The Story of Tiki: Investment in E-commerce Could Hardly Yield Quick Returns

Diep Nguyen

16:12 10/07/2018

BizLIVE -

Tiki is not the only e-commerce firm in Vietnam suffering from continual losses. The loss of Tiki in 7 years is equal to the loss of Lazada, another e-commerce platform in just half a year.

The Story of Tiki: Investment in E-commerce Could Hardly Yield Quick Returns

Photo: Inside Retail Asia

In 2016, VNG Corporation, a provider of online games and related services, paid VND 384 billion (US$ 16.62 million) to buy 38% per cent of Tiki, one of the most outstanding start up companies at that time to promote e-commerce. At the time of buying, VNG estimated the value of Tiki at more than VND 1.000 billion (US$ 43.29 million).
However, in the annual financial statements of two most recent years, VNG reported that in 2016 and 2017, VNG suffers accumulated loss of from the e-commerce platform Tiki of VND 282 billion (US$ 12 million).
In 2016, total revenue of Tiki Trading reached more than VND 817 billion (US$ 35.37 million); however because of the high operational cost, Tiki Trading incured loss of around VND 41 billion (US$ 1.75 million). In the mean time, Tiki Jsc, the company that VNG bought 38% share, got the revenue of VND 62.4 billion (US$ 2.84 million), reported loss of about VND 180 billion (US$ 7.79 million).
Also according to the report, by the end of 2016, Tiki incured the accumulated loss of around VND 308 billion (US$ 13.33 million). In VNG annual report of 2017, VNG showed Tiki making a loss of VND282 billion (US$12.26 million) for the year; raising its aggregate losses to VND600 billion (US$25.97 million).
Though suffering from big losses, Tiki remains very attractive to investors as Tiki is still a leading brand in the market. The start up companies like Tiki are not valued on the profit but based on other important criteria like market growth, market share, sales, average purchase value, and customer retention rates. 
Tiki is not the only e-commerce firm in Vietnam suffering from continual losses. The loss of Tiki in 7 years is equal to the loss of Lazada, another e-commerce platform in just half a year. 
The loss from Tiki and Lazada proves that investments in the e-commerce sector could hardly yield quick returns. 

DIEP NGUYEN

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