Shopee begins charging commission

10:50 | 02/04/2019
On April 1 Shopee officially started charging commission from its vendors. Shopee Vietnam’s managing director Tran Tuan Anh stated that the proceeds from this charge will be used to upgrade the e-commerce platform and services.
shopee begins charging commission
Vendors will have to shoulder sizeable fees due to Shopee's new policy

“Along with our role of connecting shoppers and sellers, we commit to increase investment in our platform and services and create the best experience for both buyers and vendors,” said Tuan Anh.

As soon as Shopee announced its new policy, a string of vendors gave voice to worries that the charge would result in significant losses for them. A vendor argued that the new policy will reduce her sales revenue by VND4-5 million ($174-217.4) a month.

Reacting to vendors’ concerns, Tuan Anh said that charging commission is a step ahead for Shopee in Vietnam, as it transforms from a developing platform to a sustainable e-commerce system.

“We believe that Shopee is still an attractive e-commerce platform for both vendors and customers thanks to our good facilities, support services, and diversified goods to meet the demands of consumers across the world,” added Tuan Anh.

On the other hand, Shopee’s new policy was speculated to be a result of the losses suffered to gain market share in Vietnam over the past few years – a rumour the representative of Shopee was quick to quash.

Tuan Anh said that Shopee is already collecting fees from vendors in Taiwan and other countries in Southeast Asia. “Charging commission is standard in the e-commerce sector, and is applied when the platform and services are perfect and users are willing to pay,” said Tuan Anh.

Aiming to enhance their presence in local market, e-commerce platforms have been shouldering losses over the past few years by pouring capital into their platforms.

Shopee was officially launched in August 2016, however, by the end of the same year, the firm reported a loss of VND164 billion ($7.1 million), which increased to VND600 billion ($26.03 million) in 2017, twice as much as the loss of Tiki.

Lazada reported a loss of VND1 trillion ($43.39 million) in 2015-2016, increasing its accumulated losses to VND2.7 trillion ($117.1 million) by the end of 2016. In the context of fierce competition, Lazada’s losses in 2017 alone are estimated at VND1 trillion ($43.39 million) and its accumulated loss may increase to VND4 trillion ($173.56 million) by the end of 2017.

After seven years, Tiki has accumulated nearly VND600 billion ($26.43 million) in losses, including VND308 billion ($13.56 million) in 2016 and VND284 billion ($12.5 billion) in 2017.

Tiki reported a revenue of VND62.4 billion ($2.7 million) in 2016, up six times against 2015. However, the e-commerce platform took losses of nearly VND179 billion ($7.9 million) in the same year due to overly high sales expenses. Accordingly, sales expenses in 2016 were over VND222.5 billion ($9.8 million), tripling against 2015.

In fact, Tiki JSC only reported revenue from services and e-commerce trading recorded by its subsidiary Tiki Trading. In 2016, the subsidiary’s revenue hit VND817 billion ($36 million) with the gross margin of 9 per cent. Despite this, Tiki Trading suffered a loss of VND41 billion ($1.8 million) as sales expenses exceeded the business’ profit.

By Hoang Van

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional

Based on MasterCMS Ultimate Edition Ver 2.9 2020