BAEMIN Vietnam, a top 5 e-commerce market leader in 2022
(VEN) - After just three years of operation in Vietnam, BAEMIN recently was recognized by the Ministry of
Recently, Baemin - the food delivery application of unicorn startup Woowa Brothers from Korea, had to leave the Vietnamese market.
For a long time, Vietnam's e-commerce industry has been described as a "money-burning race" for "big guys" because profit margins are extremely low. Massive and similar promotions between electronic trading floors and ride-hailing applications are continuously launched to change consumers' shopping habits and attract market share, competing with competitors.
On this journey of "burning money," many businesses suffer huge losses; some have even had to withdraw, such as e-commerce sites Adayroi and Lotte.vn, Robins.vn, ... or VuiVui are names that stopped in 2019, with an almost common reason for all: "insufficient resources". Recently, Baemin - the food delivery application of unicorn startup Woowa Brothers from Korea - also left the Vietnamese market.
According to the assessment of Mr. Nguyen Ngoc Diep, CEO of VNP Group, in 2022, Vietnam's e-commerce market will still be fierce, with the game of burning money to gain market share. If 10 businesses are in the market, all 10 will lose money until the market reaches a new threshold.
After a long period of "burning money", the two leading units in e-commerce platforms and online ride-hailing services in Vietnam are identified as Shopee and Grab.
A report updated by data company YouNet ECI as of December 25, 2023, shows that Shopee continues to monopolize the market share of e-commerce revenue with 72.7% (equivalent to 22.674 trillion VND). ). Following Shopee is TikTok Shop with 17.2% of the market and Lazada with 9% of the market.
SEA Group founded Shopee in 2015, headquartered in Singapore and operating in Southeast Asia and Taiwan. Entering the market after Lazada, Shopee spent a lot in the early stages to narrow the gap with previous competitors. Shopee continuously uses advertising campaigns, promotions, and free shipping to attract users, build a brand, and increase the number of users, although it may take some time to be profitable.
Officially launched in August 2016, Shopee lost 164 billion VND in 2016. 2017, Shopee lost more than 600 billion VND, and by 2018, the loss had tripled to 1,900 billion VND.
In the 3 years from 2016 to 2018, despite accumulated losses of nearly 2,700 billion VND, Shopee never generated revenue. At the beginning of the second quarter of 2019, this e-commerce site began considering collecting fees from sellers on its platform.
Since 2020, Shopee has begun to reduce losses, and by 2022, this e-commerce platform has reaped "sweet fruit" when revenue has skyrocketed to nearly 11,000 billion VND, an increase of 92.2% over the same period in 2021. At the same time, after many years of unprofitable operations in 2022, Shopee Vietnam had a profit after tax of more than 3,000 billion VND, reducing accumulated losses to 4,500 billion VND.
Meanwhile, other Shopee competitors, such as Lazada 2022, lost more than 200 billion, Sendo lost more than 500 billion, and Tiki lost more than 2,500 billion.
Shopee Vietnam has grown rapidly for the first time, with profits making up for nearly half of its accumulated losses.
Like Shopee, Grab does not hesitate to "burn money" on promotions and free shipping to attract consumers.
This strategy has resulted in Grab outperforming its competitors in terms of ride-hailing technology market share. A survey by Q&Me published in June 2021 based on the number of customers using two-wheeled vehicle calling services in Vietnam, Grab accounts for about 60% of the market share, Gojek accounts for 19%, and Be accounts for 18%. For cars, Grab's market share is overwhelming at 66%, Be accounts for 22%, and the rest is divided among other applications.
Market share of 2-wheel and 4-wheel vehicle calling services
In addition, Momentum Works' 2023 online food delivery market report said that most of the market share in Vietnam is concentrated in the hands of two giants, Grab and ShopeeFood. These two names are struggling for market share percentage, with Grab leading with 45% and ShopeeFood with 41%. Baemin accounts for 12%, while Gojek has 2%.
Spending heavily on advertising from 2014 to 2019, although revenue grew steadily, Grab's losses grew yearly. By the end of 2019, Grab had accumulated more than 4,300 billion VND losses.
In 2020, Grab recorded a profit for the first time after tax, reaching 243 billion VND. However, revenue decreased, and Grab lost 301 billion VND in 2021. In 2022, Grab's revenue broke out, increasing 91% over the same period to 6,384 billion VND, and profit after tax reached 329 billion VND, a loss cumulatively reduced to more than 4,000 billion.
Grab is profitable because Be, Baemin, and Gojek are still steadily losing hundreds and trillions of billions yearly.
Revenue skyrocketed to more than 6,000 billion, Grab returned to profitability in 2022
