Lessons for e-commerce companies in times of turbulence: Strategy is to survive!

In the technology market, where competition is fierce and the pace of change is rapid, adaptation and flexibility are the most important lessons emphasized by many experts for technology companies, startups facing the upcoming challenges of 2024.

Survival factors that technology companies need...

A great idea or a business plan alone is not enough to succeed in the technology industry. Faced with new market trends, changing consumer behavior, or the emergence of new competitors, technology companies must constantly adjust, not only to react but also to predict and act proactively.

Companies lacking flexibility, unwilling to change, will be at a disadvantage, as they are likely to be perplexed by unexpected events and unable to effectively respond. On the other hand, companies nurturing adaptive cultures will be better equipped to cope, to identify new opportunities, quickly adjust strategies, and surpass competitors. They are also more resilient when facing failure and better equipped to recover afterward.

Advice for the next steps of Vietnamese e-commerce companies

One of the sectors experiencing the most market fluctuations in the Vietnamese technology world in 2023 was e-commerce.

In 2023, the retail e-commerce market size in Vietnam was estimated at USD 20.5 billion, an increase of about USD 4 billion, equivalent to 25% compared to 2022.

With this high growth rate, the Vietnamese market is both an attractive opportunity and a fierce battlefield for long-standing players, including Lazada, Shopee, or Tiki, and even newcomers like TikTok Shop, along with many companies bidding farewell to users.

Over the past two years, Shopee has had to undergo multiple rounds of layoffs, affecting thousands of employees across all business sectors, replacing business class flights with economy class, cutting other expenses such as dining, hotels, even saving toilet paper, and inevitably facing negative public reactions.

Recently, there has been more information about major changes looming at Lazada regarding cost-cutting, restructuring, and strategic changes, although the company had previously stated that they were not chasing the "burning money" race.

In an exchange with us, Mr. Nguyen Thanh Son, a communications expert, Chairman of MVV Group, believes that overall, the battle of Vietnamese e-commerce players continues to intensify in the context of the global economy and the Vietnamese economy entering a slower growth cycle.

Decreasing purchasing power leads to e-commerce not significantly benefiting from changing consumer behavior trends, and the "cold winter" of capital mobilization makes financial resources to support the process of changing consumer behavior through encouraging buyers and sellers become limited.

"Therefore, this is a survival period for many e-commerce platforms as they face a challenge: they must optimize operations to demonstrate the feasibility of their solutions to investors while continuing to attract both buyers and sellers to their platforms, especially when attracting attention and loyalty from both buyers and sellers becomes costly," he emphasized.

Due to the need to optimize their operations, platforms will face difficulties in introducing new products, while the "latecomers" may leverage their product advantages to develop the market based on the customer base of those who came before.

If Shopee's changes have helped the platform achieve profitability for the first time, then Lazada's restructuring choice is also considered necessary at this time.

Founder of Momentum Works, Jianggan Li, believes that by centralizing functions at the regional level, Lazada can allocate resources more effectively and make faster decisions to address challenges and capture new opportunities. Lazada is transitioning to a longer-term strategy.

"Part of this strategy is also Lazada trying to find the right direction for the organization, striving to compete more effectively," Mr. Li assessed.

According to the leader of this Singapore-based research and venture building company, fundamentally, a business always has to address and consider three issues: decision rights, information exchange, and resource allocation.

Considering bringing these three issues to empower the market or centralizing and deciding on Lazada's own, according to him, there is no plan that is completely right or wrong.

"It depends on how you assess the current context and how you help your business adapt to the situation, as well as the potential changes ahead," Mr. Li evaluated.

The most important lesson at this time, according to MVV Chairman, is the lesson that Jack Ma summarized when talking about Alibaba's success "strategy is to survive”

The battle is no longer between traditional commerce and e-commerce but between e-commerce platforms themselves. Potential competitive opponents like sellers should not be overlooked because with the widespread adoption of technology, the possibility of mini e-commerce platforms emerging from sellers cannot be ruled out, as no one wants to "hunt on the king's land" forever.

On the other hand, Mr. Son also emphasized that as we enter a downward growth cycle of the economy, of course, costs need to be optimized to prepare for a new period of development. Therefore, large expenditures for broad technology development or for awareness-building campaigns and user development will have to be reduced to make room for user exploitation and revenue generation.

In conclusion, this expert stated: "The battle is still fierce, but it will also be a good thing for consumers because fierce competition among players in the market will force them to improve the quality of their services. Looking at what is happening, we can see somewhat the strategy of Lazada. Lazada seems to want to enhance its flexibility and adaptability in the context of the increasingly competitive Southeast Asian e-commerce market."