Tiki is among the few e-commerce platforms in Vietnam that have survived and continues to attract funding. It raised its first round of funding in 2012 from Cyberagent Ventures before securing a series B investment from Sumitomo Corporation. Last year, Southeast Asia’s first tech unicorn VNG Corporation had injected $17 million in Tiki, picking up a 38 per cent equity in it, which valued the company at $45 million.
“The e-commerce segment has taken up only 1 per cent of the $100 billion retail market, but it is poised for tremendous growth. It is expected that e-commerce will occupy 7-10 per cent of a $200 billion retail industry within the next 10 years,” Tran Ngoc Thai Son, CEO of Tiki, told DEALSTREETASIA in an interview. Edited Excerpts:-
While a lot of e-commerce companies in Vietnam had to shut down, including VC-backed startups, how has Tiki managed grow over the past 7 years?
We started small, but have grown organically and built our own fulfillment and logistics systems. Thanks to the ability to control in-house operations, we have earned customer trust. We also continuously expand our offerings so customers have a reason to come back. It’s a virtuous circle between Tiki and our customers. In 2016, Tiki, as an online mass retailer, marked a rapid development with 300,000 products of over 2,500 genuine brands from electronics, cosmetic, FMCG, books and others.
Still, what are the challenges facing Tiki?
Finding talent. E-commerce is still relatively new, so hunting for talent, who really know the market well, but at the same time have the humbleness to learn and change fast with the right ambition, is increasingly difficult.
Besides, the challenges for e-commerce in general is the lack of important components of the ecosystem, which are delivery, payment, technology, warehouse, and human resource. Only companies who manage to integrate these segments can grow and compete.
How important is external funding to an e-commerce business in a nascent market like Vietnam? Rather than financial investment, what do you think is needed in ensuring investors commit to grow the company along with you?
Investment in e-commerce is very important, as the more capital is injected to educate the market, the faster and bigger the market grows. In 2013, Tiki secured a seven-digit series B round of funding from Sumitomo Corporation. The reason we chose to work with Sumitomo was because of their long-standing experience in e-commerce. We see ourselves, in five years, still building e-commerce together. The funding had been used to improve customer care by buying more warehouses and getting faster delivery. In 2016, Vietnamese technology giant VNG Corporation purchased 38 per cent of Tiki.
Japanese investors are often very tough. What do they like about Tiki?
Actually, it’s very similar to what customers feel about us. We earn the investor’s trust because we are implementing our commitment to the customers every single day. In our general internal report for 2016, 89 per cent of the customers were satisfied with Tiki, while card payments accounted for a relative high rate of 34 per cent. It has proven that Tiki has become a credible online shopping destination.
How do you expect Tiki to be after future fundraising?
Tiki’s vision is to become the most-trusted e-commerce platform in Vietnam. According to various researches, as customers’ demand for quality services is increasing, delivery time has become a key factor. So in 2017, Tiki aims to increase the same day shipping capacity from 25 per cent to 50 per cent.
There are a lot of public reports about how money is burnt in the e-commerce business, including Tiki. But investors are still looking at the company as well as the industry as a whole. What’s your assessment for the e-commerce sector in Vietnam?
The e-commerce segment has taken up only 1 per cent of the $100 billion retail market, but it is poised for tremendous growth. It is expected that e-commerce will occupy 7-10 per cent of a $200 billion retail industry within the next 10 years. The upside is just so attractive, and big enough for even more players.
The market has a new player, as The gioi di dong has launched Vuivui.com, saying it follows a model similar to Tiki. What’s your take on the competition in general?
Over the past seven years, Tiki has grown by 130-190 per cent compared to the average industry growth of 20-33 per cent per year. I belive we are going in the right track. Besides that, I also saw a lot of new players enter the e-commerce space, most of which had bigger budget or funding than Tiki. But many of them are now gone. However, I think competition is generally good for a fast growing market like e-commerce, which requires hundreds of millions dollar to build and educate.