E-Commerce platforms: The "shock" named Temu

Discounts of 90 percent

Eager to share his experience, Nguyen Phuoc (a resident of District 3, HCMC) mentioned that he purchased a 46-piece multi-functional repair tool kit on Temu, now discounted by over 64 percent to just VND185,456. He highlighted that the prices are attractive, with free shipping and delivery within six days.

The application also provides real-time updates on order status, the delivery person, and a contact number for easy tracking. “Paying in advance with a credit card or Apple Pay is quite convenient. If there's a delay in delivery, I would receive VND25,000 as compensation, and a full refund if the order isn’t delivered within 30 days. I found the prices fairly low, so I decided to order to try it out,” Phuoc shared.

Le Hong (a resident of Tan Binh District, HCMC) also ordered 41 items on Temu, with the total promotional price coming to only VND753,000, compared to the original cost of VND3.6 million. The products also included free shipping.

Similarly, Nguyen Hai Ngoc (a resident of Binh Thanh District, HCMC) said that he purchased several items on Temu with discounts reaching up to 90 percent. “The prices are incredibly low. The product review section displays the countries of previous buyers, such as the USA, UK, Canada, and Japan, to help avoid fake reviews,” Hai Ngoc noted.

The products offered on the Temu e-commerce platform cover a wide range, including fashion apparel, office supplies, instant translation devices, printers, and smartphones, priced from a few tens of thousand Vietnamese dongs to several million Vietnamese dongs per item, depending on the category. Notably, some items are exceptionally cheap, such as iPhone headphones and charging cables, costing less than VND40,000 each, while genuine products typically retail for around VND500,000.

Why are the prices so low? According to some experts, foreign e-commerce platforms like Temu keep prices down by subsidizing shipping costs to boost sales and remain competitive. By eliminating intermediaries (such as importers and distributors), they can provide goods directly from manufacturers to consumers.

Domestic businesses struggle

In an interview with SGGP on October 24, Thai Trang, a trader at An Dong Market (District 5, HCMC), expressed her concerns that the extremely low prices on e-commerce platforms threaten the survival of local businesses.

“These prices are unrealistically low; it's a strategy to aggressively promote and capture market share while suffocating Vietnamese small-sized enterprises. Finished garments from our factory cannot be priced below VND200,000 each, and we must sell above this price to make a minimal profit. Yet, these platforms sell them for around VND100,000 each, leaving local manufacturers at a severe disadvantage,” Thai Trang explained.

Mr. Nguyen Ngoc Luan, CEO of Meet More Company, added that producing a box of coffee costs VND85,000, plus VND20,000 in operational expenses, totaling VND105,000. However, similar products are available on e-commerce platforms at lower prices with free shipping. To compete, businesses are forced to reduce their prices, resulting in diminished profits. Some domestic companies have received offers from Chinese firms to ship goods to the border, but after deducting transportation fees and various discounts, the profit margins are nearly nonexistent.

“Chinese goods entering our market benefit from subsidies and support from the transportation system. Without timely support measures, it will be very difficult for local products to survive,” Mr. Nguyen Ngoc Luan stated.

Mr. Nguyen Ngoc Ty, CEO of Non Son Fashion Company, emphasized the importance of reviewing the business practices of e-commerce platforms. “Platforms that sell quality goods in compliance with regulations should be supported, while those offering counterfeit or substandard products must be addressed promptly,” he stated.

According to the Ministry of Industry and Trade, Vietnam is experiencing rapid growth in online shopping within Southeast Asia. E-commerce revenue in the country is projected to exceed VND310 trillion this year.

By 2025, the Department of E-Commerce and Digital Economy under the Ministry of Industry and Trade aims to expand Vietnam's e-commerce market to US$14.7 billion, approximately VND880 trillion. Despite this significant potential, a YouNet ECI report for Q2-2024 indicates that domestic e-commerce platforms are struggling to compete. The market share of local platforms Tiki and Sendo remains modest compared to their foreign counterparts.