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Vietnam’s online sales face uphill battle against foreign e-commerce giants

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E-commerce in the near future could be controlled globally by several powerful multinational groups, analysts say.

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Adayroi.com belonging to Vingroup, and small sites such as Muabannhanh.com, 5giay.vn and chodientu.vn are the only Vietnamese e-commerce sites that are now operating.

Beyeu.com, Lingo.vn and deca.vn had to shut down, leaving a warning that investors joining the business field should have a high amount  of capital.

With market value estimated at $7.5 billion by 2025 and the annual growth rate of 35 percent per annum, foreign investors are pouring money into Vietnam.

SEA, the holding company of Shopee, poured $50 million more into the trading floors within the first six months of 2018. Jack Ma’s Alibaba invested $1 billion into Lazada. Tiki received $44 million from JD Group and FPT’s Sendo got $51 million from a Japanese finance group.

According to Lai Tien Manh, a branding and marketing expert, big investors who develop their networks gl balky will dominate.

In order to satisfy the requirements of a specific business field such as online retail, businesses need to have huge capital and solid technology for long term investment. However, Vietnam’s businesses do not have enough money as required.

“The trend in the world is that several powerful players will dominate the entire e-commerce market, which means the entire e-commerce cake will be swallowed by a few big sharks,” Manh said.

Regarding financial resources, investors need huge money to spend on sale promotion programs to lure more customers, on transmission line upgrading, interface improvement, and marketing campaigns. 

“Businesses need to call for investment and they have to show their abilities to persuade investors to disburse money. This is impossible for the majority of Vietnam’s businesses which have small scale and limited technology platform,” Manh said.

“Vietnam’s businesses don’t have opportunities in the e-commerce field, which is created and reserved for global investors,” he said.

How should Vietnamese owned e-commerce firms proceed? The answer is the niche market segments that foreign giants ignore.

Truong Vo Tuan, founder and chair of Muabannhanh.com, said he has focused on  products such as used cars, trucks and project houses, not on technology and household-use products.

“If we compete with other trading platforms to sell technology products, we will be defeated,” Tuan said.

Vietnam is among the fastest growing commerce markets. A report says E-commerce makes up 0.5 percent of value of the FMCG (fast moving consumer goods) sector in the four largest cities. 




Source: VietNamNet

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