Vietnam’s online market: Some shut down, others pocket big money

The online retail market is considered very attractive with 9 out of 10 Vietnamese consumers having smartphones as shown by a Nielsen report.

Meanwhile, Trang Bui from JLL Vietnam commented that the number of credit card holders is increasing, which is a factor that will change consumer behavior.

However, despite the attractive factors, many online retailers still fail. In August, Lingo.vn suddenly shut down without any notice in advance.

After receiving investment from Yellow Star Investment, Lingo once set the target of becoming the No 1 e-commerce website. However, within a short time, Lingo incurred a loss of VND150 billion. The ‘sad ending’ for Lingo also happened to Deca.vn, Beyeu.com, Lamdieu.com and Foreva.vn.

Zalora and Lazada, which are listed as the most redoubtable rivals in the market, are experiencing tough days. In April 2016, Rocket Internet, the owner of Zalora Vietnam, sold Zalora to Central Group from Thailand. In a similar move, Alibaba from China has taken over Lazada in SE Asia after a $1 billion deal.

One of the reasons for the failure of e-commerce websites was the boom of Facebook. Everyone can do business and sell goods via the social network without paying a fee.

Facebook has become involved more deeply in e-commerce after launching an app allowing users to exchange and buy/sell goods with others in the community.

The company doesn’t intend to collect fees from transactions, which gives it an outstanding competitive edge over its rivals.

However, while many investors have to leave the market silently, others pocket money.

A report from The Gioi Di Dong, a large high-tech product distributor, showed that iPhone 7 sales on its website have increased by three times, while online revenue in the first 11 months of 2016 reached VND2.944 trillion.

Meanwhile, Vingroup’s adayroi, FPT’s Sendo and Tiki have been running a race to expand the market.

In December 2014, Sendo received strategic investment from Japanese investors. It now has 80,000 shops which retail 3 million products in 14 different branches.

Tiki has received huge investment of $18 million. The once ‘online bookstore’ has been enlargng rapidly, now distributing 100,000 product items in 10 categories of goods.

The opportunities for online sellers remain very great. According to Tran Trong Tuyen, CEO of DKT, 75 percent of e-commerce market share is in Hanoi and HCMC, while the remaining 25 percent in the other 61 provinces and cities. If the 61 provinces and cities can develop like Hanoi and HCMC in 3-5  years, the e-commerce market scale would be 3-5 times larger.