Online sellers are worried about the race to the bottom as they compete to reduce prices on livestream.

E-commerce platforms use discount codes as an important tool to stimulate users to shop, but in reality this cost falls on the seller.

Mr. Le Thanh Van, CEO of fashion brand GUMAC, admitted that he was once attracted by the "record-breaking" livestream sessions of KOLs/KOCs and titles such as House sell best by e-commerce platform give

However, to achieve this, businesses are forced to continuously participate in subsidy and product discount programs to maintain sales.

High revenue but still loss

Livestreaming and e-commerce platforms are becoming a race to the bottom. The characteristic of this model is that the products must be cheap, targeting affordable items, easy to reach the majority. "This puts businesses in a passive position, profits decrease and they are completely dependent on the platform's policies," Mr. Van shared.

Mr. Van said that there was a time when GUMAC's revenue reached tens of billions of VND/month, but when recalculating, the company not only did not make a profit but also suffered a loss due to having to "discount prices to the floor".

Not only that, online sales also come with high inventory risks, forcing businesses to spend more on advertising and KOLs/KOCs. For new brands or brands building their identity, livestreaming can be an effective channel to reach customers.

However, Mr. Van emphasized that this is not a long-term strategy. If businesses are caught up in the vortex of livestreaming and continuous price reductions, the Vietnamese market will be flooded with cheap goods, competing with each other.

However, CEO GUMAC still considers e-commerce platforms an important sales channel. However, instead of chasing the price reduction race, he said he will focus on sales channels, the brand's official website, and implement attractive incentive policies, no less than those on the platform.

Shrinking gently keeps you warm.

With experience in supporting many businesses to boost sales on large platforms, organizing many livestream sales sessions with millions of dollars in revenue, Mr. Nguyen Tran Quoc Dat - Director of BeyondK Company - recognized that many Vietnamese sellers still have shortcomings and difficulties compared to foreign businesses.

"With business " In e-commerce , businesses/brands will definitely have to depend on social networks and platforms," Mr. Quoc Dat shared.

Accordingly, the typical difficulties of the Vietnamese business will have to get used to the policies of the exchanges, and participate in large campaigns to get a good number of customers. However, the cost of participating in the campaigns is not small. This pressure is even greater for brands with low margin (financial leverage).

Therefore, to support Vietnamese businesses, experts believe that it is necessary to organize campaigns with reasonable costs, similar to OCOP ("One Commune One Product", a program for economic development in rural areas). Thanks to that, sellers receive support from many parties such as the press - media, trading floors. e-commerce , and influencers (KOLs).

Besides, to develop, Mr. Quoc Dat thinks that controlling the quality of goods sold on the floor is not a small problem.

Source