This article is from WeChat official account: Zhixiang Net (ID:passagegroup), the original title: “Lazada Vietnam holds Grab, can it stop Shopee? “Author: Yuan clear, thematic map from: Vision China
Nguyen Yuk Kwok is a shirt and wallet dealer in Ho Chi Minh City. Here, the most typical way to reach online customers is through Facebook, but customers always ask to pay with Shopee.
“Shopee has been geared toward low-consumption groups from the very beginning, and people often associate it with free logistics.” Ruan Yuguo knew that the reason customers were “weird” in requesting was that Shopee’s express delivery was free.
Free logistics and low commissions are one of Shopee’s aggressive strategies to occupy the Vietnamese market. Shopee’s parent company is Sea, a conglomerate based in Singapore.
Under the epidemic, Shopee has become one of the most popular e-commerce platforms in Vietnam. In the third quarter of 2020, monthly visits in Vietnam reached 62 million, a year-on-year increase of more than 80%.
Shopee’s expansion in Vietnam is an aspect of the development of Southeast Asia’s digital economy. A Google report predicts that the market size of Southeast Asia is US$100 billion. In the post-epidemic era, e-commerce will become the cornerstone for many players to form alliances. In order to meet the needs of consumers as much as possible, players in Vietnam are working hard to build their own ecosystem.
In Southeast Asia, the growth of Grab and Gojek is inseparable from car rental services. Sea is currently the most valuable company in Southeast Asia, with a market value of US$100 billion. The fast-rising Sea is accelerating a new round of alliances and acquisitions, redrawing the picture for 2021 in the context of the economic recovery.
Using the cash flow obtained from the gaming industry, Sea, which is listed in the United States, has invested in e-commerce and digital financial services. This effort is worthwhile. According to iPrice Group data, Shopee is the most visited website in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam in the third quarter of 2020. In the third quarter of 2020, Sea’s e-commerce revenue in Vietnam and other countries increased by 2.7 times to US$618 billion. Simultaneously,Operating losses rose from US$277 billion to US$338 billion, mainly due to competitive market share.
Just a year ago, Lazada, which was acquired by Alibaba in 2016, was the most visited website in the Philippines, Singapore and Thailand. The most popular among Indonesians is Tokopedia, an e-commerce group backed by Japan’s SoftBank Group.
The rise of Sea forced them to respond. Lazada and Grab began to join forces in Vietnam, and Grab and Gojek initiated new investments in the field of electronic finance.
Indonesian YCP Solidiance consultant Edwin Muljono said that until 2015, the digital economy in Southeast Asia was still “in the growth stage of the industry life cycle. Many new players continue to enter the game and rapidly increase demand with relatively low competition.”
He said that the market is now in the “phase of elimination”—Grab acquired Uber’s regional (Southeast Asia) business in 2018. Muljono also said: “Although the market has maintained double-digit growth, it has begun to mature, and integration seems imperative.”
After analyzing the integration schedule and the shift in focus, Nikkei Asia Weekly learned that Gojek and Tokopedia are in merger negotiations. The merger will create a huge technology group in Indonesia, Southeast Asia’s largest economy. Gojek is also in talks with Grab on a potential merger.
Southeast Asia is a hunting ground for unicorns. Relevant research shows that Grab and Gojek have become the two largest unicorns with valuations of US$14 billion and US$10 billion. There are also 12 startups in this area with valuations of more than US$1 billion. On the Tokopedia and Bukalapak websites, there are two e-commerce unicorns in Indonesia, and millions of local businesses (including many mom-and-pop stores) can be online through the platform Sales.
This picture is being changed by the epidemic. Travel restrictions and the trend of working from home have hit the car rental industry severely. In 2020, Grab and Gojek will lay off 5% and 9% of their employees, respectively. However, the demand for e-commerce and food delivery quickly mentioned that this trend may continue into the post-epidemic era.
