Online booking firm Vntrip.vn repeats story of e-commerce startups

Vntrip.vn has repeatedly received investment from foreign investors. Source: zing.vn

In the past two years, Vntrip.vn recorded accumulated losses of VND100 million ($4,424), while its charter capital as of the end of 2017 was VND137 million ($6,061). However, this may not be important as the firm has been constantly receiving foreign investment.

The booking application has just announced successfully calling for investment from Swiss-based real estate firm IHAG Holding. While the value of the investment was not disclosed, the Swiss investor assessed the firm’s value at $44.2 million.

Previously, Vntrip.vn also received investment from two foreign investors. Accordingly, Hong Kong-based Hendale Capital poured $10 million into the domestic firm. In 2016, when the business was started, Alibaba’s former chief technology officer John Wu also invested $3 million into the platform.

Shouldering losses for future gain is a common thing among startups. Along with Vntrip.vn, leading e-commerce platforms in Vietnam like Tiki, Lazada, and Shopee also reported losses of thousands of billions of VND. However, despite the high losses, e-commerce players continue looking at the market with optimism.

In 2015-2016, Lazada reported losses of VND1 trillion ($44.24 million), increasing its accumulated losses to VND2.7 trillion ($119.4 million) by the end of 2016. In a fiercely competitive market, Lazada’s losses in 2017 alone were VND1 trillion ($44.24 million) and its accumulated losses may be close to VND4 trillion ($176.96 million).

After seven years, Tiki has accumulated nearly VND600 million ($26.548) in losses, including VND308 billion ($13,628) in 2016 and VND284 billion ($12,566) in 2017.

Despite the losses, the platforms still received investments from a large number of investors.

Accordingly, China-based JD.com, Tiki’s biggest shareholder, in early 2018 poured $44 million into the e-commerce platform. In addition, VNG Group also invested VND384 million ($17,000) into Tiki. Japan-based Sumitomo Group holds 30 per cent of Tiki’s shares, and Japan-based Cyber Agent Venture Fund holds 15 per cent.

Lazada, with trillion-VND losses, also received $4 billion from Chinese e-commerce giant Alibaba.

Similar to the e-commerce market, the domestic online booking service market is still in its infancy, and the trend to risk losing money in order to gain a larger market share is forecasted to continue.