< strong > editor's note: This article is selected from krasia, with the original title < / strong > < a href=“ https://kr-asia.com/can-vietnams-homegrown-e-commerce-players-compete-against-shopee-and-lazada " rel="noopener noreferrer" target="_ Blank "> < strong > can Vietnam's home e-commerce players compete against Shope and lazada? < / strong > < / a > < strong > Author: Stephanie pearl Li < / strong >
Vietnam has one of the most attractive Internet economies in Southeast Asia. According to the 2021 Southeast Asia Digital Economy Report of Google, Temasek and Bain, Vietnam's digital economy Gmv is expected to reach US $57 billion by 2025, second only to Indonesia among the major countries in Southeast Asia
Vietnam's Internet economy is mainly supported by e-commerce. According to the report, Vietnam's e-commerce Gmv increased from US $8 billion last year to US $13 billion in 2021. One of the reasons for the growth is the increasing number of Internet users. In the first half of 2021, Vietnam added 8 million digital consumers (individuals who pay for various online services)
However, Vietnam's e-commerce market is currently occupied by two foreign companies: shopee of Donghai group and lazada controlled by Alibaba. According to < a data type = "external" href=“ https://iprice.vn/insights/mapofecommerce/en/ " rel="nofollow" target="_ Blank "> according to iprice insights < / a > data, the website traffic of these two companies occupies a leading position, and the local e-commerce platforms Tiki and sendo rank third and fourth. After international players succeed in Vietnam, how will local similar platforms compete in Vietnam's e-commerce track
"Giants like shopee and lazada can copy their e-commerce playing methods and obtain traffic in Vietnam. They have excellent experience in product selection, brand cooperation, logistics, seller introduction, sales and marketing, customer service and so on." Roshan Raj behera, research consulting partner of management consulting firm redseer, told krasia
< strong > e-commerce giant shopee < / strong >
Market research firm decision lab's < a data type = "external" href in the second quarter of 2021=“ https://f.hubspotusercontent10.net/hubfs/2036413/001%20 -%20MKT/106%20-%20Reports/CC%20Q2%202021/Decision%20Lab%20-%20Connected%20Consumers%20-%20Q2%202021%20PDF%20082021%20v3. pdf? utm_ referrer= https://www.decisionlab.co/report-connected-consumer-q2-2021-lp2?submissionGuid=b2be9f49 -1a96-4b3c-928f-981b0c1921d4" rel="nofollow" target="_ Blank "> consumer preference research < / a > shows that about 51% of Vietnamese say shopee is their preferred platform for online shopping, up 7% from the previous quarter. Lazada is the favorite of 18% of Vietnamese users, followed by Facebook (8%), Tiki (7%) and sendo (3%)
Looking at users outside big cities, 73% chose shopee as the preferred shopping platform, lazada accounted for 38%, followed by Facebook, Tiki and sendo. The report also shows that 70% of generation Z young users also regard shopee as the best e-commerce platform
Behera believes that shopee's growth is due to the large number of products and freight discounts provided by the platform. "It has a strong price advantage in attracting consumers to try, trade and repurchase." Behera said shopee has established a business model combining C2C and B2C
"It is easy to order a variety of products online at preferential prices, which cultivates the stickiness of buyers to shopee platform." Behera added: "shopee's C2C model gives them the flexibility to contact multiple sellers and helps them expand rapidly."
< strong > local players join the competition < / strong >
Although the e-commerce track seems to have been dominated by foreign platforms, experts expect market competition to intensify. "There are still many players who want to compete for market share, and many investments have entered the market." Olivier raussin, co-founder and managing partner of investment firm FEBE ventures, told krasia
For example, Tiki, the largest e-commerce platform in Vietnam, received $258 million in financing led by insurance company AIA in November. Sendo, an e-commerce company established in 2012, is a subsidiary of FPT Corporation, Vietnam's largest IT service company, and has sought round D financing since July 2020. Another local player, society pass, became the first Vietnamese e-commerce company listed in the United States on November 9, with a total of $26 million through the NASDAQ IPO
Valerie vu, head of Vietnam, an early venture capital institution, told krasia that in order to compete with foreign giants, local e-commerce should invest in improving ecology and strengthen cooperation with payment solution providers
"I think Vietnam's e-commerce platform will invest heavily in infrastructure in the future to create a more efficient and cost-effective supply chain and shorten delivery time, especially with the rise of the fourth party logistics service provider model and micro logistics performance system," Vu said
She added that local platforms should also expand to different vertical categories, such as fresh food distribution and drug distribution
Tiki is working in this direction. "Tiki has embedded several Mini applications in its platform, such as infina for investment and savings, ezin for custom insurance, etc., and plans to become a super application." Vu commented. Infina, launched in January, is a retail investment application that sells mutual funds and fixed income investment products. Founded in 2020, ezin is an insurance platform through which consumers can choose insurance products from various suppliers
Tiki also operates tikingon, a fresh food distribution service, with a year-on-year increase of 2000%, according to the company. Over the past two years, all these services have brought double-digit growth to Tiki
Behera said that local e-commerce companies need to better seize the opportunities brought by social e-commerce. "For consumers who have just come into contact with online shopping, the 1-to-1 interaction (on social platforms) reduces a lot of mistrust. Accordingly, Facebook and other social media platforms are also very good at helping e-commerce transactions."
According to Bloomberg, social e-commerce accounts for more than 65% of Vietnam's $22 billion online retail economy. Behera believes that compared with e-commerce through social media such as Facebook, e-commerce platform can provide a better shopping ecology. "The platform has more advantages in ensuring product quality, logistics, payment network and customer service."
She added that it was only a "matter of time" for local e-commerce to adjust and improve themselves to increase market opportunities
Compiled by Zhao Xiaochun
Figure ｜ unsplash