E-commerce: a fierce race

Vietnam is now one of the fastest-growing countries in the e-commerce market in the region, with an average annual growth rate of about 30 percent from 2013 to 2018. But this is also a field where competition and elimination are extremely fierce, for many reasons.
A customer does online shopping. (Photo: SGGP)
A customer does online shopping. (Photo: SGGP)

Several e-commerce platforms announced to close or stopped operations in silence in the past months. Of which, the biggest closing is that the Vingroup announced its withdrawal from the direct retail sector to focus resources on the industrial and technological sectors. Accordingly, its Adayroi website would be merged into VinID by the end of December last year. Figures by iPrice showed that the website traffic of Adayroi reached 6-7 million hits per quarter, just behind other large e-commerce platforms, such as Shopee, Tiki, Lazada, and Sendo.

Similarly, on December 25 last year, CEO of Lotte.vn sent notifications to suppliers and customers of Lotte.vn, saying that as of January 20 this year, the website would stop providing its services to customers. Suppliers and customers can continue to supply goods or trade with the Lotte Mart Head Office.

Earlier, in March last year, fashion e-commerce platform Robin Online, formerly Zalora, also unexpectedly announced to halt all its operation. Therefore, since the closing day, Zalora had joined Vietnam’s e-commerce market for seven years and three years ago, it was acquired by the Central Group of Thailand. This company bought Zalora Vietnam through Nguyen Kim in 2016 then changed its name into Robins to identify it with the group’s traditional retail brand.

According to Vietnam’s E-Business Index 2019 Report by VECOM, the market scale was at US$7.8 billion in 2018. This market included online retail sales, online tourism, online marketing, online entertainment, and online selling of other services and digital products. If the growth rate of 2019 and 2020 is maintained at 30 percent, the market scale will increase to $13 billion by 2020.

Experts said that with a rapid growth rate, along with a population of nearly 100 million people, Vietnam’s e-commerce business has become a potential sector for both domestic and foreign investors. In fact, e-commerce is not as easy as pie.

E-commerce is also considered as a costly but not definitely successful game. For instance, Lingo.vn was established in 2011 and closed in August 2016, this website spent around VND150 billion.

As for other e-commerce platforms, including Lazada, Tiki, Sendo, and Shopee, although their financial potential is much stronger, their capital is mainly from investments of foreign institutional investors. For example, Lazada belonged to the Sweden Rocket Internet, then was sold to Alibaba. Up to now, this platform has been invested billions of US dollars; Sendo got investments from Japanese partners that reached millions of US dollars; Tiki received trillions of Vietnamese dongs from Vietnam’s VNG Company and the third-largest e-commerce platform in China, JD.com.

However, these e-commerce platforms have not curbed losses yet. Despite losses, investors still have to pump capital into them to keep their values intact. If they stop, they will lose everything.

Sharing at the conference on the project to develop e-commerce in Ho Chi Minh City until 2025 towards 2030 organized by the Department of Industry and Trade of Ho Chi Minh City, Mr. Vu Quoc Tuan, the representative of Lazada, said that e-commerce has entered all the corners life, instead of only in the consumer goods sector. The development tendency of e-commerce has made a leap to smartphones so the shopping demand, especially among young people, is diverse and the shopping trend is clearly shown through hot trends. If businesses are unable to keep up with it, they will be finished.

However, to do this, it requires good cooperation among enterprises to create an ecosystem for e-commerce. ‘There have not been any documents mentioning this matter,’ said Mr. Vu Quoc Tuan.

Completing, synchronizing and improving technology infrastructure, in general, will help keep online information safe, confidential and convenient for customers.

Technology infrastructure is the highway connecting the development elements of e-commerce to circulate in it. This implementation requires the effort of many parties, ministries, and provinces to create a complete and synchronized infrastructure for the development of e-commerce in the future.

Logistics is an indispensable part of the development of e-commerce and accounts for a large proportion of the total transaction cost. In addition, infrastructure and logistics capacity also affect the success or failure of an order, thereby affecting the success or failure of an enterprise.