Vietnam E-Commerce Startups Are Struggling In The Face Of Rocket Internet

As I reported last month, e-commerce revenues in Vietnam are set to hit $1.3 billion by 2015. And last year, I wrote that there are over 28 e-commerce sites in Vietnam. To add to this, the blinding growth of GHN and the acquisition of NganLuong indicate a pretty healthy e-commerce market. But for Vietnamese e-commerce sites, this might actually be the beginning of the end.

If you know anything about Vietnam, you know that rumors are the best sources of information. Well, lately, rumors haven’t been boding well for e-commerce in the country. Rumors lately have indicated that both VNG and VC Corp could be shutting down their main e-commerce platforms. These two companies are among the top five biggest technology companies in Vietnam. Other rumors are circulating that Vat Gia, a leader in Vietnam’s e-commerce market, has stagnated growth and that 5giay, a major C2C marketplace in Saigon, isn’t really interested in scaling. I’ve even spoken to vertical e-commerce sites who have confided in me that they’re not seeing the kind of growth that they wanted to see. And even the promising wave of daily deals sites has also slowed considerably.

On the flip side of all this, Rocket Internet’s Lazada and Zalora seem to be pushing through hundreds of thousands of dollars in marketing across television, online digital, and more. And although I can never get a number out of the CEOs at Rocket Internet’s properties, many speculate that they are currently dominating the market.

It makes sense, after all, since Rocket Internet has millions in the bank for marketing and inventory. No one in Vietnam can come anywhere near to the kind of inventory Rocket e-commerce companies can offer their customers. And although the model (including burning through employees and investing huge amounts of money) isn’t exactly sustainable (some say it’s a sinking ship) it’s still steamrollering the market.

How Vietnamese e-commerce sites and startups plan to outmanoeuvre the current wave (e.g. Tiki.vn seems to be very centered on its own community of customers), is not clear yet. With the economy still seeing slow growth, most of these e-commerce folks aren’t going to take as many risks as they were taking just a few years ago. In the end, they may all just die slow deaths.

(Editing by Steven Millward)