Lotte, a South Korean conglomerate, is shutting down its Vietnamese online marketplace, lotte.vn, which allows merchants to connect with buyers.
In an email to merchants, the company said the reason is a change in retail strategy, and the site will merge with SpeedLvn, which retails products sold at Lotte’s physical stores. Deal Street Asia reports.
The move is indicative of the trend toward “new retail,” which is the blending of eCommerce and traditional retail. The term was coined by Chinese eCommerce giant Alibaba, and it refers to the broad umbrella of changes in retail as companies continue to adapt to the new world.
Lotte started its eCommerce arm in 2016, allocating $25 million with an eye toward gaining 20 percent market share within three years. But that didn’t work out, as by September 2019, lotte.vn was ranked just 23rd in web traffic, far behind the eCommerce arms of many of their main competitors, such as Alibaba and Sea Ltd.
Lotte’s move isn’t the only such case of larger retailers shying away from eCommerce. Last week, Vietnamese group Vingroup announced a plan to shut down its eCommerce site Adayroi.com, which it formed in 2013, and merge its ePayment business side with its FinTech arm, VinID.
Vingroup justified the decision by saying it would be able to better predict company needs that way. The company is planning to completely exit retail to become a technology and industrial firm, focusing more on smart technology and new types of cars.
Elsewhere, Thailand’s Central Group shut down its website to focus on physical sales in March 2019, and Vietnamese electronic retailer Mobile World Group shuttered its online operation in 2018.
The Vietnamese eCommerce market is projected to hit $4.6 billion this year, and $23 billion by 2025, according to the e-Conomy SEA 2019 report by Google, Temasek and Bain.
And the heavy hitters in that field are different companies. Sendo and Tiki, both homegrown start-ups, have closed multi-million-dollar funding rounds. Both are vying for Vietnam’s second and third largest eCommerce sites, after market leader Shopee. Lazada, which is expected to up its game soon after securing an ePayment license in Vietnam, is coming in fourth place.