Dennis Uy’s Chelsea mulls foray into e-commerce

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By Patrizia Paola C. Marcelo,

CHELSEA Logistics Holdings Corp. (CLC) is is looking at developing its own e-commerce platform which may be launched within the next two to three years.

CLC President and CEO Chryss Alfonsus V. Damuy said the company, which is part of Davao businessman Dennis A. Uy’s Udenna Group of Companies, has been studying the move given the growth and potential of the segment.

“We are studying the development of our own e-commerce platform,” Mr. Damuy told BusinessWorld in a phone interview.

While being a logistics company may be an advantage, CLC is being careful with its plans given the difficulty of succeeding in the competitive e-commerce industry.

“Our attempt in e-commerce, we’re a bit cautious. With this business, there are many loose ends. There are some who have tried doing e-commerce but have failed. But we believe that as a logistics company, we can be more competitive,” Mr. Damuy said.

Mr. Damuy said the company is studying whether to focus on being an end-to-end provider or a last-mile service provider. He said CLC is doing the study independently.

2GO Group under Negros Navigation Company, Inc. (Nenaco) is currently being managed by the group of Mr. Uy through CLC along with SM Investments Corp. (SMIC).

CLC is also considering entering the telecommunications sector, either by investing or having ownership in the player or consortium of players that will be awarded the contract as the country’s third major telco player.

Mr. Damuy said the company has been studying the possible foray into telecommunications since last year. He clarified the company is not in talks with any telcos or related parties for now.

The government is set to select a third major telco player by June.

“It depends on the study. If we find that it would bring good returns for the company, there’s a big chance that we might invest, or have ownership, in the third player. With the local players, there’s a big chance that they will still be looking for investors which have the significant financial capital,” Mr. Damuy said.

Earlier this week, the company amended its Articles of Incorporation to expand the primary purpose to include infrastructure facilities and systems.

Mr. Damuy said the move will also be beneficial in the long term once the company pursues an e-commerce business. “For logistics, it’s good to have a reliable telco when running e-commerce. This will help in the whole chain,” he added.

CLC may encounter some challenges with its possible e-commerce venture given that the industry is still developing, said Luis T. Limlingan, head of sales at Regina Capital Development Corp. said.

“E-commerce is still in the developmental stage here, the ones who can get into are the bigger retail players because of less friction costs and it’s scalable,” Mr. Limlingan said in a message.

Jevin S. de Celis, equities trader at Timson Securities, Inc., said the logistics business of the company gives it an inherent advantage for e-commerce.

“Chelsea is one of the biggest logistics firms in the country and logistics is an integral part of e-commerce,” Mr. De Celis said in a message.

The telco business can boost CLC’s bottom line in the long-term, but not without the massive capital spending required to build its network and attract subscribers.

“It will also be a big boost to their bottom line performance but I bet that’ll take years before it happens since these businesses are capital intensive,” Mr. De Celis added.

CLC reported its net profit grew by 17.52% to P161 million in 2017, mainly attributable to the company’s acquisition of a stake in 2GO Group, as well as 100% ownership of Starlite Ferries, Inc. and Worklink Services, Inc.