Zalo Shop cutting the tree under itself with new subscription charge

Zalo Shop has begun collecting fees from its official accounts who have uploaded products on the site since January 6

Local unicorn VNG’s e-commerce platform Zalo Shop has begun collecting fees from accounts who have uploaded products on the site since January 6, 2021. Pointedly, vendors have to pay about VND660,000 ($28.7) for a six-month package and about VND1.32 million ($57.4) for a 14-month package.

Zalo Shop stated that the change will bankroll the upgrading of a few features to better support official vendors. However, as soon as the policy was announced, many vendors have expressed disagreement.

Duc Tuan, a member of an association of vendors operating on Tiki, Shopee, Lazada, Sendo, and Zalo, commented on Facebook that Zalo Shop is pushing its difficulties on sellers. “Previously, they [Zalo Shop] charged us VND50 per message, now they directly charged a sizeable sum from our accounts.”

Quynh Nguyen, a vendor on many e-commerce sites commented, “It’s fine to pay if the platform is really good for users. However, in comparison with other sites, Zalo Shop does not offer optimal operations so it is hard to accept the policy.”

Another issue is Zalo Shop's weak position in the local e-commerce sector which is dominated by the Big Four of Lazada, Tiki, Sendo, and Shopee. According to data published by local market research company Asia Plus, Shopee is leading the sector with 35 per cent, followed by Lazada with 20 per cent, then Tiki with 17 per cent. The remaining 28 per cent is shared by the rest of the competition, with a large portion probably going to Sendo, the last of the Big Four.

More than a year ago, Singapore-backed Shopee Vietnam also shocked the market by beginning to charge commission rates in a first real move to make money from facilitating vendors on its platform. From April 1, the platform has charged 1-2 per cent commission after each successful deal, depending on the payment method. Specifically, it charges 1 per cent for cash on delivery or international card payments and 2 per cent for credit or debit card payments.

However, Zalo Shop – just like other e-commerce competitors – already charges vendors commission. And while the main reason behind Shopee’s policy was that the platform at the time led the market by a fair margin already, while Zalo Shop is rolling out a fee no other platform charges without sufficient market share to back it up, threatening the very real possibility that the move could backfire.