The competitive atmosphere of Southeast Asia's e-commerce market has reached a pivotal moment as numerous local platforms struggle to stay afloat amid fierce competition from well-funded international giants. The recent exit of Tiki and the closure of Telio highlight the growing challenges faced by homegrown companies trying to establish their presence against rivals like Shopee and Lazada.
Over the past few years, the e-commerce sector has seen rapid growth, primarily driven by changing consumer behaviors and technological advancements. Online shopping is becoming increasingly popular, yet the competitive environment has resulted in many local brands faltering. By the end of 2024, Tiki, once heralded as Vietnam's pride and competing vigorously with other major players, withdrew its operational role after incurring losses exceeding 510 billion VND. VNG, Tiki's largest shareholder, decided to cease financial support, throwing the platform's future in doubt.
Similarly, Telio, another local player, shut down operations at the end of 2024, unable to secure additional funding or find potential buyers. The closures are part of a broader trend where several e-commerce sites, including Adayroi, Robins, and Lotte.vn, exited the Vietnamese market. The Department of E-commerce and Digital Economy, with the Ministry of Industry and Trade, has elevated scrutiny over around 120 websites and 44 apps, many of which have ceased operations or are no longer functional, reflecting the e-commerce market's current severe cleansing phase.
Jianggan Li, the founder and CEO of Momentum Works, stated, "The withdrawal from e-commerce platforms like Tiki and Telio shows the difficulty of building an e-commerce platform in Vietnam, whether B2B or B2C." This sentiment resonates deeply within the industry as local companies encounter mounting pressure from international competitors, which are well-funded and equipped with superior technology and marketing strategies.
The consumer behavior shifts are another hurdle. Today's Vietnamese consumers prioritize affordability, diverse offerings, and rapid delivery – operational advantages leveraged by larger foreign players. Experts predict 2025 will usher even tougher competition, primarily driven by cross-border e-commerce platforms such as Temu, Alibaba, Taobao, and others, raising alarm bells for local operators.
Trần Tuấn Anh, Shopee Vietnam's Chief Executive, emphasizes the importance of logistics, saying, "Logistics is the backbone of e-commerce. Local platforms need to improve their delivery systems to retain customers against international competitors." Improving logistics efficiency is imperative for domestic e-commerce firms aiming to provide competitive service against international entities backed by sophisticated logistics networks.
Regulatory challenges contribute significantly to the obstacle course for local businesses. The incorporation of advanced technologies like big data and AI has transformed the e-commerce environment, presenting opportunities and challenges. Lê Hoàng Oanh, Director of the Department of E-commerce and Digital Economy, pointed out, "New technologies like big data and AI make cross-border e-commerce more complex, yet our laws haven’t adapted, leading to unfair competition with foreign low-cost goods."
Nguyễn Ngọc Dũng, Chairman of the Vietnam E-commerce Association, adds, "Businesses must embrace new consumer trends and technology to improve customer service and logistics infrastructure." There is recognition of the necessity for local companies to catch up by embracing trends of modernization to thrive sustainably and capture market opportunities.
Government measures are also relevant. The Ministry of Industry and Trade is working on drafting specific regulations to level the playing field for both local and international platforms. Although the environment poses numerous challenges, the opportunity remains as local e-commerce platforms may focus on developing unique propositions aligned with consumer preferences.
To survive and thrive, Vietnamese e-commerce must focus on innovation, leveraging technology, enhancing customer experiences, and bolstering logistics systems. The path forward is fraught with complexity, but by tapping local strengths and adapting to market trends, domestic players may still see pathways to success. The competitive fire may be intense, but resilience and innovation could potentially propel them forward.
Overall, the competitive upheaval within Southeast Asia's e-commerce market serves as both a warning and call to action for local startups. Strengthening their operational frameworks and receiving governmental backing will be pivotal for the survival and growth of homegrown e-commerce sectors amid the relentless pressure from external market forces.