Despite boasting 71 million users in Vietnam, Zalo doesn’t plan to become a super app.
In an exclusive interview with Tech in Asia, Zalo COO Nguyen Cong Chinh said the company prioritizes its messaging function over integration of other added features.
Zalo COO Nguyen Cong Chinh / Photo credit: Zalo Group
Founded in 2014, Zalo, whose parent company is Vietnam’s first tech unicorn VNG, is currently surpassing global competitors like Facebook Messenger and WhatsApp in both downloads and monthly active users in the country, according to data.ai.
In 2020, Tech in Asia analyzed why Zalo could have been better integrated with products across VNG’s ecosystem, especially its payment app ZaloPay. However, Nguyen reaffirmed that such integration is not the platform’s top priority.
He added that Zalo is already “profitable” and its advertising revenue has seen “significant growth” over the past two years, without elaborating further. The local chat app, which processes about 2 billion messages a day, has recently rolled out end-to-end encryption to compete with WhatsApp and Telegram.
Like WeChat in China, Kakao in South Korea, and Line in Japan, Zalo’s success has a lot to do with its understanding of the local culture. But while WeChat and Kakao have succeeded in building a comprehensive ecosystem for their respective platforms, that hasn’t been the case with Zalo.
The Vietnam-based company has about three dozens features on its platform, allowing users to shop, pay bills, or find local merchants. However, none of these features have become as popular as its core chat function.
Starting from August 1, the platform will reportedly charge subscription fees for business accounts and limit free features for individual users.
The move into subscription has caused some industry people to question whether this would decrease the competitiveness of Zalo as users can flock to other free alternatives.
At its annual shareholder meeting held last month, VNG said it expects to incur a loss of about 993 billion dong (US$42.5 million) this year. The Vietnamese tech giant was reportedly exploring a SPAC listing in the US, Bloomberg reported in August 2021.
Meanwhile, VNG has been aggressively investing in startups. In February, it announced a US$22.5 million investment in Funding Societies, with both sides planning to leverage the “combined capabilities of Zalo messenger and ZaloPay” in SMEs financing.
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