Cutthroat competition in e-commerce benefits consumers

  • by VNBUSINESS
  • September 10, 2018

Many e-commerce firms have had to leave and the market has been re-organized with only several big players. They continue their cutthroat competition to gain the upper hand over rivals.

According to the Vietnam E-commerce Agency, the total value of the e-commerce market reached $5 billion in 2016. 

Meanwhile, eMarketer estimates that market’s transactions account for 1.1 percent of Vietnam’s total value of the retail market, much lower than the average 7 percent in the world. 

However, though accounting for a small proportion, the e-commerce market has a very impressive growth rate of over 20 percent per annum.

It is the high growth rate which persuades investors of different nationalities to make big investments in Vietnam. Google and Temasek predicted that Vietnam’s e-commerce market would see a boom by 2025, when revenue reaches $7.5 billion.

Competitors follow their own strategies to lure more customers. Lazada strives to develop users quickly, accepting losses in sales. Tiki focuses on improving delivery, customer care and logistics technology. Meanwhile, Shopee tries every possible way to reduce the delivery cost.

To prepare for the boom, Alibaba’s Lazada, Garena’s Shopee, VNG’s Tiki, Vingroup’s Adayroi and FPT’s Sendo all are running a race to lure more customers. 

Competitors follow their own strategies to lure more customers. Lazada strives to develop users quickly, accepting losses in sales. Tiki focuses on improving delivery, customer care and logistics technology. Meanwhile, Shopee tries every possible way to reduce the delivery cost.

However, all of them have to spend big money on marketing campaigns. Lazada’s CEO Alex Dardy once told Forbes that the biggest cost of Lazada now is for marketing and logistics. Other e-commerce firms also run frequent sale promotion campaigns to lure customers.

In such cutthroat competition, customers receive the biggest benefits. 

Quynh Lien, a housewife in Thanh Xuan district in Hanoi, said if she wants to buy something, she will access e-commerce websites to find products and compare the prices.

Lien, who has experience in shopping on e-commerce websites, noted that all the websites regularly run sales promotion programs. However, Lien mostly chooses products on Shopee and Lazada because they offer the best prices.

An analyst said the two websites can offer good prices because they are backed by foreign groups with powerful capability, Alibaba and Garena. 

Shopee has received huge capital from the holding company to prepare for the long-term competition in Vietnam. Just in the first six months of 2018, SEA injected VND1.2 trillion ($50 million) into Shopee Vietnam.

The competition among e-commerce players is so stiff that they have begun launching year-end sale promotion programs. Shopee Vietnam, for example, will have a super-shopping day on September 9. 

Source: Vietnamnet

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