E-commerce: exorbitant losses for a single per cent

Each e-commerce platform needs to spend millions of US dollars to gain a single per cent of market share from competitors, showing just how serious the competition is.
e commerce exorbitant losses for a single per cent

E-commerce platforms are playing a game of chicken, throwing millions of dollars around to remain the last one standing. (Source: VIR)

According to the latest statistics of security company VNDIRECT, each e-commerce company has to suffer a loss of VND124 billion ($5.4 million) to gain 1 per cent of market share from any competitor. This raises concerns whether newcomers like Viettel Post have the finances to challenge the current kings of the hill Lazada, Tiki, and Shopee.

E-commerce in Vietnam is still a new sector, so businesses have to pour tremendous amounts of capital into advertisements, personnel, and warehouse infrastructure toset a solid foothold on the market.

One evidence for the fierce competition is their race in promotions, which originated in Lazada’s 95 per cent discount promotion last year titled “Birthday discount party”. Accordingly, as soon as Lazada launched its promotion programme, Shopee immediately came out with its “Shocking deals and hot prices not only for birthday” programme and an unveiled jab at Lazada.

Since then, the e-commerce platforms have been suffering huge losses. Specifically, the total accumulated losses of the three giants – Lazada, Shopee, and Tiki – in 2015-2018 were VND9.4 trillion ($408.7 million). This may baffle newcomers in the sector.

In 2016 and 2017, Tiki posted VND179 billion ($7.78 million) and VND282 billion ($12.26 million) in losses. This resulted in VNG, which currently owns 28.8 per cent of Tiki's shares, also reporting losses of VND93 billion ($4 million) and VND126 billion ($5.4 million) in the same years. In 2018, VNG posted a loss of VND254 billion ($11 million). As of the end of the first quarter of 2019, VNG's losses from Tiki have reached the value of its VND506 billion ($22 million) capital contribution in the company.

Similarly, Lazada reported a loss of VND1 trillion ($43.39 million) in 2015-2016, increasing its accumulated losses to VND2.7 trillion ($117.1 million) by the end of 2016. Due to the fierce competition, Lazada’s losses in 2017 alone were estimated at VND1 trillion ($43.39 million).

Shopee was officially launched in August 2016, however, by the end of the same year, the firm reported a loss of VND164 billion ($7.1 million), which increased to VND600 billion ($26.03 million) in 2017, twice as much as the loss of Tiki.

Source: VIR

Related News

E-commerce tax collection in Hanoi increased by 265%

E-commerce tax collection in Hanoi increased by 265%

VCN - As of August 2024, the Hanoi Tax Department has built a tax management directory for e-commerce business activities including more than 75,000 organizations and individuals. In particular, there are more than 37,000 business households and more than 9,000 individuals.
Insurance companies adapt to e-commerce trends

Insurance companies adapt to e-commerce trends

VCN - Travel insurance, cargo insurance, shipping insurance… have become popular services in online shopping transactions. Therefore, insurance companies are adapting this trend and expanding their customer data.
Ho Chi Minh City: Many violations in e-commerce business

Ho Chi Minh City: Many violations in e-commerce business

VCN - Since the beginning of the year, Ho Chi Minh City authorities have inspected and detected many violations in online sales.
Avoid disadvantages for Vietnamese exports from new defense measures

Avoid disadvantages for Vietnamese exports from new defense measures

VCN - As trade scale grows larger, Vietnam's exported goods face many new trade defense lawsuits from importing countries. On the contrary, Vietnam also uses more trade defense tools to protect domestic industries to prevent unfair competition. In the face of developments in trade defense cases, businesses are always warned to get information early to take timely response measures.

Latest News

Many factors affecting tuna exports in the last months of the year

Many factors affecting tuna exports in the last months of the year

VCN - Tensions between Israel and Iran escalate, tuna businesses are worried, they may have to stop export orders to the Israeli market in the last months of the year.
Vietnam still dominates Philippine rice import

Vietnam still dominates Philippine rice import

Vietnam continues to assert its dominance as the top rice exporter to the Philippines, with 2.91 million tonnes shipped as of the late October, or over 79% of the Philippines' total rice imports, according to the Vietnam Trade Office in the Philippines.
Vietnam cements ties with partners to engage in global semiconductor, AI industries

Vietnam cements ties with partners to engage in global semiconductor, AI industries

By boosting cooperation with reputable partners across the globe, Vietnam is taking steps to gain a foothold in the world’s semiconductor and artificial intelligence (AI) industries.
Aquatic exports expected to rise in year-end despite challenges

Aquatic exports expected to rise in year-end despite challenges

Aquatic exports is expected to surge in the remaining months of this year, as the year-end festive season comes, despite many challenges in the international markets, according to insiders.

