The Vietnamese startup giving small pharmacies a boost

In The Checkout this week, we dive into BuyMed’s ambitions to overhaul Vietnam’s pharma sector and the intensifying fight between Temu and Shein. [Read from your browser]( The Checkout 🛒 --------------------------------------------------------------- Welcome to The Checkout! Delivered every fortnight, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we spotlight: - A startup’s ambitions to [disrupt Vietnam’s retail pharmacy]( - Temu’s lawsuit against Shein for engaging in anti-competitive practices - An under-the-radar D2C firm in Singapore that’s [bootstrapped and profitable]( --------------------------------------------------------------- Hello {NAME} There’s something about frequenting your neighborhood cai fan store and having the vendor remember your order. Or visiting your childhood doctor who knows your medical history at the back of his palm (aided by the log it’s written on of course). Unfortunately, with the commoditization of food and services, often by larger franchises or chains, such “human touch” is at risk of being lost. In Vietnam, mom and pop pharmacies are being driven out of the market by larger drugstore chains like Pharmacity and Long Chau, which are rapidly expanding into lower-tier cities and rural areas. But Buymed, a startup that just raised US$51.5 million in series B funding - significant for a Vietnamese startup, in the midst of a funding winter no less - is hoping to give small drugstores an edge through its B2B ecommerce platform that connects pharmaceutical manufacturers, distributors, clinics, and local pharmacies. This week, my colleague Huong dives deeper into Buymed and how it’s disrupting Vietnam’s retail pharmacy in the Big Story. The fight isn’t always between David and Goliath, though. Shein and Temu, two ecommerce giants, are embroiled in lawsuits against each other as they battle it out for dominance in the US. In this week’s Hot Take, I share some surprising facts gleaned from Temu’s lawsuit against Shein for alleged anti-competitive practices. There’ve been numerous analyses of the ultra-fast fashion sector by observers in recent years but an “insider” account by an industry rival hits differently. -- Melissa  --------------------------------------------------------------- THE BIG STORY [How this UOB-backed startup disrupts Vietnam’s retail pharmacy]( Buymed, which primarily serves mom and pop drugstores, secured the country's largest tech deal in the first half of 2023.  ---------------------------------------------------------------  THE HOT TAKE Takeaways from Temu’s tell-all lawsuit against Shein Here’s what happened: - Chinese online marketplace Temu [filed a lawsuit]( earlier this month accusing rival Shein of engaging in anti-competitive practices. - It accused Shein of forcing manufacturers into signing exclusivity agreements prohibiting them from also working with Temu, leading some to remove products from the latter’s website and to hold back on offering new products on Temu's platform. - Shein is also alleged to have sent thousands of errant copyright notices to Temu, aimed at products that the latter has priced lower than the former. Here’s our take: The ongoing rivalry between Shein and Temu - both Chinese-founded firms that have established themselves in overseas markets - was put on full display when the latter filed a lawsuit against the former this month. From market share, to Shein’s moat, to just how far both companies have pulled ahead of the traditional fast fashion firms, the [court document]( is a tell-all. Here are a few of our key takeaways: 1) Shein’s manufacturers hold the key to any potential ultra-fast fashion challenger. Shein has built its moat around its network of independent, third-party apparel manufacturers in China - approximately 8,338 of them. We already knew that but the documents reveal something more: that Temu’s ambitions to challenge and overtake Shein very much depend on having access to this same network. Temu uses many of these same manufacturers for its own operations - but its access to them is now under threat. According to Temu, the same 8,338 manufacturers represent “70% to 80% of the total number of merchants capable of supplying ultra-fast fashion” and hold a unique and crucial skill set. This includes the ability to create new designs quickly, the agility to shift production to new stock-keeping units (SKUs), and the “expertise and facilities necessary to fit into the efficient logistics and distribution practices necessary to deliver ultra-fast fashion,” Temu says. At the same time, manufacturers dependent on Shein’s dominant market share have to either acquiesce to its demands for exclusivity or face costly penalties. Shein commands an estimated 70% of the ultra-fast fashion market in the US. As long as the status quo remains, Temu - and any potential Shein challenger for that matter - will struggle to topple Shein’s position as the market leader. 