Falling farther and farther behind other e-commerce platforms, Lazada has decided to branch out into e-wallet services – a decision with which the company may very well dig its own grave.
Lazada has announced entering the e-wallet market several days ago, which will be released at one of the e-commerce platform’s biggest shopping campaigns next month.
Lazada’s representative said that e-wallet would be a new experience in online shopping aided by technology, logistics, as well as collaboration with banks and card issuers to promote non-cash payment, improve security, and simplify the payment process.
Lazada expects to raise the number of non-cash payment orders. However, its e-wallet is absolutely separate from the Alipay application which has already been deployed in Vietnam by Alibaba, Lazada’s major shareholder.
As a key market in the region, the scale of e-commerce in Vietnam is expected to reach $15 billion by 2025 and Lazada is building a comprehensive strategy with numerous touchpoints to bring new experiences to customers, a company representative said.
However, last year, Lazada kept falling farther behind competition. According to the Map of E-commerce in Vietnam announced by iPrice, in the second quarter of 2019, Lazada fell to the third position in terms of traffic with 28.3 million visits per month) in the quarter, going from first one year ago, following Shopee and Tiki at the leading position.
Additionally, these firms have to burn massive amounts of money on sales and promotion programmes to lure in passengers. Lazada is the e-commerce platform with the largest loss at VND1 trillion ($43.5 million) and its accumulated loss may increase to VND4 trillion ($173.9 million) by the end of 2017, followed by Tiki and Shopee.
Along with the rapid growth of the e-commerce market, non-cash payments have become increasingly popular, with numerous local and foreign players entering the e-wallet scene like AirPay, Moca, Payoo, WePay (VCCorp), Zalo Pay (VNG), Viettel Pay, and MoMo.
It is difficult to calculate the amount these players spent on the e-wallet race, however, most of them report losses and call this a “war of attrition”.
While it is smothered by e-commerce competition, Lazada’s decision to enter another highly contested field is definitely not a conservative, safe option to branch out into a field with solid prospects of growth – and it is difficult to think of a justifiable reason to open a second front while the company is being bled dry in the trenches of e-commerce already.