After 12 years of launching, Lazada's market share has shrunk to 7.6%, while TikTok Shop is growing strongly after 2 years of launching.
TikTok Shop grows strongly
The current Vietnamese market revolves around the 5 most prominent e-commerce platforms: Shopee, Lazada, TikTok Shop, Tiki, and Sendo. According to a new report released by Metric, in the first 9 months of 2024, the Vietnamese e-commerce market with sales on these 5 platforms reached 227,700 billion VND, equivalent to 9.5 billion USD, an increase of 37.66% over the same period in 2023.
In 2023, the revenue of these 5 platforms will reach VND 232,100 billion, an increase of 53.4% compared to 2022. At the end of 2023, Shopee is still in the lead with more than 70% market share, followed by Lazada and TikTok Shop. However, from the first quarter of 2024, reports have recorded a redistribution of market share, with Shopee in the lead, but the second position has shifted from Lazada to TikTok Shop.
By mid-year, according to Metric's calculations, Shopee continued to lead with revenue of VND53,740 billion, reaching 67.9% of the market share. TikTok Shop ranked second with VND18,360 billion, accounting for 23.2% of the market share. Lazada only reached VND6,030 billion, accounting for 7.6% of the market share and Tiki had only 1.3% of the market share with VND997.06 billion.
According to Metric, in the first half of the year, especially the second quarter, while many platforms such as Lazada and Tiki experienced negative growth compared to the same period last year, TikTok Shop and Shopee continued to grow steadily. Of which, TikTok Shop increased by more than 150% and Shopee increased by nearly 66% in sales compared to the same period last year.
In the third quarter, TikTok Shop continued to break through in sales, with an increase of more than 110% compared to the same period in 2023, while Shopee only increased by more than 11%. Compared to the second quarter, TikTok Shop increased by 34.7% and Shopee increased by 16.7%.
Tiki, although still experiencing negative growth compared to the same period last year, has improved compared to the second quarter of 2024, with an increase of 38%. Meanwhile, Lazada and Sendo's sales have been continuously decreasing month by month.
“Amid fierce competition between platforms, TikTok Shop has quickly achieved double-digit sales growth, demonstrating an effective strategy in combining shopping and entertainment models,” Metric report said.
Chinese e-commerce platforms come later to take over the market
TikTok Shop is an e-commerce feature integrated into the TikTok application, entering the Vietnamese market at the end of April 2022. Launched the latest, this platform has a different direction from the other 4 platforms, not following the traditional shopping style of e-commerce but pursuing the shoppertainment model - a combination of shopping and entertainment.
This platform provides various services to entertain users while watching videos; from entertainment for learning, such as cooking skills, learning English, and providing entertainment services for shopping. That is, TikTok viewers will generate buying behavior when they see others buying.
In addition, preferential policies for purchase - cancellation/return are also promoted, making consumers excited.
Statistics from Vietdata show that just a few months after its launch, TikTok Shop surpassed Tiki and Sendo, rising to 3rd place in the list of 5 e-commerce platforms in Vietnam. The platform's sales in November 2022 alone were equivalent to 80% of Lazada's revenue in the same period and 4 times that of Tiki.
In 2023, TikTok Shop will have a net revenue of nearly VND 890 billion, an increase of about 80% compared to 2022, with a profit after tax of VND 32 billion. Livestream sales sessions will help TikTok Shop surpass Lazada to take second place in the first quarter of 2024. The number of sellers on this platform will increase by more than 400%, equal to Lazada and Tiki combined.
A report from TikTok Shop also shows that in the first half of 2024, the number of product searches by users on this platform increased by 79% compared to 2023. Flash Sale campaigns recorded 4 times growth compared to the same period, while sales from livestream sales sessions increased by 153%.
The platform continues to invest 4 times in activities to increase the scale of reach and user experience for the 2024 Mega Sale season, while introducing a series of solutions to meet the needs of sellers and content creators. In addition, the platform also provides a set of advertising tools to help brands convert buyer views and clicks into payments.
Meanwhile, Shopee, the e-commerce platform that holds the number 1 market share in Vietnam with nearly 70%, and is considered Temu's biggest competitor, is also being threatened by TikTok Shop's breakthrough.
Shopee was founded by Singapore-based SEA Group and entered the Vietnamese market in 2015. A report from Vietdata shows that in 2023, Shopee's net revenue will reach more than VND 18,000 billion, an increase of more than 70% compared to 2022. However, this giant's after-tax profit decreased by 50% compared to the previous year, reaching more than VND 1,400 billion.
In 2024, Shopee will continuously launch policies to increase competitiveness, including a return policy, extending the return and refund period up to 15 days from the time of successful delivery.
Since 2019, Shopee has been ahead with livestreaming. However, this giant now has to innovate to compete with TikTok Shop, focusing on product categories such as fashion, health and beauty. Shopee also allows buyers to cancel orders even when the goods are in transit, to reduce market share and attract customers.
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