HANOI -- South Korean conglomerate Lotte is shutting down Lotte.vn, its Vietnam-focused online marketplace connecting merchants with buyers, citing a change in its retail strategy.
The marketplace will be shut down on Feb. 20, 2020, and merged with SpeedL.vn, an e-commerce website that retails products sold at Lotte's physical supermarket stores in the Southeast Asian country, the company said in a notice to merchants this week.
Lotte attributed the move to a shift in its model to "new retail," a term coined and popularized by Chinese e-commerce giant Alibaba that refers to the blurring boundaries between online and offline retail.
Lotte's announcement comes roughly a week after Vietnamese behemoth Vingroup announced its plans to shut down its e-commerce website Adayroi.com and merge it with its fintech arm VinID. The website, which closed on Dec. 20, now greets visitors with a notice on its demise that explains the move as part of Vingroup's shift to the new retail model.
Lotte's Vietnamese e-commerce unit started operations in 2016, when the South Korean giant said it would allocate as much as $25 million for the business with a target to gain a 20% market share within three years.
However, it only ranked 23rd in terms of web traffic at the end of September 2019, far behind rivals such as Alibaba-backed Lazada, Sea Ltd.'s arm Shopee, and local e-commerce startups Tiki and Sendo, according to a report by online shopping aggregator iPrice.
Vingroup's Adayroi fared no better. Launched in 2014, it reportedly drew tens of millions of dollars in investments from its parent company but never managed to break into the top seven e-commerce websites in the local market.
In March this year, Thailand's Central Group closed its Robins Vietnam online fashion store to concentrate on its physical stores. In 2018, Vietnam's largest electronics retailer MobileWorld Group had pulled the plug on Vuivui.com after two years of operations.
Other Vietnamese online shopping platforms to close include Beyeu, Deca, Lingo, Hotdeal and Muachung, among others.
Vietnam's e-commerce market is estimated to touch $4.6 billion in gross merchandise value this year and projected to reach $23 billion by 2025, according to the e-Conomy SEA 2019 report by Google, Temasek and Bain.
Homegrown startups Sendo and Tiki, which have both closed multimillion-dollar funding rounds, have been taking turns to be the country's second and third-largest e-commerce websites, after market leader Shopee. Coming in at No. 4, Lazada is expected to up its game soon after securing an e-payment license in Vietnam.
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