Dual lightning strikes to turn Vietnam’s e-commerce equilibrium upside down

The e-commerce market is looking at two high-calibre developments with the merger of Tiki and Sendo and the entry of heavyweight competitor Facebook. 

While  the merger would consolidate the two parties into a major competitor, it may hit a roadblock by breaking antitrust regulations – Facebook’s entry, however, is sure to rearrange the landscape.

1494p15 dual lightning strikes to turn vietnams e commerce equilibrium upside down
1494p15 dual lightning strikes to turn vietnams e commerce equilibrium upside down

After leaving the industry to stew for nearly a year, the two local e-commerce platforms of Tiki and Sendo finally agreed on a merger deal two weeks ago. A VIR source revealed that the two sides are finishing the last steps of the deal that is expected to be completed this July.

According to local market research company Asia Plus, Shopee is leading the Vietnamese e-commerce playground with the market share of 35 per cent, while Lazada holds 20 per cent. Following them is Tiki with 17 per cent.

The remaining 28 per cent is shared by the rest of the competitors, however, a long line-up of players including Leflair, Adayroi, and Lotte.vn have thrown in the towel, implying that a large portion of this is held by the fourth member of the Big Four, Sendo. If Sendo’s market share is similar to Tiki’s 17 per cent, they would hold about 34 per cent combined, which would make them a significant contender to both Shopee and Lazada. Thus, the two overseas rivals could see fierce competition in the coming time.

However, the market share of the two local companies spells trouble, as even without getting a clear reading on Sendo, Tiki’s market share is more than triple of what is allowed for horizontal merger and acquisition (M&A) deals (5 per cent) – essentially disqualifying it from any sort of merger.

Neither party to the deal has replied to media queries regarding the issue and it remains to be seen how the two would go about justifying the economic concentration. One point in their favour though, with other players holding 35 and 20 per cent, the merger would not necessarily result in an overbearing force in the market that could batter down any opposition.

New shopping competitor

While it remains unclear whether the Tiki-Sendo alliance would be strong enough to beat Lazada and Shopee, Facebook’s Shops appearing in the market promises to throw a titanic wrench into the works for the Big Four.

The global social network Facebook in the middle May launched its new feature named Shops which is very similar to other e-commerce platforms.

With 2.6 billion users globally and more than 60 million local users, Facebook’s Shops will have a great competitive edge right from its launch.

According to CEO Mark Zuckerberg, Shops will improve on the standard web commerce experience by storing user payment credentials in a single place that they can then use on any Facebook or Instagram storefront. There are currently more than 160 million small businesses using the company’s apps.

Additionally, Facebook’s new e-commerce feature will be integrated into existing Facebook business profiles and Instagram profiles, and they can also appear in Stories or be promoted in adverts. Items that businesses have made available for purchase will appear within the shop, and users can either save items or place an order.

Customers and sellers will be able to use Shops for free. Companies running business on the platform can adjust the layout and design of the store to promote the products they want to highlight. As of now, nearly one million companies registered to use the alpha version of Facebook’s new service.

 

Obviously making good use of its advertising prowess, sellers will be able to purchase advertisements for their virtual stores and products.

At least initially, Facebook will not charge merchants for sales made on the platform unless they use the company’s checkout process. In the latter case, sellers will pay 40 US cents for orders of up to $8 or 5 per cent for orders above $8.

As a result, local sellers will have one more option to run business on e-commerce platforms. While the current e-commerce firms do not really sport advertisement features, Facebook will clearly use this advantage to gain a foothold. This could take a sizeable chunk out of the market shares of other e-commerce firms in the country.

Hence, both Tiki and Sendo would see their slice of the pie diminish due to the appearance of Facebook’s Shops – along with Lazada and Shopee, and every other competitor small or large.

Financial incapacity

As e-commerce is still a new sector and all players in the race are rolling ahead tremendous losses, Tiki and Sendo have been constantly calling for investment, resulting in fragmented shareholder structures.

As of now, overseas investors hold 65 per cent of Sendo’s shares. In addition to FPT, Sendo’s stakes have been picked up by SBI, Beenext, Econtext Asia, and Daiwa.

