VNG takes loss from Tiki in stride

VNG still believes in its brighter future

VNG’s long-term plans with Tiki

In May 2016, VNG Corporation completed a VND383-billion ($17.02 million) deal to acquire a 38 per cent stake in Tiki. Accordingly, VNG spent VND104,000 ($4.57) per share, with the expectation to benefit from holding one of the largest e-commercial platforms in Vietnam.

However, in 2017 VNG reported a loss of VND125.3 billion ($5.5 million) from Tiki, 34 per cent more than in the previous year. The value of VNG’s investment as of the end of 2017 was VND165.7 billion ($7.27 million) only, VND218.7 billion ($9.6 million) less than the initial investment value.

According to Le Hong Minh, chairman of VNG, the e-commerce sector in Vietnam is in the developing phase, thus firms are willing to take losses.

In reality, numerous e-commerce platforms, like Amazon and JD.com had been reporting losses for numerous consecutive years before getting profit. Besides, before establishing their market-leading positions, Grab and Uber burned massive amounts of money on promotion programmes to lure in customers.

After receiving investment from VNG, Tiki has seen increase in the value of goods. In 2017, the total value of goods in circulation on the Tiki platform was four times higher than in 2016. According to statistics from Euromonitor, Tiki ranked sixth among the online shopping sites in Vietnam in 2017 with the visitor volume of 15.08 million.

Tiki CEO Tran Ngoc Thai Son also stated that the losses are part of the firm’s long-term development plan. Tiki is expanding its scale of operations via investing in infrastructure, warehouses, human resources, and technology.

ZaloPay to be the ace in the hole for VNG

According to Minh, mobile payments have only made up 1 per cent of all payment transactions in Vietnam, thus, there is great potential to exploit. VNG will continue to invest in technology in this key business sector to bring positive experiences for customers and then step-by-step expand the ZaloPay customer base.

Tom Herron, Business Development director of VNG, shared about VNG’s vision in the mobile payment sector: “Despite VNG having the advantage with a large customer volume who are using VNG services, VNG will not rush promoting ZaloPay. Instead, the firm will focus on developing the product’s quality to offer customers the most convenient product with the highest quality,” Tom Herron said.

According to the plan, ZaloPay will be connected with partners (restaurants, banks, and transport firms) to create numerous benefits to meet the payment demands of customers from shopping and entertainment to transport.

As an e-commerce platform using QR payment, ZaloPay was launched in 2016. At present, ZaloPay commands a double-digit market share and ranks among the top five largest payment channels in Vietnam.