return icon

E-commerce giants incur losses as they spend more on technology, marketing

They are spending big money on technology to manage business effectively and give clients the best experiences, and on marketing campaigns to lure more customers.

In 2018, announced the investment of $44million in Vietnam’s leading B2C platform TIKI.VNby VNG, the biggest investment in an affiliate.





In March 2018, Alibaba bought Lazada and raised its total investment capital there to $4 billion.

SEA, the holding company of Shopee, keeps injecting money into the marketplace despite losses.

According to the Vietnam E-commerce Association (VECOM), Vietnam’s e-commerce grew by 25 percent in 2017. If the growth rate is maintained, the market value may reach $13billion by 2020.

The ‘e-commerce fever’ has created a crowded and competitive logistics market with more than 50 suppliers by 2017, from traditional forwarding service providers such as Viettel Post, EMS and VNPost to startups such as giaohangnhanh, supership and giaohangtietkiem, from domestic to international companies such as DHL, Grab Express and Lazada Express.

According to the Vietnam E-commerce Association (VECOM), Vietnam’s e-commerce grew by 25 percent in 2017. If the growth rate is maintained, the market value may reach $13billion by 2020.

However, though Vietnam is an attractive market, it still doesn’t bring profits.

There are four factors that determine success and failure.

For marketplaces, technology is considered a prerequisite condition to bring good shopping experiences to customers and help sellers optimize profits. In addition to systematic thinking, a great amount of capital to maintain technology applications is vital.

Marketplaces also need to apply good policies for sellers and buyers to lure them to the trading floors. That is why e-commerce firms recently have poured money into costly marketing campaigns and subsidy programs.

This is the favored method that Vietnamese firms use to conquer consumers’ hearts and expand their market share.

The third factor is logistics costs. Logistics activities of marketplace include the transportation of goods from sellers’ warehouse to buyers, or from the marketplace’s storehouses to buyers’ doors.

Some experts estimate that the transportation cost makes up 25 percent of total cost for one order. At present, most e-commerce firms offer partial or 100 percent subsidy for the coast, i.e. buyers don’t have to pay shipping costs. The subsidy gobbles up the firms’ profits and make their losses more serious.

Delivery time and refusal rates are also a big headache for marketplaces. In many cases, e-commerce firms have to build up transport staff of their own instead of outsourcing to others.

Meanwhile, the investment rate for the development of delivery networks is huge. And because of the expenses, the lossed incurred by e-commerce firms is foreseeable.

Linh Nga


E-Commerce needs a new push to reach rural areas

E-Commerce needs a new push to reach rural areas

E-commerce is developing rapidly in Viet Nam but it needs a new push to reach rural areas and help small- and medium-sized enterprises (SMEs) reach customers, experts have said.  

Concerns persist over taxation of foreign e-commerce firms

Concerns persist over taxation of foreign e-commerce firms

The passing of the amended Law on Tax Management by the National Assembly is expected to improve the taxation on e-commerce activities.



High costs and legal impasses hinder LNG energy development in Vietnam

Too many variables and over-reliance on imports have been hindering Viet Nam's plan to build power plants running on liquefied natural gas (LNG), industry experts have said.

Three Vietnamese military officers awarded UNHQ medal

The United Nations on May 26 awarded its medal to three officers of the Vietnam People’s Army who are working at this organization’s headquarters in New York, USA, on Peacekeeper’s Day (May 29).

Trade revenue set to eclipse 700 billion USD this year

Free trade agreements (FTAs) spurred Vietnam’s bilateral and multilateral trade, with 2022 revenues projected to hit a record 750 billion USD, according to experts.

Government takes action to protect wild birds

Deputy Prime Minister Le Van Thanh has signed a directive to protect migratory and wild birds in Vietnam.

Quang Nam man owns 2,000 antique gardening tools

Collecting old items is how 47-year-old Tran Van Phuc from Quang Nam province describes the previous daily life of the working class to the younger generation.

Tourism booms as people are anxious to travel after Covid lockdowns

Since March, many families have booked long-distance tours for the summer now that the economy has reopened.

Mekong Delta farmers back away from rice as input costs rise

Rice farmers in many Mekong Delta provinces are reducing rice cultivation over rising prices of inputs like fertilisersnbsp;and pesticides.

Mural depicting VN, US’s friendship inaugurated

A ceramic mural, US-VN Friendship, has been inaugurated at the new US-Vietnam Co-operation Centre in Hanoi.

New pact promotes Vietnam-Europe fashion links

Culture, lifestyle and fashion links between Vietnam and Europe will be promoted under a Memorandum of Understanding signed this week by the European Chamber of Commerce in Vietnam (EuroCham Vietnam) and the Aquafina Vietnam International Week.

Vietnam likely to consider nuclear power development

The Economic Committee of the National Assembly (NA) has recently proposed developing nuclear power over the next decades to ensure national energy security and meet the ‘net zero’ goal Vietnam set at the 26th UN Conference on Climate Change (COP26).

Short animated Vietnamese film competes at Cannes Film Festival

“Giac Mo Goi Cuon”, known as “Spring Roll Dream” in English, a short animated film by a young Vietnamese director has been nominated in the La Cinef, a category at the Cannes Film Festival which honours works by students from global film schools.

PM welcomes Intel’s investment expansion in Vietnam

Prime Minister Pham Minh Chinh applauded Intel’s decision to expand its investment in Vietnam while receiving its CEO Patrick Gelsinger in Hanoi on May 27.

Hanoi to build 17 bridges spanning Red River

In addition to the seven existing bridges, Hanoi will have 10 more bridge crossing the Red River, under a development plan to 2030 with a vision towards 2050.

Localities asked to report progress of large FDI projects

The Ministry of Planning and Investment has requested localities to report the execution of large foreign direct investment (FDI) projects that need significant investment and use large land lots.

Opportunities for e-commerce in Vietnam to boom

Recently, e-commerce in Vietnam is assessed to grow robustly. It is forecasted that Vietnam's internet economy will reach US$57 billion by 2025, ranking second in Southeast Asia, after Indonesia.