On E-commerce “Firepan”

In the second half of December alone, two e-commerce platforms - Adayroi and Lotte.vn - announced ceasing their operations, following Robin.vn, Deca.vn and other names. In the race to gain market share, most businesses have suffered losses for years, reflecting the fierce competition of e-commerce market in Vietnam in 2019.

The race to "burn money"

In fact, Vietnam has witnessed miraculous e-commerce growth in the past four years. According to a Google report, Vietnam's e-commerce market will increase from US$2.8 billion in 2018 to US$ 15 billion in 2025, equivalent to annual growth of over 43%.

According to a survey of the Ministry of Industry and Trade, up to 36% of respondent companies said they sell goods on social networks and 45% said selling via social networks is highly effective.

The evolution of Vietnam's e-commerce market is progressing in two main directions. One is a game for e-commerce giants ready to invest much to gain the market share. The other is the emergence of more innovative startups with disruptive technologies that deliver services for leading businesses.

Top e-commerce exchanges reported huge losses. Tiki incurred a loss of VND1,200 billion (US$52 million), Shopee suffered from nearly VND2,700 billion (US$117 million) of accumulated losses, and Lazada made accumulated losses of over VND5,300 billion (US$230 million) in the past three years.

Financed by foreign giants, online retailers have constantly “burnt money” to launch promotions to attract customers. While Tiki invests in product packaging, infrastructure, identity recognition and video advertisements through music videos on YouTube, Shopee spends its money for deal-based promotion and for logistics.

What makes foreign players pour more money into e-commerce in Vietnam despite rising losses? According to experts, what an e-commerce exchange needs is gaining market share and increase its advantages in the financial market through merger and acquisition. In addition, multinational corporations are aiming to have Big Data and capture information of tens of millions of customers to study consumer behaviors, research and design products.

How are E-commerce trends in 2020?

In 2019, Amazon Group officially entered Vietnam to support local businesses join the global online sales network. In addition, the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade announced a cooperation with Amazon Global Selling to support Vietnamese firms to promote exports through e-commerce channels. After a period of testing, Vietnamese companies can absolutely seize the opportunity to supply goods to foreign markets through this form.

For startups, this time is a great opportunity to become unicorns, by providing secondary services and symbiotic services for e-commerce ecosystems besides other big players.

According to the Ministry of Industry and Trade, customers now have more online shopping channels, boosted by the growth of e-commerce (68%), social networks/forums (51%) and mobile commerce (41 %) in the last two years. Buyers have many options and they also require sellers to appear in multiple sales channels to meet their demands.

Online multichannel chains play a very important role in the modern retail market. According to Sapo's annual report, 97% of online stores applied multichannel retail in 2019, with more than 54% of shop owners having five sales channels.

As for e-commerce based on social networks, influencer sales will gradually overwhelm influencer marketing in 2020, according to experts.

With a population of nearly 100 million and a consumer market of about US$38 billion, e-commerce is still a fertile ground which is expected to further expand in the coming time. Viettel Group invested much in its e-commerce website, Voso.vn, which is designed to become a general market.

Currently, businesses are racing in price but they will shift toward entertainment and increased customer experience in the coming time. In order to develop rapidly and strongly in this field, they need to access and experience online sales services and solutions such as using chatbot application to answer customers, using blockchain technology in product traceability.

E-commerce is a long-term “game” for financially strong companies. The race of domestic and foreign players promises to be more intense in 2020.

Huong Ly (Vietnam Business Forum)