March 4, 2020 
Vietnam, a nation ravaged by wars and epidemics through its recent history, has shown tremendous grit while establishing itself as one of the world’s fastest-growing economies.
Largely dependent on agricultural produce, Vietnam struggled financially until the United States of America lifted its economic embargo on the Southeast Asian nation in 1994.
But the genuine signs of moving forward were evident after Vietnam and the USA signed a Bilateral Trade Agreement (BTA) in 2000. Since, the GDP has reportedly grown at a rate of 5.1 percent, the highest globally.
The Rise of the eCommerce Ecosystem in Vietnam
Here are some of the contributing factors for the rise of the eCommerce ecosystem in Vietnam.
Improvement in Economy
Improvement in the economy has also led to the Vietnamese embracing e-commerce. In a recent survey, it was discovered that there were 59 million internet users in a population of nearly 96 million. Of the 59 million internet users, GlobalWebIndex reported that 78 percent of that number (users between the ages of 16 and 64) already shop online, be it through mobile phones or computers.
Increase Spend
Though the average spend in the Vietnamese e-commerce industry has been roughly $46 per user, the value of online consumer goods purchases shot up by 30 percent from 2017 to 2018. Over $6 billion was spent in the e-commerce space in 2018, a hike of $1 billion from the previous year. Vietnam’s e-travel sector has been booming in the last few years contributing 59 percent ($3.5 billion in 2018) to Vietnam’s e-commerce industry.
Products/services that ramp up the eCommerce Space
It is one of the few Southeast Asian marketplaces where other electronic products or gadgets or essentials didn’t constitute the largest economic churner. In 2018, consumer goods generated $2.2 billion to the country’s e-commerce value. Fashion and beauty are also notable contributors to the Vietnam e-commerce industry but with digital music, there is a certain lull with the average yearly spend per user being just $1.
That said, the overall e-commerce market is enjoying a spell of great success with overall valuations rising steadily and increasing by 20 percent from 2018 to 2019. The major boost has been with the consumer products marketplace, which is growing at 29 percent every year, while the travel e-commerce market, the largest contributor, could only see a rise of 16 percent from 2017 to 2018.
The Budding Online Grocery Shopping Space
Another encouraging sign of the Vietnam e-commerce industry is that online grocery shopping has witnessed a boom. Among the three fastest growing online grocery marketplaces, from 2017 to 2018, the country saw a rise of a whopping 38 percent. This isn’t just good news for grocery retailers but the entire e-commerce market on a whole as increasing e-grocery sales will entail that Vietnamese are familiarising themselves with online shopping.
At this point, it will be interesting to see the standout e-commerce players that make the biggest impact in Vietnam’s e-commerce industry.
Like most of Southeast Asia, two brands – Shopee and Lazada – enjoy a considerable market share. Between June and August 2019, Shopee had 34 million visits per month, while Lazada had 24 million. It may be no surprise that Shopee’s runaway success could stem from the fact that the website uses a hybrid consumer-to-consumer and business-to-consumer model.
When it seemingly looked like Shopee and Lazada would rule the roost, another brand is making a quiet foray among the heavyweights. Statistics for the period between June and August 2019 revealed that a local platform tiki.vn, a comprehensive product-based website, attracted three million more visits than Lazada.
Interestingly, the Vietnamese e-commerce industry trends are a little confusing. The popularity of e-commerce applications among mobile and computer devices is in no way inter-related. To break it down further, success in the mobile space doesn’t necessarily mean the website enjoys a similar status. Maybe owing to the interface, the nature of the merchandise on the platform or the purpose of the platform, users have marked a clear distinction between mobile and desktop e-commerce models.
Adayroi ranks among the top five shopping apps in Vietnam but the website doesn’t even breach the top-10 most popular e-commerce marketplaces in the country. On the other hand, thegioididong.com, chotot.com, and dienmayxanh.com, all of which are popular local transactional websites, find success as websites but the apps lack the same traction.
Is e-grocery the next big thing in Vietnam?
Circling back to what has been the largest influence on Vietnam’s e-commerce industry in recent years, we will take a look at how the online grocery boom has panned out. As of January 2019, food and personal care items had the smallest share of the market but various models predicted a growth of 40 percent a year, indicating a sign of things to come.
DataReportal’s analysis at the beginning of 2019 revealed that Singapore’s e-grocery market was growing the fastest globally at a rate of 47 percent annually. Malaysia was next, growing at 39 percent a year, with Vietnam hot on its heels (38 percent).
Despite the impressive predicted growth rate and the fact that online grocery spending is expected to double every year, it will still only account for 0.5 percent of the overall grocery revenue. In 2018, Vietnam’s e-commerce industry saw shoppers spend $348 million on online grocery, whereas the country’s total grocery market was estimated at $63 billion.
What slows Vietnam’s e-commerce growth?
Logistical Barriers
United Nations reported that one-third of Vietnam’s population occupy urban areas. Considering a majority of the country still lives in rural areas, there will be mainly logistical barriers posed to the growth of e-commerce, especially the grocery sector that is reliant on timeliness.
Online Payment is still far-fetched
With less than one in 25 adults possessing a credit card and only one in three individuals having a bank account, online payments pose quite the barrier. However, Vietnam has adopted the concept of the mobile wallet, with 40 percent of the population utilizing the payment method.
Conclusion
Weighing the pros and cons of the Vietnamese e-commerce industry, there is little to suggest that the nation cannot compete strongly with global e-commerce forces. The predicted upward spiral of various sectors and increasing awareness of the ease of access to online shopping will definitely see the country move in the right direction in terms of e-commerce prosperity.
Weighing the pros and cons of the Vietnamese e-commerce industry, there is little to suggest that the nation cannot compete strongly with global e-commerce forces. The predicted upward spiral of various sectors and increasing awareness of the ease of access of online shopping will definitely see the country move in the right direction in terms of e-commerce prosperity.
