Start up with e-commerce,
Online technology-based economic sectors, such as e-commerce and fintech, are expected to bring billions of dollars to the domestic economy. This is also a fertile “land” for Vietnam’s “unicorns” (startups that are worth billions of dollars) to be born and develop.
Start up with e-commerce: advantages from stable growth
Considered as one of the economic sectors that can take advantage of many different opportunities from the 4.0 technology revolution, e-commerce is actively contributing to promoting cross-border trade and the domestic consumer market. This is also the industry with high and steady growth from 2015 to the present.
According to the Vietnam E-Commerce Association (VECOM), this industry has had a comprehensive development with a growth rate of over 30% in 2018. VECOM believes that it will reach the goal of US $ 10 billion in revenue for the B2C segment (business to consumer) in 2020, which was outlined in the E-commerce Development Master Plan for the period of 2016-2020.
From $ 7.5 billion in 2018, the forecast of the e-commerce industry will increase to $ 15 billion in 2025, with the positive contribution of a series of domestic and foreign businesses such as Shopee, Lazada, Tiki, Sendo, Adayroi.
Forecast the size of the e-commerce industry will increase up to 15 billion dollars in 2025.
In 2018, Alibaba Group (China) invested another $ 2 billion in Lazada Southeast Asia, in total, Alibaba poured $ 4 billion into this Southeast Asia’s largest e-commerce company. And Shopee, backed by the mother company SEA (whose major investor is Chinese Tencent Group, which accounts for about 40% of SEA’s shares), has increased another $ 50 million of charter capital for Shopee Vietnam. Up to now, Shopee has invested US $ 500 million to expand its network in Vietnam, Thailand, Malaysia, Indonesia, Philippines, Singapore and Taiwan.
Two domestic e-commerce businesses, Sendo, received $ 51 million from 8 investors (including 4 former investors namely FPT, eContext Asia, BeeNext, Beenos and 4 new investors, SBI Japan, SoftBank Ventures Korea, Daiwa PI Partners and SKS Ventures); and Tiki in early 2018 confirmed a $ 44 million investment from China’s major online retailer, JD.com.
Adayroi is the only e-commerce platform among the five most prominent names currently on the online retail market that is not backed by foreign funds. The shareholders of Lazada, Shopee, Tiki, Sendo are all businesses with potential and experience in the field of technology and start up with e-commerce. This will be a big challenge for Adayroi. However, this e-commerce platform has an advantage that no other opponent can easily get – it’s Vingroup’s ecosystem.
With an ecosystem which is covering many areas such as real estate, hospitality, retail, education, health care, cuisine and smartphones, automotive and motorbike industry, Adayroi has the opportunity to own a huge and extremely potential customer base. Along with that, Adayroi’s membership programs that can help customers receive offers from other units in the Vingroup ecosystem. It can also be a competitive advantage that other competitors can hardly gain.
Vietnam’s start up with e-commerce market will become increasingly hot, when the prominent faces of the world and Asia such as Amazon, Grab, Go-jeck enter. The battle for market share is still heating up day by day in a $ 15 billion market by 2025.
Fintech: advantage from global boom trend
Start up with e-commerce, Technology and finance (fintech) can be considered as the most noticeable emerging economic sector in Vietnam in recent times, which is attracting special attention of domestic and foreign big companies. According to statistics, the total value of Vietnamese fintech market is US $ 4.4 billion in 2017 and it is estimated that by 2020, this figure will reach US $ 7.8 billion. The number of fintech companies from 40 at the end of 2016, reached nearly 100 at the present time, spread across many different fields.
In particular, the payment sector plays a key role with more than 30 companies that have been licensed by the State Bank to provide operating intermediary payment services. This is followed by peer-to-peer lending (P2P Lending) with the presence of about 10 companies in the market. The remaining companies provide solutions to support the bank’s operations without directly providing services to end-users such as security, e-KYC, asset management, etc.
Fintech in Vietnam has been attracting the special attention of large technology companies and enterprises such as FPT, Viettel, and VNPT to enter the market through both direct and indirect forms such as investment in forming fintech companies, establish investment funds, incubators support fintech startups …
Recently, Momo e-wallet has conducted a survey, based on reports of organizations such as the United Nations, Smartlink and post offices about money transfers worth less than 5 million VND, thereby forecasting market size up to 35 billion dollars. This is also the goal that the fintech in Vietnam aims to. Fintech solutions can bridge the large gap between the population without a bank account and access to financial services. It is an opportunity for Vietnamese technology enterprises and startups to cooperate with credit institutions, but it is also a big challenge when foreign giants such as Grab, Alibaba and WechatPay are trying to penetrate into the market and compete with Vietnamese fintech such as Momo or Zalo.
In 2018, there were $ 117 million invested in fintech startups in Vietnam and in the near future, competition in the market is expected to be fierce.
Taking advantage of the fintech development trend, in mid-September this year, FPT Software held a seminar to introduce digital transformation solutions in the financial industry – akaFintech. Citing PwC’s audit report on financial services technology in 2020 and in the future, FPT Software representatives said artificial intelligence, blockchain and automation technologies will be the key trends that will change competitive environment in financial services industry.
The application of digital transformation platforms and solutions helps businesses accelerate technology transfer, enhance competitiveness, develop new business models to break out in the market.
According to Mr. Nguyen Khai Hoan, Deputy General Director of FPT Software, Vietnam is in the period of strong development, there are many opportunities to be opened as well as a series of foreign companies seeking investment. However, only in the next 5-10 years, if Vietnamese enterprises do not change and catch up with the development, the opportunities will disappear.
At the moment FPT Software is focusing on developing a number of platforms that support digital conversion such as akaChain, akaBot. Based on akaChain, FPT Software and Bao Kim E-Commerce Joint Stock Company have developed and implemented iCredit – a service related to customer credit scoring, helping businesses in the field of finance and banking. customers understand customers better and accurately assess the potential risks from individual customers.
On the other hand, although the technologies are ready, according to experts, the most difficult problem to develop fintech is data sharing.
Estele Gonzalez, global marketing manager of technology firm ThinkPower (Taiwan), said that the fintech field in Taiwan appeared early, but the speed was still slower than the potential. Some reasons can be mentioned as banks, individuals who are not ready to share personal data, lack of coordination among the parties involved.
Ngoc Anh
* Source: Saigon Times