Vietnamese e-commerce startup Tiki has often been likened to Amazon.
Like its much bigger US counterpart, it came into existence as an online seller of books. Tiki founder Tran Ngoc Thai Son launched the business from a garage in January 2010 with his savings of $5,000.
“I was fond of reading English books, but it was very difficult to find them,” Son says. “But books were not my ultimate goal. Since the inception of Tiki, I knew Vietnam would offer a lot of opportunities for e-commerce.”
Nguyen Manh Dzung from Tokyo-headquartered venture capital firm CyberAgent Ventures, an early investor in Tiki, adds, “It’s hard to compare the two of them as the market conditions they faced were a world apart. But Tiki’s path to expansion is the same as what Amazon has done.”
Those comparisons are set to follow Tiki as it forges its path ahead. In addition to physical products and conventional services such as bill payments, it plans to offer everything from insurance packages to the latest album by K-pop band Blackpink.
“Our exponential growth is largely attributable to expanding the managed marketplace model. Within the next 12 months, we target to have more than 20 million authorised products on our platform,” Son said.
Tiki, which was named after a combination of ‘Tim kiem’ (search) and ‘Tiet kiem’ (save), has come a long way since its launch.
The year 2010 marked the advent of the internet boom in Vietnam. The number of internet users in the country that year stood at 27 million, recorded a jump from 800,000 in 2003. Today, 60 per cent of Vietnam, home to 97 million people, has access to the internet.
Vietnam’s e-commerce market is estimated to have grown at a compound annual growth rate of 25 per cent between 2015 and 2018, according to a Google-Temasek report. Son says Tiki registered a three to four times higher growth during that period.
Dzung says this has been possible due to Son’s singular focus on Tiki from its inception.
“We invested in Tiki when the company was very small. Now Tiki has proved that our decision eight years ago was right,” he said.
We recently reported that Tiki is in talks to raise $100 million in an upsized funding round led by private equity firm Northstar. It is understood that the Vietnamese startup could end up raising as much as $150 million in its current funding round if it fulfils specific KPIs set by its investors.
Son declined to comment on specifics of Tiki’s fundraising but said the company plans to deploy any capital raised to expand its core operations, including technology and infrastructure.
Unlike other e-commerce players that have partnered with logistics service providers, Tiki invests in its own fulfilment centres, which Son says account for a large proportion of its overall investments.
“E-commerce infrastructure remains a great deal in the Vietnam market. Supply chain is a multi-billion dollar industry in the country but has not yet been efficiently operated. Combining technology with our fulfilment centres, we aim to cut the logistics costs for sellers and users,” he said.
These investments, he says, are also a key reason behind Tiki piling up losses of around $45 million.
“The nature of an internet transaction platform requires high user acquisition cost to build momentum based on a large enough user base and significant transaction frequency. Uber, despite its large volume of rides, is still making losses. Snapchat and Twitter, which have a higher possibility to turn profitable, have witnessed losses for years. [Tiki’s] losses are normal,” Dzung says.
Going forward, Son says, if Vietnam wants its internet economy to reach the projected tens of billions of US dollars, the country would need billions of dollars in investments.
“Tiki will be one of the Vietnamese technology businesses leading the path in attracting capital for growth,” he said.