Many major e-commerce (e-commerce) giants have withdrawn from the competition due to high costs, but the battle for market share through aggressive spending is far from over as new contenders like Temu, Shein, Taobao, and 1688 make their entry into Vietnam.

 Major players exiting the race

With a population exceeding 100 million, a youthful demographic, and an internet penetration rate of approximately 79.1%, along with 73.3% of the population active on social media, Vietnam is considered a lucrative market for e-commerce giants.

The e-commerce race in Vietnam has essentially become a "money-burning" contest to capture market share. The winner must have substantial financial resources to endure until rivals falter.

“Many major players have exited the market, such as Lotte.vn (from South Korea’s Lotte Group), Deca.vn (from 24h), and Adayroi.com (from Vingroup). Tiki and Sendo are still operating, but their growth has been negative for several quarters, with a market share shrinking to under 1%. Without breakthrough strategies or mergers and acquisitions, their long-term survival remains uncertain,” said Bui Quang Cuong, CEO of iViet Solution, speaking to VietNamNet.

Over time, new names have emerged, challenging established market leaders. Lazada initially dominated Vietnam's market but was later overtaken by Shopee. Shopee held the top spot for a long period, enduring significant losses. Just when it started to see profit in Q4 2022, Tiktok Shop entered the scene. Despite Shopee reporting profits throughout 2023, it faced losses again in Q4 2023 and continued to see declining profits in 2024 as competition intensified.

According to YouNet ECI, by Q2 2024, only Shopee (with about 71.4% market share) and Tiktok Shop (with around 22%) maintained positive growth, together accounting for over 93% of the market share. While many believed it had become a two-horse race between these giants, new players like Temu, Shein, Taobao, and 1688 have recently entered. Temu, in particular, has made waves with its ultra-low pricing strategy directly from Chinese manufacturers, paired with numerous promotions and affiliate marketing campaigns.

Cuong noted that competitors continue to spend heavily on market competition, and with the arrival of more international e-commerce giants, the battle remains heated. If Temu can address its legal and product quality issues, it could soon shake up the current market rankings.

First launched in the U.S. in September 2022, Temu now operates in 82 countries and regions and quickly rose to the top of e-commerce platforms in many markets. In the first half of this year, its gross merchandise value (GMV) reached $20 billion, surpassing the $18 billion recorded in 2023. Temu has even overtaken eBay to become the second most-visited e-commerce site globally.

How can Vietnamese e-commerce platforms compete?

Consumers benefit the most from increased competition, enjoying more options and lower prices as platforms cut out intermediaries and offer promotions. However, issues like counterfeit goods and online scams have emerged, and despite the efforts of platforms and authorities, complete prevention remains elusive.

Domestic enterprises and sellers are the most adversely affected. Facing fierce competition, many local businesses have dissolved, and numerous vendors have exited the e-commerce space. Domestic production faces threats as foreign platforms directly bring international products to Vietnamese consumers without intermediaries.

“In 2023, over 110,000 sellers left Shopee, Tiki, Lazada, and Sendo. Although 95,000 new sellers joined Tiktok Shop, the total number of sellers dropped by about 10,000,” Cuong cited.

Cuong believes that "money talks" in the e-commerce world, making it a race dominated by international giants, while Vietnamese companies have limited opportunities due to insufficient financial resources.

The two Vietnamese platforms, Sendo (by FPT) and Vo So (by Viettel), initially showed promise thanks to backing from major Vietnamese tech companies. However, Sendo has experienced negative growth in recent years. Although Vo So has not officially exited the competition, its website is no longer accessible. Cuong pointed out that even major Vietnamese corporations may struggle to support these e-commerce platforms sustainably.

The CEO of iViet Solution suggests that Vietnamese businesses should target niche markets, focusing on products that are genuine strengths of Vietnam. Additionally, logistics capabilities need significant improvement. “Currently, international shipping to Vietnam is often faster and cheaper than domestic shipping, which makes it hard for us to compete,” he stated.

According to Metric, Vietnam’s e-commerce market recorded total sales of 227.7 trillion VND in the first nine months of 2024, a 37.66% increase over the same period in 2023. Product volume reached 2.43 million units, up 49.8% from 2023, while the number of active shops fell by about 1% compared to the previous year.

Binh Minh