at attracting business owners that might be new to operating online businesses and are hesitant to start one. Instead of having them commit to a subscription from the get-go, Shopmatic charges 3 per cent for every successful transaction, plus a $1 hosting fee at the end of every 12 months.
The company’s subscription plans are S$30 per month for three months; S$25 per month for six months; and S$20 per month for 12 months.