Despite suffering losses over the past seven years domestic e-commerce platform Tiki continues to carry out its market expansion plan, recently launching its first cross-border channel with significant support from Chinese giant JD.com.

Tiki Global's website, including JD.com pavilion

On July 11 Tiki officially launched its first cross-border ordering service “Tiki Global” and a JD.com e-commerce pavilion with thousands of original genuine goods on offer from its foreign partners.

Tiki’s new shopping channel enables consumers to purchase original foreign goods without any intermediates. The goods are shipped directly from foreign manufacturers in 8-15 days. Goods currently sold on Tiki Global are mainly electronic equipments, cosmetics, and items for mothers and babies.

The company’s launch of its cross-border channel is predictable since Tiki received a huge investment sum of $44 million from JD.com - its biggest shareholder.

As well as JD.com, many other firms have poured investment into the domestic e-commerce platform, including VNG Group who invested VND384 billion ($17 million), Japan-based Sumitomo Group who hold 30 per cent of Tiki’s shares, and Japan-based CyberAgent Venture fund who hold 15 per cent of its shares.

Despite suffering losses of VND600 billion since establishment, Tiki’s total value keeps increasing, hence many investors continue to pour capital into the firm. As of late 2017, Tiki’s total value hit $180 million - 80-fold higher than five years ago.

After seven years, Tiki has accumulated nearly VND600 billion ($26.43 million) in losses, including VND308 billion $13.56 million) in 2016 and VND284 billion ($12.5 billion) in 2017.

It is not uncommon for startups to suffer losses at the beginning and begin to succeed later and therefore leading e-commerce firms are not afraid to “burn their money” to gain the largest share. Despite the high rate of losses, e-commerce players show their positions in the market.

In the period 2015-16, Tiki’s main competitor Lazada reported losses of VND1 trillion ($43.39 million), increasing its accumulated losses to VND2.7 trillion ($117.1 million) by the end of 2016. In the context of a fiercely competitive market, Lazada’s losses in 2017 alone are estimated at VND1 trillion ($43.39 million) and its accumulated loss may increase to VND4 trillion ($173.56 million).

However, even with these huge losses, like Tiki Lazada received financial support, with Chinese e-commerce giant Alibaba investing $4 billion.

A similar situation has also occurred in other e-commerce platforms such as Sendo and Shoppee.

The domestic e-commerce market is still in its infancy, and the trend to risk losing money in order to gain the larger market share is forecast to continue, with huge losses by firms showing no sign of ending in the coming time.

VIR