Another bites the dust in e-commerce

08:00 | 26/12/2019
The local e-commerce market is proving tougher than imagined by most as players drop out of the race left and right, while others are hanging on by a fingernail.
another bites the dust in e commerce
Adayroi has halted all transactions before its merger with VinID Photo: Le Toan

Three months after VNG Corporation reported losing all of its VND500 billion ($21.74 million) investment capital in Tiki, Vingroup-backed Adayroi have also thrown in the towel after five years in the competition.

As announced by VinCommerce, the Vingroup subsidiary in charge of the platform, Adayroi will merge with VinID, the group’s digital ecosystem arm. All transactions on the platform will halt, and VinCommerce will work with suppliers soon to determine the fate of existing contracts.

Vingroup CEO Nguyen Viet Quang said that the move is part of the group’s restructuring strategy which will see non-core business segments removed in order to focus finances on industry and technology.

It means Vingroup will concentrate less on sectors such as food and e-commerce – areas in which it had been very active in previous years. A VIR source revealed that the Adayroi e-commerce platform has been suffering massive losses during its operation.

E-commerce has recorded one of the fastest growth rates (30 per cent in 2018) in the local economy. However, it is still in a period of “burning money” as dedicated players go into great losses to build out the necessary infrastructure, train personnel, and run advertising campaigns, according to the Vietnam E-commerce Association.

Indeed, losses are very common in the e-commerce sphere. In the 2015-2018 period, the three market leaders of Lazada, Tiki, and Shopee reported VND9.4 trillion ($408.7 million) in total accumulated losses. Furthermore, securities company VNDIRECT also calculated that the e-commerce sector would need to take on a loss of VND124 billion ($5.4 million) to gain a single percentage of market share from their peers.

Without revealing detailed losses, Quang of Vingroup admitted to sustaining losses. “The local e-commerce market is still very promising, so all players have been enduring tremendous losses to gain a foothold. Even leading global groups like Amazon and have been straddled with this burden for years now,” he said.

While Shopee and Tiki have received ample capital from their parent companies and investors, the near opposite can be said for Adayroi with Vingroup instead placing its capital focus elsewhere.

In 2015 when Adayroi was launched, Vingroup announced the ambition of beating all big players to dominate the market within a short time. Therefore, the giant offered a great amount of money for headhunters to lure senior personnel from Lazada, Zalora, and VCCorp, among others.

This lasted until early 2018, when Vingroup switched attention to developing its automotive and motorbike brand VinFast. Adayroi began to slow down marketing activities to work on sales, logistics, and especially customer service in order to stay among the top five e-commerce platforms in Vietnam, with little success.

Perhaps admitting to the dismal prospects, Vingroup previously decided to sell its e-commerce platform but could not drive home a bargain, according to VIR’s source. As a result, Adayroi slipped to eighth position in the fourth quarter of 2018. It dropped another two places by the third quarter of 2019, according to a survey from The survey also showed that Adayroi received an average of 6-7 million visitors per quarter, ranking fifth behind Shopee, Tiki, Lazada, and Sendo.

After losing so much ground, Adayroi’s withdrawal comes as no surprise, with ample precedent of competition dropping out of the race.

As of the end of 2019’s first quarter, online fashion retailer Robins Online (previously Zalora) announced halting operations., after eight years in the local e-commerce segment. In 2016 Thai-based Central Group, via home appliance retailer Nguyen Kim, purchased the platform and renamed it Robins.

Four months before Central Group’s move, Mobile World Investment Corporation (MWG) closed the e-commerce website and replaced it with, the online shopping platform of the Bach Hoa Xanh chain of food stores.

Nguyen Duc Tai, chairman of MWG’s management board, had hopes that the revenues of the previous platform could exceed the mobile store chain within five years and lead the local e-commerce market by 2020. Nevertheless, with modest revenues of VND73 billion ($3.17 million) – a mere 0.1 per cent of total earnings of the parent company two years ago – the dream never materialised.

Four years ago, Project Lana’s e-commerce platform shook the market by sounding the retreat, especially with its farewell address. Before leaving the battlefield, the website noted, “E-commerce requires lots of money. Many companies will decide to stop burning it. Good luck to the rest who are still trying.”

By Kim Anh

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