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Foreign investors eye Vietnamese commerce websites
Domestic run websites have been dominating the home e-commerce market. But the market situation would change in some days.
E-commerce market not yet attractive, but will be attractive soon
comScore, a market survey firm late last year released a report showing that four of the five biggest commerce websites in Vietnam are Vietnamese run. The only foreign one is lazada.vn.
Also according to comScore, Vietnam is the only economy in South East Asia where domestic run retail websites dominate the market. Meanwhile, the other markets such as Indonesia, Malaysia, Thailand, the Philippines or Singapore have been dominated by foreign ones.
The report also pointed out that the Vietnamese run vatgia.com alone attracted 50 percent of the total hits to the five websites. The online retail chain has attracted 20,000 stalls which had the total trading value of VND5 trillion in 2013.
Two reasons have been cited to explain the strength of the Vietnamese retail firms in the domestic market.
Nguyen Ngoc Diep, Managing Director of vatgia.com, said the Vietnamese e-commerce market is not big enough to attract foreign investment.
Meanwhile, some analysts believe that Vietnamese firms, with the good understanding the domestic market and the advanced corporate governance skills applied by their owners, who finished foreign schools, can help them compete well with foreign firms.
However, Nguyen Thanh Hung, Deputy Chair of the Vietnam E-commerce Association (VECOM), who was an official of the Ministry of Industry and Trade’s E-commerce and Information Technology Agency, believes that the current dominance by domestic websites would not persist.
Hung commented that the current situation would change in the near future, when the policies on doing business on Internet get perfect and more Vietnamese get familiar to online shopping.
He affirmed that once the Vietnamese market gets more bustling with more online shoppers, a lot of foreign big investors would jump into the market.
Who will be the foreign pioneers?
Analysts also noted that some foreign investors now move ahead with their plans to penetrate the Vietnamese e-commerce market.
Sources said the Japanese Rakuten Ichiba would set foot in Vietnam this year. The big guy is managing 40,000 online stalls in Japan and has a record high number of customers of 75 million.
Rakuten has been present in Thailand since 2009 after buying 67 percent of Tarad.com stakes. In 2010, the group joined forces with Global Mediacom, a media company in Indonesia, to set up the retail chain Rakuten Belanja Online there.
Meanwhile, Rocket Internet, the owner of lazada.vn, the only foreign owned website in the top 5, has been unceasingly expanding its investment in South East Asia.
In early December 2013, it successfully raised the funds worth $120 million to develop the two fashion retail websites – Zalora (zalora.vn) in Vietnam and Iconic in Australia. Just one week later, the group announced the additional investment of $250 million in Lazada.
Analysts noted that Rakuten and Rocket Internet are following different ways to access the market. While Rocket Internet always marches towards at “rocket’s” speed, Rakuten tends to go more slowly and take cautious steps by cooperating with local firms.
Vatgia.com, with 1,000 workers, which has been developed with the investment capital of $15 million, which now has 1,000 workers, is looking for the investors who can pour some $20 million to help upgrade its strength.