- Tram Ho
Hoang Vu said that he recently closed fashion shops on Tiki and Sendo – two names arguably the most notable in the rapidly growing e-commerce market in Vietnam.
The trader said his low payback rate, high fees and lack of support to the sellers were the reasons for his departure. However, in addition to these concerns, Vu also said that e-commerce shops Shopee and Lazada as well as Facebook and Instagram proved to be more effective in attracting Vietnamese consumers.
TechinAsia spoke with 5 sellers on Vietnam’s e-commerce platforms. The results showed that they all said that they prefer Shopee because it is easier to open stores, post and advertise products. Their app is friendly to both buyers and sellers, resulting in a higher turnover. These people also said that online sellers often start on Shopee first to gain a large enough traffic before expanding to other platforms.
In general, the battle for both buyers and sellers in the e-commerce market is becoming increasingly fierce. After all, an e-commerce platform needs to attract both sides. Along with Indonesia, Vietnam is one of the most promising e-commerce markets in the Southeast thanks to its growing population of 97 million people and its growing popularity of the internet and smartphones. clever high. Between 2015 and 2019, the annual growth rate of Vietnam’s e-commerce reached 81%, higher than Thailand and Malaysia as reported by Google and Temasek.
In fact, Vietnam’s fledgling e-commerce sector only accounted for 4.2% of the total retail industry in 2018 according to government data.
Therefore, there is still a lot of potential for development.
The government has set a goal of reaching $ 35 billion in e-commerce revenue by 2025. This is clearly an ambitious goal in the post-Covid-19 context. Overview of e-commerce market in Vietnam today is the race of 4 giants (Big4) including Tiki and Sendo – domestic companies have received hundreds of millions of dollars of investment; Shopee and Lazada – foreign soldiers with very strong financial potential.
4 big players in the field of e-commerce in Vietnam.
However, with information about the possibility of Tiki and Sendo merging, the competitive landscape will enter a new chapter.
In recent years, Vietnam’s local foundations have performed worse than their international competitors. Grab was extremely successful when it joined the country in 2014, leaving local players like Be and FastGo with little room to grow. Vietnamese social networks also cannot take off because of the overwhelming dominance of Facebook.
With such a reality, will domestic e-commerce companies also suffer the same fate?
However, it must be added that, unlike Be and FastGo – the companies only appeared after Grab had defended its position in the market, both Tiki and Sendo joined the game earlier than their foreign rivals. surname. Combining these two companies – worth about $ 100 million each – could create the biggest merger in the technology sector and allow both companies to attract more capital to battle their rivals. their international capital.
With the fledgling e-commerce infrastructure in Vietnam and investors increasingly “tightening their wallets,” the consolidation of forces will at least help Sendo and Tiki survive the long term. However, it will not be easy to fight against a company backed by Alibaba, such as Lazada and Shopee, which have benefited from the parent company Sea.
Like many other countries, Vietnam has taken measures to keep social distance in order to prevent the spread of Covid-19. However, these regulations only lasted for 2 weeks in April thanks to the effective response from the government to the pandemic. Online shopping is forecast to increase in crisis but ultimately does not meet expectations.
While the document shows a steady increase in e-commerce application usage, Lazada, Tiki and Sendo web traffic data dropped in the first quarter of 2020 compared to the same period in 2019. Shopee is foreign. This is the only website that has witnessed an increase in Q1 traffic.
Dang Dang Truong – an expert from iPrice said that the increase in online shopping is mostly with essential products while the demand for fashion and electronics products – which is the growth engine for the Vietnam e-commerce website in previous years decreased.
Even before the pandemic hit, several online shopping websites in Vietnam had to close in 2019, including Adayroi – a subsidiary of Vingroup as well as Lotte.vn and Robins.vn. Recently, Leflair – a startup selling online brand also filed for bankruptcy amid the noisy supplier debt.
In general, e-commerce in Vietnam is extremely promising but still in the early stages of development. This means that to attract new customers and make them buy companies will have to spend a lot of money. The majority of spending is driven by consumers in Hanoi and Ho Chi Minh City – where 70% of total e-commerce transactions nationwide. Shipping products to end-users is also quite expensive, spreading across 63 provinces and cities.
Buyers, especially first-time buyers, are not easy to attract. In 2019, government data showed that 83% of respondents were still concerned about the quality of products sold online. Consumer surveys also show a range of other issues such as poor transportation, complex payments and higher prices than offline stores.
There are also “cash is king” ideas. Among Southeast Asian countries, over 90% of online purchases in Vietnam are still paid in cash or to shippers – the highest in the region.
The market is crowded
Shopee – the unit that entered Vietnam since 2016 is one of the “Big 4” of the e-commerce market here. The Sea Group subsidiary has quickly captured the market in terms of web and mobile users.
In order to attract consumers, e-commerce companies must “burn money” to reduce prices, support shipping costs, reward suppliers and expensive advertising campaigns including hiring floating people. language in Vietnam. VNDirect published market research predicting that a new entrant must spend at least VND 142 billion (USD 6 million) a year to gain 1% of the market share.
