November 14, 2019 00:58

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Tran Hai Linh, General Director of Sendo: Do not 'burn money' for growth

10:02 | 19/10/2019

VCN - With a series of domestic and foreign e-commerce businesses and platforms, finding a direction for businesses is not easy. Tran Hai Linh, General Director of Sendo says businesses should not "burn money" for growth to survive but must rely on value and service providing to customers.

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Tran Hai Linh

Many say that e-commerce businesses are growing fast in Vietnam but are not profitable, what do you think about this issue?

We need to have a more complete and objective view of the e-commerce businesses. In fact, e-commerce has two different segments, which are e-commerce platforms and e-businesses.

E-commerce platforms have invested heavily in finance to change Vietnamese consumers’ behaviour. According to assessments, Vietnam also has about 40-50 million customers who have not purchased online or purchased online rarely. So the goal of e-commerce platforms is to shift customer behaviour to online shopping and to build infrastructure for e-commerce such as delivery and payment. This investment needs to be extended over years and will get interest in the next 5-10 years. Therefore, e-commerce platforms are often unprofitable in the early stages.

However, enterprises and traders starting an online business are the group that has very fast development in both quantity and quality. There are hundreds of thousands of such businesses and households now. They are growing fast and are good profitable businesses.

As an e-commerce platform, what is the situation of Sendo's business now?

Sendo is doing well, the transaction size and customers have grown more than three times over the previous year. However, as I have analysed above, there are many Vietnamese people who have not purchased items online, many bad delivery routes and 70 percent cash payments. Thus, there are many things for enterprises to invest in and solve. Sendo may be profitable in the next year, but it would mean that we have to stop investing to expand the market, while Vietnam's market has many opportunities to grow in the next 5-10 years.

There are many foreign enterprises opening markets or investing capital for e-commerce platforms in Vietnam, what do you think about this competition and what strategies do businesses like Sendo need?

Big foreign enterprises have advantages in capital, but they do not understand the Vietnamese market. However, these businesses invest in very "hot" services such as fast delivery, selling phones, computers, televisions and they are concentrated in big cities. The GDP per capita in Vietnam is more than 2,000 USD/person/year. With this scale, the purchase of goods valued at 200,000-300,000 VND is a lot, no one buys two phones or two televisions a month. Understanding customers, Sendo focuses on bringing the right goods to consumers such as clothing or accessories and chooses a wider market including urban residents type II and type III and rural areas to stand out.

In fact residents in large cities have many purchasing options such as going to supermarkets or convenience store chains; while urban residents type II and type III and people in rural areas cannot. Sendo does not offer costly, expensive solutions with high quality, but focuses on a suitable price and large merchandising coverage to bring choices to customers. Enterprises develop on the basis of not "burning money" but relying on providing value for growth. Because customers are less interested in which units, domestic or foreign, offer services, but care about the best solutions and low costs.

Obviously, many difficulties for e-commerce businesses are in sight, what are your recommendations for the development of e-commerce in the future?

E-commerce and other industries such as payment and delivery are all young businesses that are willing to learn. So our difficulty is to create a better investment environment to attract capital from outside. Fortunately, the Government has taken many actions to welcome foreign investment. Vietnam has a good "window", the Government, ministries and agencies are welcoming e-commerce, so all businesses are benefiting. However, we should not receive e-commerce indiscriminately and arbitrarily, causing it to develop rampantly. Moreover, policy makers need to put themselves in businesses’ shoes, listen to businesses to have appropriate promoting policies for their development.

By Huong Diu (recorded)/ Ha Thanh