3 Ways Ayala Corp. is Embracing the Digital Future
The Philippines’ oldest conglomerate makes strategic deals with rising players in the digital economy
PHOTO CREDIT: Getty Images
In an era where no company is big enough to avert disruption, those that survive are the ones who can adapt and conquer.
Ayala Corporation, the oldest conglomerate in the Philippines, whose business interests lie in banking, real estate, power, water, telecommunications, infrastructure, and healthcare, is betting on the digital economy, even as most of its earnings come from traditional sectors like banking and real estate. In its 2016 annual report, Ayala Corp. posted a net income of P26 billion, up from P22 billion in 2015.
Here’s a look back on Ayala’s strategic moves in 2017.
Offline to online retail
Concurrent with the Ayala group’s continued expansion of its shopping mall business—announcing in January 2017 its plans to open 11 new malls across the country in the next two years—it also dipped its toes in Southeast Asia’s growing e-commerce space.
Last year, Ayala partnered with Global Fashion Group, the parent company of regional e-commerce player Zalora. The deal resulted in Ayala owning 49% of Zalora Philippines in what would be the group’s first foray in fashion e-commerce.
Zalora Group CEO Parker Gundersen believes bringing in Ayala as a partner in the Philippines brought together the online and offline worlds.
“I have no desire to run stores,” Gundersen says. “I don’t think that’s really our model, our core competency…I want to be the best online.”
He describes the deal as a “a unique partnership where we can do things together, [with Zalora helping Ayala] digitize its offline experience, and [Ayala] introducing [Zalora] to brands and other partners that they have been working with for many years and building that trusted relationship.”
To meet the changing demands of customers, new business models such as Zalora’s can offer alternative solutions to Ayala’s brick and mortar operations. In December, Zalora and Ayala Malls announced the initial rollout of their partnership in the form of pop-up stores, more convenient parcel delivery and pick-up, and an enhanced shopping experience.
In October, the local start-up community was abuzz as Chinese tycoon Jack Ma arrived in the Philippines for the launch of an e-payments service that was the result of a joint venture between Ma’s Ant Financial and Ayala-owned Globe Telecom.
In August 2017, Ant Financial through Alipay inked a deal to acquire 45% of Mynt, Globe’s wholly-owned fintech start-up that competes in the areas of payments, remittance, and loans. After the deal, Globe held 45%, while Ayala Corp. had 10%.
Alipay, a third-party payment platform, brought the reverse QR, which enables merchants to receive cashless payments without point of sale terminals or other expensive equipment. Merchants, including street vendors, only need a card or sticker with a QR code to accept payments, and the system utilizes Globe’s existing mobile wallet, GCash.
“The convenient daily life that 520 million Alipay users are enjoying will soon be realized in the Philippines,” Ant Financial Eric Jing says in a statement.
In 2016, Alipay owned more than half of the mobile payments market in China, slightly ahead of close competitor WeChat Pay.
Ayala is also sinking its teeth into healthcare.
February of last year saw Ayala Healthcare Holdings, Inc. (AC Health) invest in early stage start-up Wellbridge Health, Inc., which owns and operates MedGrocer, an e-pharmacy and medicine benefits management service. Customers can order medicines online and have it delivered directly to them.
“On the pharmacy side, we are exploring new ways to reach the customer and deliver affordable medicine; on the health tech side, we are looking to build a portfolio of innovative technology solutions across the continuum of care,” AC Health CEO Paolo Borromeo says in a news release.
AC Health also partnered with Maria Health, a Philippine start-up that aims to provide small- to medium-sized enterprises easier access to healthcare coverage. The deal is expected to enhance FamilyDOC, a 3-in-1 community-based clinic that offers primary care, a diagnostic facility, and pharmacy.