According to Vietnam E-Commerce Association (VECOM), the growth rate of e-commerce sector in 2017 was over 25 per cent and could be maintained throughout the period of 2018-2020. Additionally, it is estimated that the turnover of this sector will reach $4 billion by 2020, based on the report of Statista.
In a new market with such high growth rate as e-commerce, many leading companies do not hesitate to jump in the war of gaining market share. Greater losses of these companies further prove the dominant position of e-commerce market.
Joining Vietnam market since 2012, Lazada is now the top e-commerce site in terms of its spending. Based on the financial statement of Recess, the legal entity of Lazada in Vietnam, this company reported losses of $42.4 million in 2015 and $44.3 million in 2016.
Since Lazada only recorded over $26.1 million of revenue in 2015 and $39.4 million of revenue in 2016, these losses even exceeded Lazada's revenues in terms of absolute value.
Although, Lazada recognized gross profits from business operations, this site is still unable to collect actual profit after so many years due to the large amount of sales expenses and management expenses, which even further increase the loss amount.
In particular, Lazada's accumulated loss by the end of 2016 was nearly $120 million, while the company only has a charter capital of over $651,000. All of the company's working capital come mainly from loans.
According to the financial statement of Recess, Lazada also recorded a short term loan of around $65.1 million and a long-term loan of nearly $61 million by the end of 2016.
Nevertheless, same as many other e-commerce sites, loss is not the top concern for Lazada. In 2018, Alibaba Group said that they would commit to injecting $2 billion into Lazada's business, increasing its control of Lazada.
Alibaba’s first investment came in April 2016 when it bought 51 per cent of Lazada for $1 billion, and it added another $1 billion last summer to increase its equity to around 83 percent.
Another e-commerce site also suffering losses is Shopee, which is a unit under Garena, the leading internet platform provider in Singapore (now renamed as SEA).
When Shopee first entered the market in 2016, Shopee only recorded a loss of over $6.9 million, but this figure quickly increased to over $26 million.
Besides the financial support from SEA, Shopee also inherits the ecosystem that SEA has built.
By the end of 2017, Shopee's total assets reached around $32 million, more than 10 times the previous year. This is a result of the capital increase of Shopee from $1.3 million to over $49.5 million in the year.
Compared to Lazada and Shopee, two e-commerce sites Tiki and Sendo are much more modest.
After seven years of operation, in 2016 Tiki's accumulated loss reached nearly $26.1 million. In this year, Tiki suffered a loss of nearly $7.8 million due to extremely large sales expenses.
Nevertheless, Tiki also does not need to worry too much about the number of losses.
Early in 2018 the second largest e-commerce corporation in China, JD.com said that they will continue to pour more investment into Tiki. This injection from JD was less than two months after the group announced its investment of $44 million in Tiki in November 2017.
Sendo had also mobilized capital of over $17.4 million in two years from 2015 to 2016. However, Sendo's spending plan is somewhat more modest than its rivals with a loss of only $2.6 million in 2015 and $5.9 million in 2016. By the end of this year, Sendo's accumulated loss reached nearly $10 million.
Still, Sendo's equity is still over $9.8 million thanks to the surplus of stock issuance in 2016.