What The Hell America!

Vietnam’s e-commerce platform Sendo, once seen as a homegrown rival to deep-pocketed foreign competitors, shut down its core marketplace on April 15.

While Sendo’s closure stemmed from the dominance of ShopeeiShopeeSingapore-based Shopee, a subsidiary of Sea Ltd., is a major e-commerce platform that operates across Southeast Asia.READ MORE, TikTok Shop, and Lazada, it’s not a full surrender yet. The company has rebranded as Sendo Farm, scaling back its broader e-commerce operations to focus solely on online groceries — a market estimated to be worth $2.8 billion in 2024. Sendo Farm’s model heavily leans on a network of housewives, remote workers, and owners of mom-and-pop stores who have turned their unused fridge space into distribution and pickup centers.

“Sendo’s strategic shift to focus solely on Sendo Farm, divesting from its broader e-commerce operations, highlights the intense competition and gradual consolidation happening within Vietnam’s online market,” Jane Ha, senior marketing manager at international market research company Kantar, told Rest of World. “This transition shows a need for smaller players to adapt and focus on a niche to survive in a market dominated by several large players.”

Between its launch in 2012 and 2021, Sendo served 12.5 million customers in a market that reached 61 million online shoppers by 2023. It had the early mover advantage and the backing of Vietnam’s largest IT company FPT. But by 2024, its market share had fallen below 1%, according to Kantar — a drop that reflects the wider trend in Southeast Asia: over the past three years, numerous homegrown platforms have scaled back or shut down amid rising competition, even as the region’s e-commerce industry has grown 15% a year, according to Singapore-based Cube Asia, an e-commerce market intelligence firm.

Sendo Farm takes orders a day in advance through its app. The next morning, it delivers bulk packages to its ground network — often housewives and small shop owners — who sort and distribute the items in their neighborhoods. Customers can also pick up their orders from the partners’ locations.

Big players like Shopee and Lazada have gained market share by offering discounts and free shipping. These tactics helped them sell a large and diverse volume of products, giving them economies of scale — a key advantage that Sendo could not sustain while competing with its foreign rivals.

“The thing is, if there is no free shipping anymore, there is no product promotion, there is no flash sale or voucher, the customer just stops purchasing,” Duc Pham, who held several roles at Sendo from 2014 to 2021, told Rest of World.

Duc said Sendo had to differentiate itself because all platforms were offering similar products and targeting the same customer base.

The model Sendo chose for its survival draws inspiration from China’s online retail giant Pinduoduo, which shares a parent company with global e-commerce heavyweight Temu. Pinduoduo’s business model centers on encouraging buyers to pool their orders and secure group discounts. In 2021, Sendo Farm launched its first warehouse in Ho Chi Minh City during the Covid-19 lockdown.

Fifty-three-year-old Le Thi Lan struggled to buy groceries in Ho Chi Minh City during the lockdown, until she discovered Sendo Farm on Facebook. “At first I was scared of being scammed,” Lan told Rest of World. “[But] I had to accept the risk.”

Sendo Farm quickly became Sendo’s strategic business, Thao Le, the company’s marketing director, told Rest of World.

In late 2022, as soon as China reopened, Sendo’s CEO Tran Hai Linh and deputy CEO Nguyen Phuong Hoang flew to China to better understand the online grocery business, planning to “do things no one else had done before,” Hoang wrote in a blog post. They talked to partners, delivery hub operators, and customers. Hoang even posed as a job applicant to visit a warehouse belonging to a “famous company in the online grocery business.”

“The valuable information collected was immediately deployed at Sendo after the business trip ended,” Hoang wrote.

Sendo Farm has cultivated 1 million customers, tens of thousands of delivery partners, and hundreds of suppliers of fresh produce and other groceries, according to Thao. Thao said the company purchases groceries directly from the source to reduce intermediary costs and remain competitive.

Nguyen Duy Lu, who previously worked at both Sendo and its Vietnamese rival Tiki, told Rest of World that while Vietnam and China share similarities in how neighborhoods and apartment blocks organize group grocery purchases, Vietnam’s infrastructure still lags behind China’s.

“Production [in Vietnam] is more fragmented; it’s more difficult to monitor input materials, and the number of Sendo users is still not large enough,” Lu said. “So Sendo Farm needs more time.”

Southeast Asia’s e-commerce has been driven mainly by nonperishable goods, like beauty and electronics, but the growth of these categories is slowing, Peem Benjasiriwan, manager at market data and insights firm Cube Asia, told Rest of World. Online groceries offer a new avenue of growth, he added, but it “is quite difficult because they have to invest [a lot of money] in the infrastructure that allows them to keep the product fresh.”

With Sendo Farm using unused fridge space and the free time of people, the platform’s success depends on how well it connects those too busy to shop with those who have time to spare, according to Dang Nguyen, a research fellow at the ARC Centre of Excellence for Automated Decision-Making and Society in Melbourne.

Lan, the Sendo customer in Ho Chi Minh City, became a partner last year, in part because the person running a nearby pickup hub often wasn’t home.

Nguyen Lan Huong became a Sendo Farm customer in 2023 out of curiosity. Soon enough, she was ordering for her relatives and friends, and after a month, she became a Sendo Farm partner, since the closest pickup point was a kilometer away.

The 30-year-old former teacher who is paralyzed in her right arm runs the Sendo Farm hub with the help of her mother, who does deliveries, earning on average 6 million dong ($230) a month. “That’s good enough to cover my expenses,” Huong told Rest of World. Sendo Farm advertises that its partners could earn up to 8 million dong ($308) a month.

What keeps Huong and her relatives and friends coming back to Sendo Farm is its price. “Some things are even cheaper than at my local wet market,” she said.

Meanwhile, competition is heating up. Supermarkets have introduced online shopping options, and big players like Shopee and TikTok Shop are pushing into the segment too.

“In 2024, we’ve seen a significant shift, with beverages and food categories showing the largest increase in value. Shoppers can now conveniently purchase fresh and frozen foods online with same-day delivery options,” Ha from Kantar said.

What has been Sendo Farm’s cost-saving advantage so far, passing last-mile storage and delivery costs onto local partners, may become a barrier to scaling in the future, Nguyen Binh Minh, head of human resource development at Vietnam E-commerce Association (VECOM), told Rest of World.

“To reach industrial scale, they’ll need a transit hub for goods,” which, unlike housewives, can operate round the clock, Minh said.