The Rise and Fall of Multiply: A Case Study on Startups in the Philippines

Multiply, once a prominent e-commerce platform in the Philippines, has closed its doors due to strategic and financial missteps. This case study explores the reasons behind its closure, the missed revenue targets and business plan, and the lessons learned from this failure in the Philippine startup ecosystem.

Mismanagement and Closure

Unlike what some would believe, the closure of Multiply was not due to the ruthless actions of the CEO, as some sensational reports suggested. Instead, it was due to poor planning, lack of a sustainable revenue model, and an inability to adapt to the changing e-commerce landscape in Southeast Asia. The platform has faced significant challenges since its inception, particularly in the context of a rapidly evolving market dominated by more agile and efficient competitors.

Missed Revenue Targets and Business Plan

Multiply has always struggled with revenue generation. Despite its early promise, the platform failed to achieve the anticipated financial performance. The company’s business plan was lacking in a clear, uted strategy to generate revenue. Without a solid plan, Multiply found itself in a precarious financial position.

Naspers, the majority owner, has also diversified its investments across various e-commerce platforms in the region, making Multiply their least profitable and least performing asset. This circumstance likely influenced their decision to close down the platform. Given the platform’s long-standing presence since 2004 and its efforts to establish itself in the local business community, one might question why it didn’t become more successful. The answer lies in the inability to innovate and adapt to market changes.

Adaptation vs. Market Trends

The e-commerce landscape in Southeast Asia has undergone significant transformation over the past decade. The rise of group buying sites, direct e-commerce platforms, and peer-to-peer classified sites has dramatically reshaped the market. Multiply, however, struggled to capitalize on these trends.

Group Buying Sites, Direct E-commerce, and Peer-to-peer Platforms

Group buying sites like Grouper, with minimal initial investments, have captured a significant portion of e-commerce transactions. Direct e-commerce platforms such as Lazada and Zalora have grown through prudent business models and have generated substantial revenue. Even peer-to-peer classified sites like Sulit have managed to generate some revenue by providing a convenient platform for local transactions.

Throughout this period, Multiply has failed to align its strategy with these evolving market trends. This inability to adapt is reflected in its financial performance and customer base. The platform's local counterparts were unable to effectively manage merchants or provide a robust ecosystem, leading to a cost center rather than a revenue generator.

Customer Management and Strategic Blunders

Multiply's attempts to solidify its place in the micro business online marketplace were laudable, but the execution left much to be desired. The platform offered cash prizes to top sellers, subsidized delivery costs, and even waived transaction fees. These measures were meant to strengthen merchant relationships and build a sustainable revenue stream. However, these strategies were not sufficient to address the underlying issues.

Despite these efforts, the platform still faced significant challenges. The lack of transaction fees, for instance, made it difficult to recover costs, especially when the option of direct bank deposits was preferred by most consumers. Multiply’s projections to introduce transaction fees in mid-2013 were optimistic at best, given the prevailing market conditions.

Lessons Learned and Case Study

This case study serves as a cautionary tale for startups in the Philippines and Southeast Asia. The failure of Multiply highlights the critical importance of a well-versed business plan and the ability to pivot strategically. It also underscores the need to stay ahead of market trends and adapt to changes in consumer behavior.

The management of Multiply also exposes foibles in community engagement and customer relationship management. Despite these strategic issues, the platform's legacy as a pioneer in e-commerce remains a relevant topic for academic and practical study in the region.

In conclusion, the closure of Multiply provides valuable insights into the challenges faced by startups in the e-commerce sector. It is a reminder that success in this fast-paced and competitive market requires not only vision but also the ability to execute effectively and adapt to change.