Regarding Tiki, in addition to VNG’s 24.6 per cent and JD.com’s 22.2 per cent, Ubiquitous Traders Pte., Ltd., CyberAgent, STIC, and Sumitomo have all bought into the platform. As of the end of 2018, Tiki recorded VND1.4 trillion ($60.87 million) in accumulated deficit and Sendo reported VND1.3 trillion ($56.5 million) in losses. However, continually selling shares to gain more funding cannot be maintained forever. Breaking new ground on angling for finances, Tiki a few weeks ago announced plans to stage an initial public offering (IPO).

Sendo, while not showing any wish to list on the stock exchange, could easily find itself pressed for money.

Nevertheless, after the failure of WeWork, which received billion-dollar investment but went bankrupt last year due to the ineffective use of the capital, many investors are now focusing on the profitability of startups instead of their potential. Therefore, funnelling money into e-commerce may not be as appetising as in the past. Thus, forming alliances and proposing an IPO could both be meant as remedies for the financial conundrum.

Facebook’s Shops may find it hard to compete with e-commerce giant Amazon. Experts say that the playground seems too cramped to welcome any player, even one with 2.6 billion users. “Success will not only be made through the large quantity of users, it also depends on the way Facebook satisfies customers,” said Ngo The Vinh, an expert working in e-commerce for over a decade.

According to the latest survey from US-based Peel Research Partners, nearly 40 per cent of US adults use Facebook to explore news and contact friends, but not for shopping. Amazon and eBay, in their minds, are the places for such a task.

Also in the US, according to a survey by Minnesota Public Radio, around 55 per cent of total users access Amazon for searching goods, 28 per cent using Google, and only 17 per cent using other methods. That means a product showcased on Amazon can be sold out more easily, because users load up Amazon for shopping without being disturbed by social media.

Moreover, advertisements on Amazon are one of the most efficient functions to bring in money, which has yet to be developed on Facebook. Users said that sponsored products on Amazon are of better quality than on Facebook, so merchants and their shops are visited much more. vir

Anh Hara

E-commerce a positive for VN retail sector

E-commerce a positive for VN retail sector

Despite the impact of the COVID-19 pandemic, the retail market in Vietnam in the first quarter of this year still recorded positive results from e-commerce, online shopping and delivery services.

Will Vietnamese e-commerce platforms Tiki and Sendo soon merge?

Will Vietnamese e-commerce platforms Tiki and Sendo soon merge?

Following the hottest M&A retail deal of Vingroup and Masan in early 2020, the merger of Tiki and Sendo is expected to make the competition in e-commerce industry fiercer.

 
 

Other News

.
Can Vietnam could take advantage of new foreign investment strategies?
Can Vietnam could take advantage of new foreign investment strategies?
FEATUREicon  03/06/2020 

Over the past few decades, many companies worldwide have come to China, seeking a place to set up production bases and do business as they were lured by the country’s low labour costs and enormous domestic consumer market, 

Post-pandemic focus for new investments
Post-pandemic focus for new investments
FEATUREicon  03/06/2020 

A series of favourable policies are expected to be issued by the government’s upcoming taskforce in the country’s bid to attract a new investment wave after the health crisis.

"Passion - The Mother of Invention", says Vietnamese scientist
"Passion - The Mother of Invention", says Vietnamese scientist
FEATUREicon  02/06/2020 

No half measures. That’s the one thing that has stood out about Vu Ngoc Tam since he was a kid.

An initiative of national strategic importance
An initiative of national strategic importance
FEATUREicon  01/06/2020 

HCMC authorities put forward a proposal to develop the Eastern Creative City during a working session with the Prime Minister early this month. 

Four key measures help Vietnam control coronavirus
Four key measures help Vietnam control coronavirus
FEATUREicon  29/05/2020 

Vietnam did not shy away from broadcasting the seriousness of Covid-19.

What foreign ambassadors say about Vietnam's coronavirus fight?
What foreign ambassadors say about Vietnam's coronavirus fight?
FEATUREicon  29/05/2020 

It seems that Vietnam has adapted to a "new normal" state after it reopened the economy in late April.

