Leflair, an e-commerce platform specialised in flash sales and branded goods, officially announced suspending operations in Vietnam, yielding to the capital and cost pressure.
|Leflair is the newest casualty of the e-commerce race in Vietnam (Source: leflair.vn) |
Leflair, a retail website providing premium products in Vietnam, once announced strong ambitions to “become the No.1 online destination for brand shopping in Vietnam”. However, since then, Vietnam’s competitive e-commerce landscape has taken its toll on the niche market player, forcing the startup to decide on cease its local business.
In a letter to merchants, Leflair said, “The changes in the investment landscape for startups have made Leflair's current business strategy difficult to pursue. Under the capital crunch and requirements to cut costs, we had to make the tough decision to cease our operations in Vietnam.” The local high-end online sales market is promising as Vietnamese people rank the third in Asia after China and India in their preference for premium brands.
At the same time, Pierre-Antoine Brun, co-founder of Leflair, explained why many e-commerce sites had to cease operations in Vietnam as they sold similar products to the same customer group, leading to fierce price competition.
Leflair has a journey of about four years doing business in the Vietnamese market up to the time of official announcement of the shutdown. During that period, Lefair served a total of more than 120,000 customers, with the annual net sales reached tens of millions of dollars.
According to ndh.com, over the past four years, Leflair reached the highest average order value (AOV) in the Vietnamese e-commerce market, with its website receiving about 1.6 million visits per month and the company receiving the total investment of $12 million.
However, this investment is dwarfed by the capital mobilised by the giants of the Vietnamese e-commerce market. For instance, Alibaba has poured billions of dollar into Lazada, while Tiki, Sendo, and Shopee have received hundreds of millions of dollars from foreign giants from China, Japan, or Singapore.
Media expert Nguyen Khoa Hong Thanh, deputy director of iSobar Media Company, said that with e-commerce being so fiercely competitive in Vietnam among the "Big Four", investors will have to think carefully whether to invest in smaller platforms. This may be one of the reasons why Leflair was struggling to raise capital.
The difficulty in raising capital is one of the leading reasons why startups, especially in the field of e-commerce, go belly up.
Another example, vuivui.com (the e-commerce website of The Gioi Di Dong) also had to close at the end of November 2018 after a year of operation, also cracking under the heat of the war of attrition waged by the "Big Four".