Vietnam-based flash sales platform TOP MOT has secured $1 million funding from a consortium of individual investors and launched services, the company has recently announced, contradicting popular perception that there is no room for new e-commerce players in the country.
The investors in the funding round were all private individuals from the finance and e-commerce field in the US, Europe and Asia, the startup said in a statement.
The investors and advisors for the company include Phong Nguyen, co-founder of American online shopping site Gilt Groupe, which was acquired by department store operator Hudson’s Bay Company in January 2016.
Founded by former CEO of Zalora Vietnam (which has recently been acquired by Thailand’s Central Group in an assumed $10 million deal) Erik Jonsson, has also served as deputy CEO of conglomerate Vingroup’s e-commerce arm.
TOP MOT had done its soft launch in December 2015. It is the first website in Vietnam that follows a flash sales business model, connecting suppliers with a need to clear excess and end-of-season inventories, and end-users that are looking for discounts.
TOP MOT currently runs about 40 campaigns a week, each starting at 10am daily with a maximum time span of five days.
Its products – a mix of well-known international brands like Converse, Shiseido, e.l.f., Puma, Pedro and popular Vietnamese brands like Gosto, Kujean, Huulala and Bitis Hunter – are usually sold out after only a few hours from the campaign launch.
Since the soft launch last year, the company has seen approximately 70 per cent increase in traffic stemming from mobile devices at any given month, its statement added.
The funding has helped the e-commerce startup launch an iOS application that will see it expand further in areas outside of the two large cities – Hanoi and Ho Chi Minh City – where future growth is expected to come from.
“The population in cities like Can Tho, Vung Tau, Da Nang and Hai Phong have access to products onTOP MOT at very attractive discounts, and the customers in these cities usually jump on the opportunity to buy them,” said Jonsson in an interaction with DEALSTREETASIA.
By targeting customers in other cities, where there is high demand for online purchasing, but not much exposure to online services, when compared to Hanoi and Ho Chi Minh City, TOP MOT has proven there are lot of e-commerce opportunities to tap in Vietnam, despite widely known hurdles in terms of logistics and payment in the “cash-is-king” market.
The challenges in Vietnam have also forced several e-commerce startups to shut shop, despite being venture backed, over the last 18 months.
IDG Ventures-backed Project Lana was one of the Vietnamese e-commerce platforms that terminated business last year, and prior to that Deca.vn had shut shop. Joining these were all of Rocket Internet‘s e-commerce ventures in Vietnam: Foodpanda (taken over by local startup Vietnammm), Zalora (sold to Central Group) and Lazada (sold to Alibaba).
In comments to DEALSTREETASIA, Jonsson said,”Ecommerce in Vietnam is indeed not easy, specifically for B2C businesses that require a sizable up-front investment to be able to process and fulfill orders in a professional manner.”
“There is less and less room for “me too” models – as the market grows, more players are added and competition increases. Unless you solve a specific problem or bring a unique value-add to your customers it will be hard to grow and thrive in the long-run against competitors that may have deeper pockets than what you do,” he added.
Being the pioneer in the flash deal space, coupled with the promising scenario of Vietnam’s young and 90 million population, Jonsson said he was highly confident in his business model, and added that similar startups has done well over the last couple of years in China and other markets.
“E-commerce in Vietnam is not a sprint, it’s a marathon, and we have to be disciplined and focused in each step of the way,” Jonsson added.