DealStreetAsia, citing one of the people involved, said e-commerce sites Tiki and Sendo agreed to merge. Earlier in February, a leaked source also said the two sides were negotiating to proceed to the same home.
Currently, both of them have not officially spoken about the merger information. However, if it is true, can give two easy reasons for this move.
Increasing competitiveness in the market
Take a look at Tiki and Sendo’s rivals in the market, Shopee and Lazada. Despite being in the top 4 largest e-commerce floors in Vietnam, the parties are divided into 2 groups with different properties.
Group 1: Shopee, Lazada – Operating from the abundant capital of the parent group, Alibaba (China) and Sea (Singapore), they are constantly pumping capital continuously.
Group 2: Sendo, Tiki- Self-proving ability to raise money through funding rounds.
It is easy to see this potential difference when looking at the current accumulated losses of businesses. Joined Tiki 6 years later, but by 2018, meaning that after only 2 years in Vietnam, Shopee had double losses on Tiki. And the foreign rivals have no intention of stopping burning money in this war.
In an interview with VTV, Mr. James Dong, General Director of Lazada Vietnam said: “Our parent corporation uses part of its abundant profits from Chinese e-commerce market to invest in Vietnam. As long as we are serving good users and sellers, time is our friend“.
If Tiki and Sendo merge successfully, the market will be a three-horse race between Shopee, Lazada and Tiki-Sendo.
Nguyen Ngoc Dung, vice president of Vietnam E-Commerce Association (Vecom), said in February that the deal was a good signal for the market, because they would complement and support each other to increase. strength, increase competitiveness. Sendo has advantages in rural and suburban markets, while Shopee, Lazada and Tiki are concentrated in big cities.
“Assuming these two enterprises merge, it will create a domestic E-commerce enterprise with sufficient capacity to compete with foreign enterprises. Since then, Vietnam has mastered future industries such as e-commerce“, Mr. Dung commented.
Adapt to the changing investment environment and world trends
The fierce competition requires a higher level of investment, especially in an industry like e-commerce, needing to pump money continuously to retain partners and customers. However, the trend of shifting the tastes of venture capital funds will somewhat affect startup based on capital raising for growth such as Tiki or Sendo.
This has been proved by the story of Leflair, a startup that hits the niche of e-commerce market is selling brand-name goods in a flash fashion. The same method of raising capital as Tiki or Sendo, once invested to $ 12 million, but Leflair had to suspend operations because the CEO said it was because they could not raise more capital.
Mr. Loic Gautier, former General Director of Leflair shared with VTV: “There is a shift in the world capital markets, investors now want to pour capital into more profitable companies, which makes it difficult for short-term startups to raise capital.“.
According to Reuters, after a WeWork-like shock, the explosion of technology unicorns in Asia decreased in 2019 in both the number and the speed of funding. As for the data from PitchBook Data (a company providing data, research and technology covering private capital markets, including venture capital …), only 23 startups reached billion USD in 2019, this figure is only half compared to 2018. Calling speed also decreased by 36% in number of cases and scale by 2/3.
When the appetite and spending tolerance of investors changes, the merger plan can also be a good “scenario” for both Tiki and Sendo, increasing both attractiveness when calling for capital in the next rounds and restructuring. to function effectively.
In a broader perspective, merger and acquisition is also a trend of global e-commerce industry. To dominate the world e-commerce market today, Amazon has acquired and merged more than 100 different companies. Among them are notable deals such as Amazon acquired Zappos shoes and clothing company for $ 1 billion or children’s products website Quidsi for $ 500 million.
According to investors, the Vietnamese market will also follow this direction.
Mr. Yoshihiro Ishawata, Vice President of SBI Venture Capital said: “We believe that Vietnam’s e-commerce market has entered a phase of focusing market share on the four strongest enterprises. The next time the competition between 4 businesses will be more intense. The merger and acquisition will take place with only 2 or 3 names remaining, accounting for the largest market share“.