Experts at the 2024 E-commerce Connection and Development Forum, organized by the Department of E-commerce and Digital Economy (Ministry of Industry and Trade), said that Vietnam's e-commerce growth is currently among the highest in the world.
The market size in 2023 was $20.5 billion, and it is forecasted to reach $45 billion in 2025 and rank in the top 3 in Southeast Asia. This impressive growth rate is also increasing competitive pressure for e-commerce platforms.
VNG's Withdrawal from Tiki E-commerce Platform
Recent news about VNG's decision to no longer be an affiliated company of Tiki Global after losing VND 510 billion has partly shown the pressure from the "race" in the Vietnamese e-commerce market recently.
Specifically, according to VNG's Q4/2024 financial statements (stock code: VNZ), as of October 28, 2024, this group holds 14.61% ownership of Tiki Global. VNG has relieved two of the group's members in Tiki Global's Board of Directors and no longer significantly impacts Tiki Global. Accordingly, Tiki Global is no longer an affiliate of VNG.
The investment in Tiki Global is recorded as a long-term financial investment item. Thus, VNG will still be a major shareholder in Tiki Global but will not participate in the management and development of this company.
As of December 31, 2024, VNG has invested VND 510 billion in Tiki Global, but since the first quarter of 2019, the value of this investment has reached 0, meaning VNG has recorded a loss of the entire investment amount in Tiki. Since VNG does not continue investing further in Tiki, even if it incurs additional losses, it will not affect VNG's business results.
Tiki Global was established in 2010 in Ho Chi Minh City, initially focusing only on the online book sales segment, then expanded to many other diverse items. Tiki started calling for capital in 2012, with the first round from venture capital fund Cyberagent. After that, Tiki continued to receive investment from Sumimoto and VNG.
In May 2016, VNG invested VND 384 billion (VND 17 million) in Tiki, in exchange for 38% of shares and became the largest shareholder. In early 2018, VNG continued to pour an additional VND 120 billion into Tiki.
The appearance of Shopee in 2016 has changed the market landscape. With a strong "burning money" strategy for promotions and free shipping, Shopee quickly surpassed Lazada and Tiki to lead the market. According to a 2018 report by Q&Me Company, Shopee accounted for 35% of the market share, Lazada 20% and Tiki 17%. The gap between Tiki and Shopee has widened in the following years.
Accepting losses to leave the e-commerce market is not only happening with investment companies and corporations but also an alarming bell for many small retailers.
New statistics released by Metric show that the market in 2024 recorded a decrease in shops with sales and the rate of sellers leaving the market, with high negative growth.
Accordingly, the 5 e-commerce platforms including Shopee, Lazada, Tiki, Sendo, and TikTok Shop have decreased from 403,000 stores (in January 2023) to more than 378,000 stores with monthly orders (as of September 2024).
Although TikTok Shop and Shopee recorded positive growth in sales and output, in general, in the first 9 months of 2024 compared to the same period in 2023, all shops on the 5 e-commerce platforms had 43.15% of shops with negative growth or stopped selling.
VNG's 'withdrawal' from its management role at Tiki Global shows the difficulties that Tiki faces in the fierce competition in the Vietnamese e-commerce market. Despite still being a major shareholder, VNG is no longer interested in 'pumping money' for Tiki to continue the 'money-burning' race with its competitors.
What will e-commerce be like in 2025?
Although the overall figures for the e-commerce industry are not yet positive, Metric's forecast offers many optimistic signals for the market in 2025.
The sales growth rate of e-commerce platforms is currently 4.3 times higher than that of retail sales of goods and consumer services. Consumers are increasingly choosing low-priced goods, which has indirectly led to a decrease in items with prices above VND 1 million.
Macroeconomic indicators are on the path to recovery. Still, due to escalating prices, users continue to prioritize purchasing essential products, which the grocery - food industry and the mother - baby industry have sales increases of over 50%, reaching 64.2% and 51.7% respectively.
The choice of healthy food is increasingly developed, and criteria such as low sugar/low fat/low calorie are becoming increasingly common.
Recorded on Shopee and TikTok Shop in 11 months of 2024 recorded an impressive increase compared to the same period in the first 11 months of 2023.
Accordingly, low-sugar/sugar-free and low-fat/fat-free milk increased by 203%; non-alcoholic beverages, low sugar/sugar-free, and low calorie/calorie-free increased by 104%.
Metric has noted a significant surge in demand for green, sustainable, and vegan products.
Domestic consumers prioritize environmentally friendly options over traditional products with negative health impacts, reflecting a positive shift in consumer habits.
This trend has led to a remarkable increase in plant-based milk and vegan cosmetics sales, with growth rates of 162% and 178% respectively compared to the same period in the first 11 months of 2023.
Despite the wide variety of products, numerous promotions, and clear origins offered by e-commerce platforms, which have attracted a large consumer base and boosted sales for Mall shops in 2024, the platforms face increasing competitive pressure.
Therefore, enhancing research capabilities, fostering innovation, and developing long-term business strategies are critical challenges for e-commerce platforms in Vietnam to achieve sustainable development goals.
(According to Markettimes)
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