Foreign firms buy into online retail
Foreign companies are increasingly jockeying for position in Vietnam’s promising online retail market by pouring capital into local companies.
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JD.com will partner with Tiki in a range of areas including merchandising, cross-border trade, logistics and fulfilment, technology, financing, and operational capabilities. JD.com already owns an established e-commerce platform in Indonesia and recently partnered with Thai conglomerate Central Group to enter Thailand’s market. With its investment in Tiki, JD.com adds Vietnam to its growing foothold in Southeast Asia.
“With JD.com’s expertise in leveraging social media for e-commerce, Tiki’s partnership with VNG in social networking and mobile payments is a natural fit as we aim to provide differentiated services to suppliers and consumers in Vietnam. We look forward to working with Tiki to deliver a truly world-class e-commerce experience to Vietnamese consumers,” said Winston Cheng, president of international at JD.com.
Under the plan, Tiki and JD.com will co-operate to deliver a wider selection of global brands to consumers, while helping Vietnamese brands to expand internationally via JD.com’s global platforms.
In its seven years of operations, Tiki has consistently grown by triple-digit percentages annually, tripling the industry average. Tiki’s vision is to become Vietnam’s largest and most trusted full-category e-commerce platform.
Norwegian telecom group Telenor is also upbeat about Vietnam’s online retail market after it bought Cho Tot last year.
“We are very enthusiastic about Cho Tot and the Vietnamese market,” said Johan Rostoft, managing director of 701Search and vice president of online classifieds at Telenor Group.
Cho Tot is currently the leading and most effective marketplace for buying and selling goods in Vietnam. For many, it is the go-to platform for varied transactions like selling old phones, buying a new motorcycle, or browsing houses for sale in their area.
After five years of operations, Cho Tot has recorded strong performance with more than one billion page views per month and 3.3 million successful transactions in 2017. The number of listings on the platform has increased by 11 per cent on-year, while the number of successful transactions was up 34 per cent from 2.8 million in 2016.
According to Rostoft, Telenor believes in the growth potential of digital services. “Mobile data coverage and affordable data connectivity are spreading quickly throughout Southeast Asia. Everybody will soon have smartphones and access to mobile digital services. People in the region and in Vietnam are already very proficient users of digital services,” he said.
Telenor has viewed online classifieds as an interesting and promising digital service. The company entered this segment by partnering with some of the world’s leading providers and making significant investments in multiple classifieds sites. Last year, Telenor increased its focus on the Southeast Asia region when the group sold its Latin American assets and acquired Cho Tot, Mudah in Malaysia, and Onekyat in Myanmar.
According to Bryan Teo, CEO of Cho Tot, the site is now the top performer in the market after five years of operation. However, there is still much room for Cho Tot to grow in the C2C segment in terms of traffic and listings, he said.
“In 2018, we will continue to provide and improve the best user experience for buyers and sellers of pre-loved items. We have leveraged investment to develop features that specialise the user experience for an array of potential products such as vehicles, property, and electronics,” he added.
In addition, Chinese e-commerce giant Alibaba has expressed ambitions to expand its operations throughout Southeast Asia, including Vietnam. In 2017, Alibaba announced that it would invest another $1 billion in Lazada Group to increase its stake from 51 per cent to 83 per cent. Lazada Vietnam, under Lazada Group, is among the biggest earners in the Vietnamese tech industry.
Meanwhile, Singaporean e-commerce platform Shopee has achieved robust growth in Vietnam since its launch in the country in 2016. Shopee’s parent company, Sea, Ltd., recently completed its initial public offering on the New York Stock Exchange to raise $800 million. Thus, the company has more confidence to move forward in the regional e-commerce market, including in Vietnam.
According to Nguyen Thanh Hung, chairman of the Vietnam E-commerce Association, Amazon is also proceeding with its ambitious business plan for Vietnam’s market. Amazon wants to export goods to Vietnam and then import goods from the country. It also wants to support Vietnamese small and medium-sized enterprises’ ambitions to sell on Amazon.
