Value of most e-commerce websites are not widely publicized do there are usually many different rumored numbers going around.
At the end of 2010, it was said that eBay wanted to acquired entirely Chodientu.vn at $15 mil but in the middle of March, 2011, eBay just offered $2 mil for 20%. So, what is the real value of Vietnam’s e-commerce websites?
Criteria for evaluation
To value a website, the world-famous websites like Google Ad Planner, Biz Information base on criteria such as views per day, number of pages, links and rankings in a territory, etc. From these parameters, they calculate the value of a website within a certain period. This calculation is not based on the developmental potential of the website so very low value is often set in comparison with other organizations such as IDG, General Atlantic, etc.
However, according to Mr. Truong Van Quy, CEO of EQ Technology & Communication, the result is not correct because they are evaluated by applying formula without considering other factors like the future of a site.
Mr. Nguyen Hong Truong, IDG’s Director of Business Development and Technology, says there are hundreds of criteria for evaluating a e-commerce website such as future cash flows, revenue or profits. Moreover, there are more than 10 forms of e-commerce so each form has different way of evaluation.
According to Mr. Quy, websites are valued based on their future value and leaders’ potential. For example, when investing in VNG, the investor not only invests in the company but also its leader, Mr. Le Hong Minh or when investing in Vatgia.com, the investor invest in Mr. Nguyen Ngoc Diep’s capacity.
Moreover, investing in Vietnam’s online e-commerce has many risks so investors often considers the potential development of the market, market share enterprises holding and their development direction. Therefore, the prices they set are intended for the future rather than the current.
For example, Google lost half mil a year because of Youtube.com but with its long-term vision, Google is still investing in this web.
The way of evaluation above is sometimes wrong just like the case of eBay acquiring Internet phone Skype at $2.6 bil in 2005. After 4 unsuccessful years inspite of its high expectation, eBay had to sell off Skype.
Value and price
Not too long ago, China’s website Alibaba offered to acquire the e-commerce website Gophatdat.com at $5 mil. However, Gophatdat set the price 3 times than that itself. Is Gophatdat worth that price now that they have nearly disappeared in the market?
Industry insiders value Vatgia.com at about $60 mil. However, it is said that there is a foreign investor values it at $5 bil. That is such a high price but Vatgia.com has never confirmed or given an exact number.
Chodientu.vn is on par with Vatgia.com with the price of around $16-17 mil. However, it is said ChoDienTu has self-valued at $70 mil.
“It’s hard to know the real value of nowadays e-commerce websites. It is an internal matter of investment funds and based on many criteria. Maybe Vatgia or Chodientu hasn’t earned big profits or held such high value but investment funds realize their future potential so they keep investing,” said Mr. Quy of EQ Technology & Communication.
Evaluation of a website is just like the stock market. The higher the demand, the higher the price. However, website’s value is different from its price. A website may be set a high price but not many acquirers are willing to buy it. In contrast, a website may be set a low price but acquirers have to pay a higher price depending on the negotiation of the two parties.
The fact that websites set its own price too high maybe because they don’t wat to sell. Therefore, evaluating the real value of a website is still out of question.