More News

Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countries, thereby maintaining advantages and developing on "away grounds".
Lao Cai Customs sees a triple-digit surge in export-import turnover

Lao Cai Customs sees a triple-digit surge in export-import turnover

VCN - Updated from the beginning of the year to October 24, total import and export turnover through Lao Cai Customs Department increased by 102%.
Coconut is expected to become a billion-dollar export item

Coconut is expected to become a billion-dollar export item

VCN - Talking to the press at the ceremony to launch the first train carrying fresh coconuts to China, Mr. Luu Van Phi, Director of the Department of Industry and Trade of Tien Giang province, said that Vietnam's agricultural export potential, especially fresh coconuts, is expanding with the appearance of international railway transportation from Song Than station.
Plastic exporters interested in converting to recycling technology

Plastic exporters interested in converting to recycling technology

VCN - The Vietnamese plastics industry is facing major challenges in terms of plastic waste and recycling needs. Secretary General of the Vietnam Plastics Association Huynh Thi My (pictured) shared important information about the transformation in production of plastics enterprises to meet increasing export demands.
Logistics sector must embrace innovative trends to stay competitive

Logistics sector must embrace innovative trends to stay competitive

The Vietnamese logistics industry must adapt to new trends and enhance infrastructure to remain globally competitive, speakers said at an event in Ho Chi Minh City on October 31.
Vietnam’s agro-forestry-aquatic product exports likely to set new record

Vietnam’s agro-forestry-aquatic product exports likely to set new record

Vietnam’s agro-forestry-aquatic product exports are likely to achieve a record high of 62 billion USD in 2024, said Deputy Minister of Agriculture and Rural Development Phung Duc Tien.
UKVFTA greatly benefits Vietnam-UK trade: Experts

UKVFTA greatly benefits Vietnam-UK trade: Experts

The UK-Vietnam Free Trade Agreement (UKVFTA), signed into law three years ago, has clearly benefited trade cooperation between the two countries, particularly in the context of Vietnam’s exports to most other major markets declining due to geopolitical tensions and headwinds in the global economy, said experts at a conference in Hanoi on October 30.
Agricultural exports likely to exceed 60 billion USD amid challenges

Agricultural exports likely to exceed 60 billion USD amid challenges

With swift production recovery and continued growth, Vietnam's agricultural sector could potentially surpass the 60 billion USD export target, according to the Ministry of Agriculture and Rural Development (MARD).
Vietnam-Philippines trade likely to exceed 8 billion USD for first time

Vietnam-Philippines trade likely to exceed 8 billion USD for first time

With the current rising trend, trade between Vietnam and the Philippines is likely to exceed 8 billion USD for the first time to hit about 8.5 billion USD in 2024, with Vietnam’s surplus of more than 3 billion USD, according to the Vietnamese Trade Office in the Philippines.
Read More

Your care

Latest Most read
Many factors affecting tuna exports in the last months of the year

Many factors affecting tuna exports in the last months of the year

VCN - In recent years, Israel has always been Vietnam's leading tuna export market after the US and the EU. Therefore, the recent escalation of Israel-Iran tensions is affecting Vietnam's tuna exports to this market.
Vietnam still dominates Philippine rice import

Vietnam still dominates Philippine rice import

Vietnam continues to assert its dominance as the top rice exporter to the Philippines, with 2.91 million tonnes shipped as of the late October, or over 79% of the Philippines' total rice imports, according to the Vietnam Trade Office in the Philippines.
Vietnam cements ties with partners to engage in global semiconductor, AI industries

Vietnam cements ties with partners to engage in global semiconductor, AI industries

By boosting cooperation with reputable partners across the globe, Vietnam is taking steps to gain a foothold in the world’s semiconductor and artificial intelligence (AI) industries.
Aquatic exports expected to rise in year-end despite challenges

Aquatic exports expected to rise in year-end despite challenges

Aquatic exports is expected to surge in the remaining months of this year, as the year-end festive season comes, despite many challenges in the international markets, according to insiders.
Trade Defense: The Key to Success for Vietnamese Businesses

Trade Defense: The Key to Success for Vietnamese Businesses

VCN - From losses and near bankruptcy, many domestic enterprises have recovered thanks to timely application of trade defense measures. Trade defense is also an effective shield for Vietnamese enterprises against a series of lawsuits from importing countr
Mobile Version