These e-commerce platforms themselves vary greatly. While Shopee is targeting rural women and brands that are defined as affordable, Tiki is looking to Amazon. TikiNow – its shipping branch guarantees 2-hour delivery – just like Amazon Prime.
Like Amazon, Tiki prides itself on being a customer-centric approach, betting on high-income consumers – ready to pay for standard products. In turn, Sendo wants to enter the market and reach low-income consumers living outside Hanoi and Ho Chi Minh City.
Entering Vietnam in 2012, Lazada lost the top position in some aspects compared to Shopee in the third quarter of 2018. Not to mention still having to struggle to find the right senior, making Lazada still unable to success.
When asked by Techinasia about the business situation in Vietnam, a Lazada spokesperson said the platform served “over 70 million annual active consumers”, calling it a “measure of location.” market leader”.
The person added that “app downloads and web traffic are not meaningful metrics” nor are the company focused. The newly appointed CEO Li Chun also plans to “strengthen Lazada’s competitive position through the application of data technology and localize business activities in 6 countries with Vietnam as a key market”.
Will merging Tiki and Sendo help defeat Shopee and Lazada?
To deal with larger rivals, Tiki and Sendo have important capital mobilization rounds.
When TechinAsia asked about the possibility of a merger, both companies declined to comment. However, a source close to the matter said Tiki and Sendo had informed the authorities about the merger.
“This merger can bring in” two assets with very good complementary capabilities, “creating huge synergies with the potential to raise more capital,” said Akshay Jayaprakasan – an analyst. .
Being able to offset each other “makes sense”. “I think in terms of value, an e-commerce company in Vietnam is still worth better than competitors in markets like India or Indonesia.”
Tiki crowdfunding rounds.
Moreover, the current “Vietnam e-commerce sky is too crowded” to attract capital, according to Jeffrey Paine – a manager at Golden Gates Foundation. “Investors will look to other areas such as B2B trade, social commerce as well as areas of trade support from payment to delivery.”
The potential merger between Tiki and Sendo has been rumored since February, but so far the structure of the deal has not been revealed.
So what can help domestic businesses compete with foreign giants like Shopee and Lazada?
Theoretically, the merger between Tiki and Sendo will help expand the reach across the country of both companies. Tiki is primarily aimed at tech-savvy consumers in Hanoi and Ho Chi Minh City while Sendo focuses on more distant cities.
Analysts say both companies have the potential to expand more quickly because they have very different business models: Tiki focuses on B2C and Sendo is mostly C2C. They also have different portfolios.
“We believe that the merger will be good for profits and growth in the long run. With the merger, the market has three players of great caliber with strong ability to compete with the other competitors.”
One of the challenges for Tiki is to expand the product offering not as a platform for real, high-end products. Currently, Tiki says it has about 10 million SKUs on 35 items.
“For Tiki, Sendo could be a missing piece. If we look at China, Alibaba has Taobao and Tamall. Taobao focuses on cheap and quality goods to target first-time buyers and new buyers.” , Tmall meets the needs of those who desire to buy more advanced products. ”
Tiki’s shareholder structure.
An e-wallet can also be an important factor as they can allow e-commerce companies to expand to financial products like Alibaba has done. Tiki does not currently have an e-wallet, while Sendo’s SenPay has been deactivated.
For faster shipping, Tiki established TikiNow Smart Logistics in September 2019. By operating the in-house transportation system, Tiki has learned not only the Amazon model but also JD.com – one of the investors in them. In return, Shopee relies on a third-party carrier. In December 2019, it partnered with Grab to provide one-hour shipping to buyers in Hanoi and Ho Chi Minh City – a challenge. directly with Tiki’s 2-hour shipping service.
A Tiki spokesperson said that fast shipping remains one of the main competitive advantages, as they reach an average nationwide transit time of 1.5 days. “In order to do this, we have invested heavily in warehouse centers in many cities across the country and built in-house shipping teams along with working with third-party shipping providers. reliable”.
While the merger of Tiki and Sendo is basically very good in theory, there are still complex barriers at that scale. Although they still have separate brands after the merger, both need to take advantage of each other’s strengths and avoid annoying each other.
On social networking groups for e-commerce merchants, there is a lot of talk about the Tiki and Sendo merger. However, most sellers emphasize concern whether it will actually benefit them.
To address this concern, Tiki said that “Tiki sellers are a key factor that we focus on in all our business activities. We make great efforts to ensure online business. for sellers as seamlessly and conveniently as possible. ”
However, a trader named Thanh Vu, who sold cosmetics on Shopee, believed that Tiki or Sendo did not attract enough attention to merchants like him. When Shopee was new in Vietnam, they came to Thanh Vu and invited him to join this platform. Vũ eventually moved from Facebook and now holds seminars to train other online sellers.
His advice for local e-commerce companies to not lose market share right at home is: To run a successful online platform, you have to pay attention to both buyers and sellers. ”
Source : Genk