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It will take time to the fog to clear. I dont like investing blind, when there is no certainty over anything except cash burning for an unknown time line.
Here's the thing about market size. The market is sizable and growing no doubt. But what can be extracted from this market no one knows. The players at this point is already forgoing long term profitability. Alibaba bought Lazada in 2016, instead of showing a profit, the cash burn seems to be accelerating the past 2 years. So when can we see Lazada standing on its own 2 feet and breaking even? Do we even have the slighest clue? 10 years seems unrealistic now given that they are already 7-8 years into the game since Alibaba took over(even longer if you factor pre take-over period.)
And here is the scary part, Shopee is looking to return to its cash burning ways to fend off competition and keep its leading position. So we can safely asssume that when competition heats up, Shopee will burn cash to stay ahead. Will bytedance
be the last strong competitor or will there be new entrants somewhere down the road? Sure there are new entrants to all industries but some are certainly more intense/insane than others. Which is why it is somewhat better to choose a boring and unexciting industry to invest in.
Reminds me of the airlines industry. Comeptition is so stiff, fixed costs so high, that under normal cicumstances, it is generally not a profitable business. Right now ticket prices are relatively high due to pent up demand and limited capacity. Given time, we are likely to see much higher capacity and lower ticket prices and back to unfavorable dynamics again...as it usually is.
Here's the thing about market size. The market is sizable and growing no doubt. But what can be extracted from this market no one knows. The players at this point is already forgoing long term profitability. Alibaba bought Lazada in 2016, instead of showing a profit, the cash burn seems to be accelerating the past 2 years. So when can we see Lazada standing on its own 2 feet and breaking even? Do we even have the slighest clue? 10 years seems unrealistic now given that they are already 7-8 years into the game since Alibaba took over(even longer if you factor pre take-over period.)
And here is the scary part, Shopee is looking to return to its cash burning ways to fend off competition and keep its leading position. So we can safely asssume that when competition heats up, Shopee will burn cash to stay ahead. Will bytedance
be the last strong competitor or will there be new entrants somewhere down the road? Sure there are new entrants to all industries but some are certainly more intense/insane than others. Which is why it is somewhat better to choose a boring and unexciting industry to invest in.
Reminds me of the airlines industry. Comeptition is so stiff, fixed costs so high, that under normal cicumstances, it is generally not a profitable business. Right now ticket prices are relatively high due to pent up demand and limited capacity. Given time, we are likely to see much higher capacity and lower ticket prices and back to unfavorable dynamics again...as it usually is.