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Home / Economy / Trade - Service
E-commerce competition heats up
Ngoc Thuy 19:42, 2018/01/31
Vietnam’s e-commerce market is heating up right in the first month of 2018 with fierce competition coming from names such as Tiki, Shopee, Lazada or Cho Tot.
JD.com, China’s second largest e-commerce firm, has announced an investment of US$44 million to become the main shareholder in B2C e-commerce platform Tiki. In  time, Tiki is expected to take the lead in Vietnam’s fastest- growing e-commerce market.
 
Vietnam is one of the fastest growing e-commerce markets in Southeast Asia with a growth rate of 33%.
Vietnam is one of the fastest growing e-commerce markets in Southeast Asia with a growth rate of 33%.
Before the investment of JD.com, Tiki opened a new platform called marketplace, providing trading floors for themselves and other businesses to sell goods. As such, Tiki will be responsible for the quality of goods and products sold in this platform.
 
With the new partnership, Tiki and JD.com are expected to step up efforts in recruiting sellers in this platform and promoting delivery service within 2 hours.
 
Meanwhile, the Singapore online shopping platform Shopee has grown rapidly in the Vietnam’s market after its launcha year ago. The popularity rating of Shopee Vietnam application has surpassed that of Lazada Vietnam in Quarter III and IV of 2017, according to a market survey conducted by the iPrice Group.
 
Lazada Vietnam has also been trying to stay at the top following strong pressure from Shopee Vietnam. Its latest move is to cut by 50% the commission fee for each order and to provide free delivery in the last 02 big sales in the end of 2017. Meanwhile, domestic companies implementing C2C such as Sendo (FPT) or Zalo (VNG) have not shown any sign of expansion this year.
 
With the current fierce competitive market, a wave of mergers & acquisitions (M&A) is expected to be the trend this year, indicating big players will put more pressure on smaller ones until the latter are pushed out of the market.
 
The Southeast Asian e-commerce market reached US$11 billion in 2017, an increase of 41% over 2015, according to the latest report from Google and Temasek. Vietnam is one of the fastest growing e-commerce markets in Southeast Asia with a growth rate of 33%.
 
The race to gain a foothold in the market will no doubt be very fierce, and Cho Tot is another name showing strong potentials. The company is looking for opportunities for growth in new fields, including digital advertising, said Johan Rostoft, 701Search’s Managing Director and Vice President of Online Classifieds at Telenor Group, an investor of Cho Tot.
 
In 2016, Telenor acquired Tapad, a marketing technology firm, enabling the company to have more insights within  digital marketing and analytics. This is seen as the reason why Telenor is taking more interest in Southeast Asia’s biggest advertising platforms.
 
Telenor plans to transform online advertising site into a platform providing multiple services within the e-commerce ecosystem. Specifically, in the future, Cho Tot will not simply be  an advertising site, but also an integrated marketplace with online stores, delivery services and online payment.
 
This model is not new in Vietnam and in the global scale with the more prominent ones Sendo (FPT), Zalo (VNG) or Shopee (Singapore). These companies have the advantage of not having to invest in fulfilment infrastructure or delivery staff, so that orders are processed faster than traditional retailers such as Lazada (Alibaba) or Tiki.
 
Unlike Thailand or Malaysia, Vietnam has not clearly defined the differences between business model B2C and online advertising sites,  so that companies such as Lazada, Tiki or Shopee are implementing both models to serve customers.
 
Companies like Lazada Vietnam and Tiki are becoming barriers for new companies to enter the market, at the same time putting more pressure on C2C companies such as Cho Tot, Sendo, Zalo or Shopee to change their services and customer approach.
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