A David vs. Goliath battle in Vietnam’s B2B ecommerce sector

Despite the boom of ecommerce and convenience stores, mom and pop stores still dot Vietnam’s narrow streets and alleys. Similar to the warungs in Indonesia or the sari-sari stalls in the Philippines, these stores (known as cửa hàng tạp hoá) form an integral part of everyday life.

Forty-year-old Lan Nguyen opened her store in a neighborhood within Hanoi’s Ba Dinh District several years ago, before the arrival of modern stores like VinMart+ and Circle K that are now located nearby.

Even then, she says her shop had a decent pool of customers. Her biggest concern has been managing her inventory, which she does manually after closing the shop at 11 p.m. She orders from her suppliers by phone.

Like their counterparts elsewhere, these corner stores have not yet caught on Vietnam’s fast-sweeping technology wave. Customers still pay in cash and shop owners often rely on their memory to quote the prices of their goods.

But now, startups and companies are rushing to capture the massive opportunity to digitalize them.

A startup vs. a conglomerate

Across the country, there are about 1.4 million mom and pop stores and 9,000 wet markets, according to various industry estimates. Roughly 88% of FMCG goods still flow through these general trade outlets to reach consumers in Vietnam, which is the highest rate among ASEAN countries, according to RedSeer Consulting.

In December 2019, GGV Capital, Tiger Global Management, and Sequoia India signed off a US$25 million check for Telio, which at the time had barely reached its first year. Given the lack of early-stage Vietnamese startups that could raise a sizable series A, the Telio deal was quite significant for Vietnam’s tech ecosystem.

GGV Capital has a record of backing B2B ecommerce startups, such as Udaan (India), Khatabook (India), and Shihuituan (China). In its internal podcast, Jixun Foo, managing partner at GGV Capital, explained the firm’s decision to back Telio: He said that the startup could improve procurement for small retailers and potentially provide them with the right form of financing.

Similar to Udaan, Telio also aims to disrupt the wholesale entity in the supply chain, allowing general trade retailers like mom and pop stores to buy directly from brands, manufacturers, and distributors on its centralized platform.

Telio CEO and founder Bui Sy Phong did not respond to Tech in Asia’s request for comment.

A potential 3x to 4x growth

The race has just begun