Big players incur big losses

E-commerce, which has witnessed a boom in the last five years, saw a high growth rate of 25 percent in 2017, according to the Vietnam E-commerce Association (Vecom). 

Analysts believe it will be maintained in the 2018-2020 period.

Meanwhile, Statista estimates that the total revenue of the e-commerce sector would reach $4 billion by 2020.

In such a fledgling and fast-growing market, all the big players have been seeing losses as they are spending a lot scrambling for market share. 

Joining the market in 2012, Lazada is the biggest spender. The finance report of Recess, the legal entity that owns Lazada, showed a loss of VND977 billion in 2015 and VND1.019 trillion in 2016. 

The loss was even higher than its revenue, VND600 billion in 2015 and VND907 billion in 2016. The high expenses on sales and management were the major reasons behind the loss.

By the end of 2016, the accumulative loss of the e-commerce website had reached VND2.743 trillion, while its charter capital was VND15 billion only. Its working capital is mostly from loans. 

In early 2018, Alibaba stated it will pour $2 billion into Lazada. Prior to that, it spent $2 billion to acquire 83 percent of Lazada’s shares in 2017.

Shopee has also found its name in the list of biggest losers. In 2016, when it joined the market, Shopee took a loss of VND160 billion. But the figure soared to VND600 billion in 2017.

By the end of 2017, Shopee’s total assets had reached VND730 billion, or 10 times higher than earlier that year. 

If compared with these two e-commerce websites, backed by large corporations, Tiki and Sendo are smaller.

After seven years of operation, Tiki has incurred a loss totaling VND600 billion. While Tiki got high revenue of VND62.4 billion in 2016, which was six times higher than 2015, it still took a loss of VND179 billion in the year because of the high sale costs.

Like other e-commerce players, Tiki doesn’t need to worry about the loss. In early 2018, JD.com committed to pour more money into the website. The commitment was made just two months after the Chinese group invested $44 million in Tiki in November 2017.

Sendo spends less money that the other three. It reported a modest loss of VND60 billion in 2015 and VND136 billion in 2016. By the end of 2016, Sendo’s total loss had climbed to VND230 billion. 

US$1=VND22,000

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Chi Mai