E-commerce opportunities
Although Covid-19 continues to challenge some of Vietnam’s most important economic sectors, including tourism, foodservice, and traditional and modern retail, it also resulted in the growth of the country’s e-commerce sector. According to the Vietnam eCommerce and Digital Economy Agency (iDEA), e-commerce sales in Vietnam in 2020 were approximately USD 11.8 billion, up 18% over 2019. According to the National E-commerce Development Plan 2021-2025, around 55% of the population is predicted to engage in online shopping by 2025, with B2C e-commerce revenue expected to surge to USD 35 billion by 2025.
Vietnam had 49.3 million e-commerce users in 2020, the highest number in the Southeast Asian region, according to a 2021 report released by Vietnam E-commerce and Digital Economy Agency, an organization governed by the Ministry of Industry and Trade in Vietnam. The average annual spend per customer increased from USD 170 in 2016 to USD 240 in 2020. By 2025, the average value of online purchases of goods and services is anticipated to reach USD 600 per person per year. The Vietnam E-commerce White Paper 2021, built from an official statistical survey in 2020 by the Ministry of Industry and Trade, suggests that 52% of consumers used e-commerce platforms for purchasing food and beverage in 2020.
Key drivers supporting this robust growth include progressive policies by the government of Vietnam, rapid urbanization, a growing middle class with increasing per-capita income, rising internet access (68.7 million internet users as of Jan 2021, with 70% internet penetration) and smartphone users, as well as strong consumer confidence in online shopping. Due to social distancing requirements and concerns with physical contact, Vietnamese consumers have moved towards online channels to purchase essential goods instead of shopping at brick-and-mortar stores.
Consumers are now able to easily place orders online and have the products they need, whether groceries or meals, delivered at home. Competition in e-commerce is fierce. To capture business opportunities and remain competitive, digital shopping platforms are racing to advance technologies, increase product ranges, and expand relationships with suppliers, delivery service providers and financial institutions. All platforms, including websites, apps, and social media, aim to draw consumer attention, and a variety of promotions, such as free delivery, contactless delivery and discount programs, are being offered to boost sales.
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| Category | Popularity |
|---|---|
| Food & Beverage | 52% |
| Clothing, Footwear, Cosmetics | 43% |
| Home Appliances | 33% |
| Book, Stationary, Flowers, Gifts | 26% |
| Train and Air Tickets | 26% |
| Technological and Electronic Devices | 23% |
| Tour and Hotel Booking | 21% |
| Movie and Concert Tickets | 21% |
| Online Consultation and Education | 10% |
| Music, Game, DVD | 8% |
| Spa and Beauty Services | 7% |
| Others | 8% |
Source: Vietnam E-commerce White Paper 2021
Around 52% of online shoppers bought food & beverage products, making it the most popular category amongst online shoppers in Vietnam. This was followed by clothing, footwear, and cosmetics (43%); home appliances (33%); book, stationary, flowers, gifts (26%); train and air tickets (26%); technological and electronic devices (23%); tour and hotel booking (21%); movie and concert tickets (21%); online consultation and education (10%); music, game, DVD (8%); and spa and beauty services (7%).
According to Statista, e-commerce revenue for the food and beverage segment is expected to grow at a CAGR of 34.8% from USD 642 million in 2020 to USD 2,858 million by 2025.
Although Vietnamese consumers are still price-sensitive and seek promotions, with the income levels rising over the past decade, they are now paying more attention to the brand’s reputation and product quality. The reliability of e-commerce platforms is also a key consideration while choosing platforms for online shopping. Customers prefer platforms with user-friendly features and those that organize livestreams for product introductions.
Recommendations on accessing e-commerce channels
Selling via e-commerce channels
Direct listing on e-commerce platforms allows foreign sellers to quickly approach the wider retail market in Vietnam. Major e-platforms in Vietnam have simple procedures for store registration and support foreign companies in listing and selling products without setting up a company in the country, which enables sellers to reduce operational costs. However, a direct listing is only suitable for examining the market prospects, and it is advisable for overseas companies to establish business entities in Vietnam if they aim to continue conducting business in Vietnam in the long run. Shopee, Lazada and Tiki are the three most popular e-commerce platforms in Vietnam, with a collective monthly average number of visitors of more than 100 million.
Indirect sales on e-commerce platforms (via a local representative) are common for those exporters that have not yet established a legal entity in Vietnam. Canadian exporters can utilize an importer or distributor based in Vietnam or any country, as long as the importer or distributor has registered for trading in Vietnam. To import products into Vietnam and sell them on local e-commerce platforms or retail stores, the importer/distributor must have a local trading company and a business registration certificate and trading licence.
Marketing
Vietnamese distributors may require manufacturers or brand owners to bear marketing costs for a particular period in exchange for a lower margin or commission. Even if the Vietnamese distributors/retailers are in charge of marketing activities, they still expect exporters to pay a part of the costs related to the product’s marketing in the local market. It is common to observe that several distributors create sales websites but still list their products on major e-commerce platforms.
Product delivery
E-commerce platforms have partnered with various courier companies to offer express delivery of products. For example, Shopee and Lazada have partnered with Kerry Express, DHL and Ninja Van. Usually, e-commerce platforms select shipping courier partners to deliver products to the buyers. However, in the case of cross-border selling and shipping, most businesses outsource fulfilment services to companies that have experience in international logistics operations.
Language
Although Vietnamese consumers, especially the younger generation, can read and understand English at a moderate level, foreign merchants are recommended to use Vietnamese as the primary language when it comes to product descriptions, marketing campaigns, and customer service.
Payment method
With regards to the payment method for e-commerce transactions, foreign firms should note that Vietnamese consumers prefer the cash-on-delivery (COD) payment method. Though there has been an increase in e-payments, cash is still a dominant means of payment on e-commerce platforms, resulting in higher operating expenses, as the sellers have to pay logistics companies a specific rate of commission for cash collection service.
Returns
Vietnamese consumers prefer shopping on e-commerce platforms that offer prompt customer service, a better shopping experience, and personalization. When disputes arise, customers have to facilitate a return/refund request through the e-commerce platform or make another purchase of products that they prefer. Most of the e-marketplaces claim to solve customers’ concerns about return or refund requests within 15-30 working days. However, in practice, the whole process may take several months due to logistical delays and/or quality re-evaluation.