At the beginning of the epidemic, investment enthusiasm began to decline. According to Singapore’s Cento Ventures, the first half of 2020, The funds invested in start-up companies fell 13% year-on-year. Although travel restrictions make fundraising meetings and due diligence difficult, the growth trend will remain the same. Bain partner Aadarsh Baijal stated that “the long-term prospects of Southeast Asia’s digital economy are unprecedentedly strong”, “trust in technology” and “the market has created great online demand”, these factors will bring continuous momentum to the digital economy.
In the new battlefield, Vietnam is a model. According to Google-led reports, Vietnam’s digital economy, including e-commerce, food delivery and car rental, will grow to US$14 billion in 2020, an increase of 16% year-on-year, and will grow to US$52 billion by 2025.
Shopee is now far beyond its opponents. According to iPrice data, The Gioi Di Dong(aka Mobile World) ranks second. 29 million page views per month. Followed by the local electronics operator Tiki, with 22 million monthly page views, and Lazada with 20 million.
Tuan Anh, the managing director of Shopee Vietnam, told Nikkei Asia that Shopee has “accelerated the integration of electronic payments and absorbed users into our ecosystem.”
To fight against Shopee, Singapore’s Lazada1 and Grab joined forces in Vietnam in November 2020. This partnership provides Grab with a way to strengthen e-commerce.
Grab President Ming Maa said at the launch ceremony held at the end of November: “We sincerely hope to bring everything Grab to our e-commerce partners.”
“This is not only the last mile of express delivery, but also the cooperation of payment and local services, so that we can truly integrate user experience and provide a richer experience.”
And Lazada uses Grab’s customer and driver network to direct shoppers to Grab’s takeaway service, and uses Grab’s logistics service to deliver products. Grab will also recommend its app users to Lazada. Lazada’s parent company Alibaba and Grab both have a background in Japan’s SoftBank Group.
At the same time, thanks to the end-to-end supply chain of the national operation center system, Tiki also made a promise of delivery within two hours. In 2020, Tiki also launched its own credit card jointly with a local bank, indicating that it is not satisfied with the operation of e-commerce.
The partnership between Lazada and Grab in Vietnam may also be replicated in other Southeast Asian markets. Grab’s Maa said, “I see more cooperation.” His unicorn has already participated in the “Double Eleven” market competition through partners in Thailand.
In November, Lazada and Google jointly set up digital training courses for online sellers to increase sales, which also helped Lazada’s own services improve. The “sell to China” project has also been launched. Through the global platform of the parent company Alibaba, Southeast Asian businessmen have also gained a stage to participate in cross-border e-commerce.
Grab and Gojek are also looking for growth in financial services. In 2020, Grab acquired Bento, a wealth management startup, and invested in Indonesian state-owned payment company LinkAja.
Like Sea, Grab obtained a Singapore e-banking license through the Singapore Telecom Consortium. Gojek acquired a 22% stake in the local bank Jago to provide electronic banking services for its super applications.
Other international players also participated in the Southeast Asia competition. American Amazon is enhancing its performance in Singapore. In terms of food delivery, Germany’s Delivery Hero also expanded rapidly through its Foodpanda brand. Line Man of Japanese messaging app Line is Thailand’s most popular takeaway service.
In the future, through monetary easing and fiscal stimulus, coupled with the distribution of the new crown vaccine, the global economy will begin to rebound. Unlisted startups can get more funding. In November, Gojek received US$150 billion in financing from Telkomsel, a state-owned Indonesian mobile operator.
Listed companies like Sea have begun to take advantage of bull market dividends. In December last year, Sea raised $3 billion through the issuance of new shares, with the purpose “including potential strategic investments and acquisitions.” Although the start-ups such as Sea are still losing money, the new funds can enable them to expand further and intensify competition in the Southeast Asian market.
Muljono of YCP Solidiance pointed out that major players in the region like Grab are rapidly expanding their services and becoming life-oriented apps, while large investors such as Chinese and American technology giants and local conglomerates prefer to invest in existing players.
Muljono said that this “will mean the major players in Southeast Asia and the existing major players will merge through various acquisitions while competing. Ultimately, under the leadership of several players, plus global investment Support, it will create a comprehensive market in Southeast Asia.“
This article is from WeChat official account:Passagegroup (ID:passagegroup) , author: Yuan clarity