Vietnam’s homegrown online marketplaces Sendo and Tiki have held exploratory talks to merge with each other, according to multiple sources aware of the development.
Both startups rank among the most visited e-commerce websites in Vietnam as well as the most downloaded marketplace apps in the domestic market. They compete with Alibaba-backed Lazada and NYSE-listed Sea Ltd’s e-commerce unit Shopee in the domestic market.
In the third quarter of 2019, Shopee and Lazada topped the market in terms of monthly active users, according to the latest e-commerce report from iPrice, App Annie and SimilarWeb. In terms of app downloads, Tiki and Sendo surpassed Lazada but were trailing Singapore-headquartered Shopee.
Tiki and Sendo have been discussing modalities of a potential merger to pose a stronger threat to their rivals, one person said. Meanwhile, another source asserted that the two e-commerce firms would prefer to retain their respective brands even if they integrate their businesses.
Talks are understood to be at a preliminary stage and a deal may not materialise. When contacted by DealStreetAsia, both Sendo and Tiki declined to comment on the matter.
DealStreetAsia has also verified that investors on the cap tables of both companies have been apprised of the development.
KrAsia reported that the companies have consulted the Ministry of Industry and Trade’s competition watchdog regarding the consolidation.
Meanwhile, another executive with direct knowledge of the development said a Tiki-Sendo merger will not see them cannibalize each other’s operations as “both companies have different business models and audience profiles.” This executive, who declined to be named, also added that talks are yet to reach a stage where valuation (of each of the companies) is being discussed.
Tiki largely caters to consumers who live in big cities – primarily Hanoi and Ho Chi Minh City — and are conscious about authorised, origin traceable goods. Meanwhile, Sendo is more popular among users in the suburban and rural areas of Vietnam. A merger would instantly give the combined entity wider nationwide coverage and a larger, varied consumer base.
Joining forces will also make it easier for these companies to raise funding amid expectations of a ‘startup winter,’ one of the sources opined.
Sendo, a spinoff of Vietnam’s pioneering IT firm FPT, recently raised $61 million in a Series C round from existing investors and new backers including Indonesian venture capital firm EV Growth and Thailand’s Kasikornbank. In total, it has gathered more than $130 million.
Meanwhile, Tiki’s latest financing was led by private equity major Northstar Group. While the value of the investment was not disclosed, we reported in 2019 that Tiki was looking to raise $75 million in a round, which could potentially be upsized to $100 million.
Before that, the startup had snapped up nearly $62 million from investors including CyberAgent Capital, Sumitomo Corporation, Vietnamese unicorn VNG, Chinese retailer JD.com, InnoVen Capital as well as some South Korean funds.
Vietnam’s e-commerce market is likely to have touched $5 billion in 2019, per the e-Conomy report by Google, Temasek and Bain. Still, the sector has accounted for only 4-5 per cent of total retail sales in the country in recent years.
There is, therefore, a long way to go before the country’s e-commerce sector can achieve a projected CAGR of 49 per cent by 2025.
There are some encouraging signs. Vietnam grew its share of total e-commerce web visits in ASEAN at the end of Q3 2019 to 30.9 per cent from 25.7 per cent in Q2. Indonesia’s share, meanwhile, declined from 46.9 per cent to 36.3 per cent, according to the iPrice report.
Kristie Neo contributed to this story.
