Promotions on December 12 enhance e-commerce operators' losses

December 14, 2020 | 19:20
A string of goods going on sale at unrealistically low prices on e-commerce sites have served only to highlight enhanced the losses the platforms are running.
promotions on december 12 enhance e commerce operators losses
Diverse goods are offered at VND1,000 on December 12 on e-commerce sites

During the promotion festival on December 12, plenty of goods were offered for only VND1,000 (4 US cents) on Tiki, Sendo, Shopee, and Lazada. Hoang Nguyen Lan Nhi, a clothing vendor operating on Shopee and Tiki, said that thanks to support from the operators of the e-commerce platforms, they made a tidy profit during these days.

“When the sites run VND1,000 deals, the platforms usually cover a part of the vendors' losses so that they can at least break even during these days,” said Nhi. “The programme is estimated to last for at least a week. These days are our bumper crop.”

Not only Nhi, many other vendors operating on e-commerce platforms are happy these days. Most of them said that the end of the year is usually peak shopping season, so promotions help open customers' wallets easily.

According to Minh, the owner of a clothing vendor on Shopee said that with VND1,000 orders, sellers could actually increase their profits due to increased visitor count.

“With the surprisingly cheap price, customers tend to check the comments column to review the quality of the products before deciding whether to buy or not. Thanks to that, the visitors of my vendors increased,” said Minh. “If the goods receive positive feedback, they often buy other items at my shop, too.”

Notwithstanding, while vendors are reaping heavy crops, the deficit of e-commerce platforms keeps growing. According to the local market research VNDirect, the total accumulated losses of the Big Four Tiki, Sendo, Shopee, and Lazada as of early 2020 were VND12.5 trillion ($543.5 million), much larger than the sum in early 2019, VND9.4 trillion ($408.7 million).

To maintain operations in the e-commerce segment, Shopee's parent company SEA Group most recently decided to mobilise more than $2 billion.

According to Nguyen Thuy Hang, marketing director at Lazada Vietnam, along with pouring capital into the new sales form – live streaming – enhancing investment in logistics, vendors, among others, are still important because they have contributed to increasing the number of new vendors and also customers.

Investment in vendors also includes spending significant amounts to cover their deficit from promotions. Within a year, e-commerce sites have launched about 12 promotion programmes, of 12 days a month on average.

Each platform withdraws dozens of thousands of vendors – the number has kept rising annually thanks to simulating the customer-to-customer (C2C) model – not restricting newcomers from opening stalls on e-commerce.

Thus, in case the sites selected a hundred vendors to carry out the VND1,000 deal programme, their expenses to cover for the vendors are not negligible.

By Van Anh

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