3 key predictions for Vietnam’s ecommerce industry in 2020

This article was co-authored by Dang Dang Truong.

2019 was a year of many surprises for the Vietnamese ecommerce sector: New ambitious players joined the heated space, previously formidable companies abruptly left the market, and big brands made strong positive movements in the sector.

Photo credit: Stanisic Vladimir

With that starting point, 2020 promises to be an especially exciting year for the industry. Here are three predictions about where Vietnamese ecommerce might be heading, according to analysts from iPrice Group.

An increased focus on profitability instead of growth

Everybody in the business world knows what happened to WeWork in 2019 and how it has affected investors’ confidence. Investors have become more cautious than ever and want to make sure that they are putting money into companies that have real potential and sustainability.

Asia and its highly celebrated unicorns are especially vulnerable to these changes. Last December, Indian ride-hailing company Ola reduced overall staff strength by 5% to 8%. Oyo, another fast-growing Indian startup, recently had to let go of thousands of employees as well.

In Southeast Asia, Indonesian unicorn Bukalapak has also been restructuring its company by laying off portions of its workforce due to incoming demands from investors. Teddy Oetomo, the ecommerce firm’s chief strategy officer, said it loud and clear: “Our focus is no longer growth, but to build a sustainable company.”

In Vietnam, this trend is taking shape in 2019 with two ecommerce companies closing their online marketplaces to focus more on profitable business sectors. Lotte.vn will shut down amid plans to change its retail strategy. Another ecommerce website that has been affected is local conglomerate Vingroup’s Adayroi – it is also said to be shifting to the “new retail” model.

Looking at the remaining major ecommerce players in the country, it’s easy to see that most of them are reliant on investor money. Shopee Vietnam, Lazada Vietnam, Tiki.vn, and Sendo – the four most visited online marketplaces in Vietnam – all reported huge losses in 2018 and then continued to raise more money from foreign investors in 2019.

These companies will soon have to start thinking about shifting their business models toward generating profit, instead of growing traffic or number of users, or they risk meeting the same fate as Lotte.vn and Adayroi.

Extra effort on infrastructure

Dissatisfaction in the delivery experience is common in Southeast Asian ecommerce. According to a study by iPrice and Parcel Perform, 34.1% of ecommerce users in the region are still unsatisfied with the quality of parcel delivery services they received. In Vietnam, the study found that it takes 5.6 days for a parcel to reach its buyer, the second slowest in the region.

Noticing the high demand among ecommerce consumers for speedy and timely delivery, the top ecommerce companies in the country are racing to improve its delivery speed using various strategies.

Most notably, Tiki introduced TikiNow, a shipping policy that promises to deliver products within two hours. In order to execute the strategy, the ecommerce startup requires sellers to keep all items at its warehouses. On top of this, it is also investing money into warehousing by signing a deal with Unidepot, a logistics provider which has 35,000 square meters of warehousing space in the country.

Tiki’s new strategy has leveled up the standard of delivery services in Vietnam, which has forced competitors to launch faster delivery policies. Shopee now offers delivery in four hours, and Sendo took it one step further by offering delivery in three hours.

Customers’ needs becoming more niched and diverse