2) Ultra-fast fashion firms are no longer competing with Zara and H&M. The document also reveals the extent to which ultra-fast fashion players like Shein and Temu have pulled ahead and are diverging from traditional fast fashion rivals like Zara and H&M. The exclusions imposed by Shein apply explicitly to Temu. The latter alleges that Shein's manufacturers are forced to sign loyalty oaths pledging that they won’t do business with Temu. It also claims that exclusive-dealing agreements do not apply to manufacturers offering similar products for sale on other platforms. Temu considers itself Shein’s “fiercest and most successful competitor, both in terms of manufacturer engagement and consumer satisfaction.” Both Shein and Temu trump traditional fast fashion players in number of styles and products by several orders of magnitude. With their lower price points, sheer range of goods, and more frequent style updates that aren’t dependent on runway trends, ultra-fast fashion firms have pulled ahead to become a distinct category of its own. Temu, at least, does not perceive fast fashion retailers, general ecommerce retailers, and high-end fashion brands to be “close enough substitutes” for ultra-fast fashion purchases. 3) Who will police behavior? Shein’s tactics aren’t unique to the ecommerce sector. It bears similarities to Alibaba’s infamous 二选一 (choose one of two) selling tactic that forced merchants to choose between its platforms or its rivals’. In Alibaba’s case, the Chinese government eventually stepped in to impose an [anti-monopoly law]( to rein in such practices. Alibaba was [fined US$2.8 billion]( for abusing its dominant market position. Over in Southeast Asia, we’ve also [previously reported]( on aggressive selling tactics taken by Shopee, which asked merchants to shut down their Lazada stores on mega-sale days in order to qualify for vouchers. Tokopedia and Lazada have also offered opt-in “priority” agreements with their merchants that preclude them from opening storefronts on other platforms. It’s unclear if China will step in again this time to police Temu and Shein as they are based outside the country - Shein is headquartered in Singapore, Temu in Boston, while Temu’s parent PDD Holdings is in Dublin. Both Shein and Temu also do not sell products to consumers in China. However, with Shein also [accusing Temu of infringing its trademark and copyrights]( and creating imposter Shein Twitter accounts that lead to Temu’s website, among other tactics, the fight may be a long-drawn one.  ---------------------------------------------------------------  NEWS YOU SHOULD KNOW Check out Tech in Asia’s coverage of the ecommerce scene [here](. 1️⃣ [Bukalapak posts $40.7m net profit in Q2 as revenue increases 30%]( A growth driver in the past year for the Indonesian ecommerce player was its marketplace unit, which recorded a 74% increase in revenue to US$45.3 million. 2️⃣ [Blibli’s revenue up 16% in H1 2023, loss narrows by 29%]( While the Indonesia-based ecommerce firm saw a decline in B2C online sales, net revenue from the third-party retail segment - which comprises those selling through the firm’s online commerce and travel agent platforms - grew over 7x. 3️⃣ [Alibaba’s Cainiao opens first warehouse in Greater Jakarta amid regional expansion]( The move adds to its warehouses in Vietnam and Thailand and is part of a long-term plan to support B2B and B2C firms across Southeast Asia. 4️⃣ [Indonesia to ban imported goods below $100 on ecommerce platforms]( The rules are meant to protect the country’s micro, small, and medium-sized enterprises.  FYI 1️⃣ [Carousell seeks user growth via on-platform transactions, but revenue impact uncertain]( This isn't the online classifieds marketplace's first attempt to drive payments on its platform. But will it move the needle on profitability? 2️⃣ [Bootstrapped and profitable: Singapore’s 9-figure D2C secret]( Instead of turning to VC firms, Sant Qiu raised “about a million” dollars by providing consultancy and training services for over four years. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you in a fortnight! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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