The world in the post-Covid-19 era (Part 6)
The world in the post-Covid-19 era (Part 6)
FEATUREicon  26/05/2020 

Despite the best scenario, the consequences that the invisible Covid-19 enemy has caused to nations and international relations are severe, which will affect the world decades later.

Vietnam to study health standard validation before reopening to foreign tourists
Vietnam to study health standard validation before reopening to foreign tourists
FEATUREicon  27/05/2020 

With the Covid-19 pandemic under control in Vietnam, the country now seeks to breathe life back into its tourism industry.

Researcher devotes 30 years to preserving Raglai ethnic language
Researcher devotes 30 years to preserving Raglai ethnic language
FEATUREicon  26/05/2020 

Mau Thi Bich Phanh has spent nearly 30 years of her life researching the value of the ethnic Raglai language.

Child-like man in Ly Son finds success in tourism
Child-like man in Ly Son finds success in tourism
FEATUREicon  25/05/2020 

A 34-year-old man with childlike appearance is a the successful investors in tourism in Ly Son District, Quang Ngai Province.

Covid-19 pandemic: Policy responses to stop shutdowns
Covid-19 pandemic: Policy responses to stop shutdowns
FEATUREicon  25/05/2020 

The pandemic and the healthcare crisis it triggers have ignited an economic storm in many countries. If the economic turbulence is not managed well, it will lead to a financial crisis and/or a debt crisis. 

Vietnam’s automation future at work
Vietnam’s automation future at work
FEATUREicon  25/05/2020 

Are robots coming to take Vietnamese jobs? Are iPads invading Vietnamese workplaces? 

From small teen to “natural born killer”: A Vietnamese boxer’s journey to Tokyo Olympics
From small teen to “natural born killer”: A Vietnamese boxer’s journey to Tokyo Olympics
FEATUREicon  23/05/2020 

Boxer Nguyen Van Duong is proud to be heading to Tokyo next year after defeating the renowned Chatchai-decha Butdee from Thailand in the Olympics qualifiers in Jordan in March, 

The world in the post-Covid-19 era (Part 5)
The world in the post-Covid-19 era (Part 5)
FEATUREicon  23/05/2020 

Science and technology help people cope with pandemics like Covid-19 and help society adapt to pandemics.

Cuban photographer yearns to return to Hanoi
Cuban photographer yearns to return to Hanoi
FEATUREicon  23/05/2020 

Neither the great distance nor the spread of the novel coronavirus stopped Cuban photographer Eloy Rodriguez’s from visiting Vietnam for a few weeks in early March.

The world in the post-Covid-19 era (Part 4)
The world in the post-Covid-19 era (Part 4)
FEATUREicon  22/05/2020 

American scholar Stephen Walt, a realist and an ardent supporter of nationalism, said the post-epidemic world is a world that is less open, less prosperous and less free.

The world in the post-Covid-19 era (Part 3)
The world in the post-Covid-19 era (Part 3)
FEATUREicon  21/05/2020 

Originally regarded as a "savior", the Covid-19 pandemic has created new skepticism, considering globalization as a "criminal" that spread the coronavirus epidemic across the globe and caused the current disaster.

Cooperation - key in Vietnam’s fight against COVID-19
Cooperation - key in Vietnam’s fight against COVID-19
FEATUREicon  19/05/2020 

The international community has attributed Vietnam’s remarkable achievements in taking on COVID-19 to the close cooperation between the country’s Government and its people.

The world in the post-Covid-19 era (Part 2)
The world in the post-Covid-19 era (Part 2)
FEATUREicon  20/05/2020 

Some questions must be answered clearly: Where and in what context did Covid-19 appear? Were the World Health Organization's (WHO) detection and warnings timely enough in preventing the pandemic outbreak?

President Ho Chi Minh lives on through the lives he touched
President Ho Chi Minh lives on through the lives he touched
FEATUREicon  19/05/2020 

It's been more than 50 years since President Ho Chi Minh passed away and school children still learn his poems, his biography and about his minimalist lifestyle. 

 
 
 
Leave your comment on an article

OR QUICK LOGIN