Founded in 2012 as part of Vietnam’s largest IT services company FPT Corporation, Sendo is a notable homegrown platform that’s been staying competitive in the country’s burgeoning e-commerce sector.
Sendo operates both B2C and C2C models. By its own account, Sendo currently serves more than 300,000 sellers and 10 million buyers. And it has focused on broad coverage rather than just the top-paying consumers. About two-third of Sendo’s orders are placed outside of Vietnam’s biggest cities Hanoi and Ho Chi Minh City.
In August 2018, Sendo raised USD 51 million in a Series B funding round led by SBI Group from Japan, alongside SoftBank Ventures Korea, Daiwa PI Partners, and SKS Ventures. In terms of monthly web traffic, Sendo ranked fourth among e-commerce players in Vietnam in the second quarter of 2019, according to data from iPrice, closely behind Shopee, Tiki and Lazada.
KrAsia asked CEO and co-founder Tran Hai Linh how Sendo has been able to differentiate itself from competitors by tapping into lower-tier cities in Vietnam.
KrAsia (Kr): In recent years, the Vietnamese e-commerce market has grown at a phenomenal rate of 20-25% a year but it’s also very competitive with both foreign and local players. Sendo is now in the top 4 in terms of monthly web traffic. Do you think this reflects the real situation?
Tran Hai Linh (Linh): Web traffic is certainly one of the relevant indicators but it is definitely not the only criteria assessing the scale and development of an e-commerce platform. For Sendo, the number of web visitors has never been a target.
An e-commerce platform can only become a dominant player if it can create real value for consumers. Having impressive numbers in terms of web traffic and GMV always requires burning lots of money. During the past seven years, we have been always one of the top leading players in the Vietnamese e-commerce playground but we have never been among the top two or three in terms of burning rate. Instead, we truly understand the demand of Vietnamese consumers and this drives the growth of Sendo.
Our goal is to bring goods and services to Vietnamese consumers living in every part of the country. We have been able to build a strong platform to process hundreds of thousands of transactions a day and serve more than 10 million Vietnamese customers in total.
Kr: How has Sendo been able to chart a different path from competitors?
Linh: Our strategy is to focus on customers in all parts of Vietnam, not just the big cities. An estimate of 75 million Vietnamese do not live in Hanoi or Ho Chi Minh City. It’s harder for consumers in the lower-tier cities and provinces to access affordable and quality products due to the distribution gap. Our experiences have shown that consumers in these areas often buy due to their real demand instead of buying just because products are on sale.
In 2012, when we first started, we were one of the first e-commerce platforms allowing cash-on-delivery via a local third-party delivery company, which was Vietnam Post. We understood early on that we could not wait for e-payments to fully develop. Cash-on-delivery was the best option to convince consumers to use e-commerce and earn their trust.
For first-time e-commerce buyers, they will not be willing to spend on products priced USD 1,000 or up such as an iPhone or a TV. So Sendo has chosen to focus on clothes, home appliances, technology accessories at a lower to mid-range prices – in order to meet the daily demand of consumers and attract new users at a low cost.
Most importantly, Sendo does not charge merchants commission fees. Instead, they can pay us for advertising on either our platform or channels that can direct users to the platform.
Kr: Why have you decided to venture into offering services on the platform as well?
Linh: Besides providing the products, Sendo has also ventured into digital services such as entertainment, tourism, and transportation to meet the diverse demands of Vietnamese consumers. In this third quarter of 2019, we will launch online education services in cooperation with nearly 20 of our partners to provide any Vietnamese citizen access to productive online courses and online knowledge. We will also further invest in financial inclusion services.
Through Sendo’s digital marketplace, consumers can have access to 20 online education partners. Many of these online education providers do not have resources to market their services widely to audiences outside Hanoi and Ho Chi Minh City. Sendo can act as a platform to connect these online education providers to customers across the country.
Kr: Do you think Vietnam’s e-commerce market has reached a tipping point or still holds lots of potential?
Linh: According to Google and Temasek, Vietnam’s e-commerce market is still the fastest growing in Southeast Asia. While e-commerce accounts for more than 20% of China’s retail and 10% of Indonesia’s, the number is only at 3% for Vietnam. That means the market still holds a lot of potential. There will be some breakthroughs in the coming time as consumers start having higher awareness about e-commerce and as other supporting services for e-commerce such as logistics get improved. Besides, Vietnamese e-commerce firms will continue attracting investment and allow local players to compete with foreign ones. We believe that this environment will benefit homegrown e-commerce players such as Sendo.
Kr: Sendo said several months ago that its goal is to hit USD 1 billion in gross merchandize volume (GMV) in 2020. Can you tell us more about how the platform will reach this goal?
Linh: The market value for Vietnam is very huge and our target is no longer USD 1 billion. We want to become the marketplace that can handle transactions in all three areas: physical products, digital services, financial services for both sellers and buyers. Our target is the number of transactions per day and the level of loyalty of our customers.
The interview was originally in written Vietnamese and has been translated to English and edited for brevity and clarity.