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Tiki continues taking losses, e-commerce firms ‘burning’ money

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Despite big losses, e-commerce firms area still continue to pump money into e-commerce websites. It’s still unclear when the tough days will end.

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Tiki continues taking loss

 

The annual finance report of VNG showed that Tiki, its e-commerce website, incurred a loss of VND282 billion in 2017. If counting the loss of VND40 billion in 2016, the total loss in the last two years had reached VND322 billion.

Tiki, together with Lazada and Shopee, is among the websites which have a large share in the e-commerce market. 

A source said Shopee Vietnam now has 120,000 orders a day, while the average value for each order is VND140,000. Lazada Vietnam has fewer orders, but the value of each order is higher.

Established as a website specializing in retailing English books in 2010, Tiki later received investments from different sources and then got a VND380 billion investment from VNG in 2016 after it expanded the business, selling electronics, fashion products and other items. 

Tiki has continued reporting losses since receiving capital from VNG. Sources said the startup has not made profits in the last eight years of operation.

Like Tiki, Lazada and Shopee are also not making profit in Vietnam, it is believed. However, investors keep injecting money into them.

JD.com, the second largest e-commerce firm in China, together with a group of investors, made a $44 million investment in Tiki in late 2017. It continued pumping more money into Tiki in early 2018.

Investors keep making investments in e-commerce websites. Predictions say the market may be valued up to $10 billion by 2020 with a two-digit growth rate. 

An analyst commented that when investors inject money into e-commerce, they ‘bank on the future’ and cannot expect profits in the first years of operation.

Even Amazon, the website with the highest revenue in the world, still makes low profit compared with revenue. Its CEO Jeff Bezos focuses on increasing revenue rather than making profits for the giant.

Selling more product items, offering price discounts, running sale promotion programs and improving customers’ care service, while having to pay for staff, delivery and storage fees, all cost a lot of money. 

Beyeu, Deca, Lingo and Foodpanda, which did not have money to spend, had to leave the market.

It’s unclear when e-commerce websites will stop reporting losses. However, they said if the websites focus on attracting more clients and gaining larger market share, there is no possibility for them to make profits in the next few years.

According to the Vietnam E-commerce Association (Vecom), the e-commerce market grew by 25 percent in 2017, and the high growth rate would be maintained through 2020.

US$1=VND22,000

 

Source: VietNamNet

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