E-commerce: are players getting worn out in the online race?

Successfully calling for capital from international investors, e-commerce firms are nevertheless taking losses.

The e-Conomy SEA 2018 Report from Google and Temasek showed that Vietnam’s e-commerce market would have value of $33 billion by 2025, when the market would be the third largest in Southeast Asia, just after Indonesia with $100 billion and Thailand with $43 billion.

E-commerce: are players getting worn out in the online race?



Vietnam’s e-commerce in the last 3-4 years has witnessed ‘miraculous’ growth. Thirty six percent of polled businesses said they sell goods on social networks, an increase of 4 percent over 2017, while 45 percent of businesses said selling goods via social networks brings high efficiency, up by 6 percent.

Newcomers appear every day in the e-commerce market, stating that they can compete fairly with multi-national technology firms. Vo So marketplace of Viettel and VATO of Phuong Trang are examples.

Newcomers appear every day in the e-commerce market, stating that they can compete fairly with multi-national technology firms. Vo So marketplace of Viettel and VATO of Phuong Trang are examples.

Tran Trung Hung, CEO of Viettel Post, commented that e-commerce is still a potential market and he expects high growth rates in the future.

 


“The market has not identified who the final winner is, so the opportunities are divided equally for all players,” Hung said.

Le Hai Binh, deputy chair of the Vietnam E-commerce Association, said that though some large marketplaces have cemented their positions in the market, opportunities still exist for new players. If businesses have comparative advantages and powerful financial capability, they will be able to dominate the market.

Experts all say that the e-commerce market has high potential as consumers now tend to ‘stay at home to do shopping’. Therefore, investors have every reason to believe that they would reap fruit in the future.

However, for the time being, they have to compete fiercely with each other to lure more customers. And the competition costs them a lot of money.

Though successfully calling for huge foreign capital, marketplaces in Vietnam are incurring losses. Tiki reported a loss of VND1.2 trillion, Shopee VND2.7 trillion, and Lazada VND5.3 trillion over the last three years.

Tiki, which incurs a loss because it spent big money on infrastructure and storehouses, still decided to pour money into 100 music videos of famous artists ' to increase its popularity and polish images.

However, analysts commented that e-commerce firms, after ‘burning a lot of money’, seem to be exhausted. Some of them now apply new policies, cutting clients’ benefits. They have begun collecting fees from sellers, or have increased fees. The move shows that marketplaces now are trying to cut losses.

Kim Chi 

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