Tiki and Sendo in merger talks?

The merger of Sendo and Tiki would result in a strong enough entity to contend with Lazada and Shopee

DealStreetAsia has reported that the two largest local e-commerce platforms have held exploratory talks to merge. Currently, the two sides have yet to comment on the information. Once the negotiations are taking place, the relevant parties rarely issue comments, even to disclaim leaks.

Thanks to the huge support of Singapore-based Sea Group and the leading Chinese e-commerce company Alibaba, Shopee and Lazada have quickly seized the upper hand in the local market. Meanwhile, Tiki and Sendo, with their fragmented shareholder structure, have been constantly calling for investment to maintain their performance.

As e-commerce platforms in the local market have been suffering tremendous losses, a merger would be a good solution for the two local companies. The step would not only eliminate one competitor but also create a new partnership with the stronger financial potential to beat foreign firms.

The financial issue is the largest one for any e-commerce player. Their deficits are forecast to grow because the firms have been pouring a lot of investment to maintain their positions in Vietnam.

In 2015-2016, Lazada surprised the market by reporting an annual loss of about VND1 trillion ($43.48 million). As of now, along with the Shopee’s losses, their total losses amount to VND2 trillion ($86.96 million) per year.

In 2016, the total losses of the Big Four (Lazada, Tiki, Sendo, and Shopee) hit VND1.7 trillion ($73.9 million). The losses doubled to VND3.4 trillion ($147.83 million) in 2017 and VND5.1 trillion ($221.74 million) in 2018.

As of the end of 2018, Tiki recorded VND1.4 trillion ($60.87 million) in accumulated deficit and Sendo reported VND1.3 trillion ($56.5 million) in losses.

Otherwise, constantly welcoming new investments has fragmented local firms’ shareholder structure. At the end of 2019, 61.1 per cent of Sendo's shares were held by overseas investors after getting $61 million capital in its Series C investment round. In addition to FPT, Sendo’s shares have been picked up by SBI, Beenext, Econtext Asia, and Daiwa.

Tiki also raised capital in June and December last year. The two main shareholders are VNG with 24.6 per cent and JD.com with 21 per cent of the shares. The others include Ubiquitous Traders Pte., Ltd. (nearly 9 per cent), CyberAgent, STIC, and Sumitomo.