As we are welcoming a new decade in the 21st century, we can also look forward to a new era for e-commerce in Vietnam.  

2019 was a year of many surprises for the Vietnamese e-commerce sector: new ambitious players joining the heated competition, previously formidable companies abruptly leaving the market, and strong positive movements from the big brands. 

With that starting point, 2020 promises to be an especially exciting year for Vietnamese e-commerce. Here are three predictions on where Vietnamese e-commerce might be heading towards, according to analysts from e-commerce start-up iPrice Group.  

An increased focus on profitability instead of growth 

Everybody in the business world knows what happened to WeWork in 2019 and how it has affected investors’ confidence. Investors have become more cautious than ever and want to make sure that they are putting money into companies that has real potential and sustainability for the future.  

Asia and its highly celebrated unicorns are especially vulnerable to these changes. Last December, Indian ride-hailing company Ola has reduced overall staff strength by 5-8%. Oyo, another Indian fast-growing start-up, recently had to let go of thousands of employees.   

In Southeast Asia, Indonesia’s unicorn Bukalapak has also been restructuring its company by laying off its workforces due to incoming demands from investors. Teddy Oetomo, their chief strategy officer said it loud and clear: “Our focus is no longer growth, but to build a sustainable company.”  

And in Vietnam, this trend is taking shape in 2019 with two e-commerce companies closing their online marketplaces to focus more on profitable business sectors. Lotte.vn, a Vietnam-focused online marketplace by Lotte will be shut down with the plan of changing their retail strategy. Another e-commerce website that is to be shut down is Adayroi with a notice of shifting to the new retail model.  

Looking at the remaining major e-commerce players in the country, it’s easy to see that most of them are reliant on investors’ money. Shopee Vietnam, Lazada Vietnam, Tiki and Sendo, the four most visited online marketplaces in Vietnam, according iPrice’s Map of E-commerce, all reported huge losses in 2018 and then continued to raise more money from foreign investors in 2019.  

These companies will soon have to start thinking about shifting their business models towards profit generating instead of growth in traffic or merely number of users, or they risk meeting the same fate of Lotte.vn and Adayroi. 

man driving white motor scooter on road

Extra efforts on infrastructures 

Dissatisfaction in terms of delivery experiences is often found in Southeast Asia e-commerce. According to a study by iPrice and Parcel Perform, 34.1% of e-commerce users in Southeast Asia are still unsatisfied with the quality of parcel delivery services they got. Especially in Vietnam, this study found that it takes 5.6 days for a parcel to reach its buyer, the second slowest in the region. 

Noticing the high demand among e-commerce consumers for speedy and timely delivery, Vietnamese top e-commerce companies are currently racing to improve its delivery speed using various strategies.  

Most notably, Vietnamese e-commerce platform Tiki introduced TikiNow, a shipping policy that promised to deliver products within 2 hours. In order to execute the strategy, Tiki requires sellers to keep all items at its warehouses for quick delivery. Tiki is also investing their money into warehousing by signing a deal with Unidepot, a logistics provider which has 35,000 square meters of warehousing space in the country. 

The new Tiki strategy has levelled up the standard of delivery services in Vietnam. Consequently, this forced competitors to launch their own fast delivery policies. Shopee offers delivery in four hours, and Sendo took it one step further by offering delivery in three hours.  

Looking at 2020, delivery infrastructures will continue to play an important part in consumer’s choice and a focus of competition between companies. Data from Q&Me 2019 Research in Vietnam shows fast delivery is still firmly among top 5 reasons for online shopping coming into 2020.  

Quick, punctual, and responsive customer service & delivery might even become a deciding factor in the e-commerce marketplace competition. 

Customers’ needs becoming more niched and diverse

While 2019 marked the downfall of some e-commerce businesses in Vietnam, it also marked the emergence of other smaller but more effective e-commerce businesses. 

One notable start-up among them is Lozi. The Vietnamese consumer-to-consumer ecommerce portal announced last October that it has secured an eight-digit funding (in US dollars). The company is now setting its eyes on becoming a one-stop solution for Vietnamese consumers’ one-hour delivery needs. 

Other examples include Telio, a business-to-business platform which raised US$25 million in a series A funding round last December, Leflair, which raised US$7 million back in January to invest in regional expansion.

There are many more fast-growing start-ups like those three within the Vietnamese e-commerce sector, such as The gioi skin food or Fado.vn. The similarity between these startups is that they all cater to a specific niche market, instead of fighting head-on with the marketplaces. 

It seems that as demand for online shopping increases quickly among Vietnamese, so will their sophistication and expectation. More and more Vietnamese are now looking for specific products, brands, or services that cater to their niches. 

This is bringing about a lot of opportunities for Vietnamese SME e-commerce businesses to excel in 2020 and beyond, as well as opportunities for giant e-commerce players to differentiate themselves and acquire a new competitive edge.

This post was contributed by iPrice Group

About the authors

Dang Dang Truong and Vivien Jane Kiong are analysts and content creators from iPrice Group, specialized in the Vietnamese tech business and investment scene. iPrice Group is a meta-search website operating in seven countries across South East Asia. Currently, iPrice compares and catalogues more than 500 million products and receives about 20 million monthly visits. Using this database, iPrice occasionally produces researches on the state of e-commerce and online shopping habits across the region.

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