Analysis of E-commerce market size and Competitors
The situation of E-commerce development in Vietnam and the world
1.1 E-commerce development in the world:
E-commerce continues to grow strongly across the globe, especially in developing countries where e-commerce originated Development accounts for more than 90% of the total value of global e-commerce transactions, of which North America and Europe alone have reached over 80% E-commerce growth is fastest in North America, followed by Asia-Pacific and Western Europe In Asia, Singapore and China have two countries with rapid e-commerce development and keep up with North American countries In the rest of Asia, e-commerce has developed but is still very slow.
North America Asia Pacific West Europe Latin America
TR IL LI O N U S D O LL AR S
The United States leads the world in e-commerce development, accounting for over 70% of global online sales Year after year, retail sales from e-commerce in the US continue to show significant growth, consistently surpassing previous annual figures.
B2C is the oldest and fastest-growing e-commerce model However, in recent years, the B2B e-commerce model has developed faster
E-commerce in Latin American countries has developed very rapidly in recent years.Venezuela is the country with the fastest growth rate of e-commerce in the region,increasing by 224% in the two years from 2005 to 2007 After Venezuela are Chile,Mexico, and Brazil with similar e-commerce development rates respectively 183%,143%, 116% The country's most popular form of online payment is a credit card B2B e-commerce accounts for 80% of e-commerce transaction value in Latin America.Brazil is the fastest-growing country in the region, followed by Mexico and Argentina.Currently, 88% of B2B e-commerce websites in the region are Brazilian.
1.2 Current status of e-commerce development in Vietnam:
E-commerce has appeared in Vietnam for the past 10 years since the Internet was launched in 1997 However, e-commerce applications have only been really popular in the past 4 years since the Law on Electronic Transactions was promulgated in December 2005 and took effect in March 2006 The promulgation of the Law on Electronic Transactions is considered a turning point for the development of e-commerce in our country This shows that the Vietnamese government has seen the role of e-commerce in economic and social development
In addition to promulgating the law, the government also issued the "Master Plan for E-commerce Development for the period 2006-2010" The objectives of the plan are:
60% of large-scale enterprises conduct business-to-business e-commerce transactions (B2B);
80% of small and medium enterprises know the utility of e-commerce and conduct e-commerce transactions in the form of business-to-consumer (B2C) or business-to-business (B2B);
10% of households conduct e-commerce transactions in the form of business- to-consumer (B2C) or consumer-to-consumer (C2C);
Government procurement offers are published on websites of government agencies and e-commerce transactions in government procurement (B2G).
After 4 years of promulgation of the law as well as a master plan for e-commerce development, in our country e-commerce has been applied in many fields such as:
Businesses in the production and services sector have implemented various e-commerce software solutions to enhance their operations, including accounting management software, enterprise resource management software, sourcing software, and customer database management software.
The rapid growth of online buying and selling has led to a significant increase in virtual markets A study by the Department of E-commerce and Information Technology at the Ministry of Industry and Trade revealed that by the end of 2007, there were 40 B2B e-commerce platforms and 100 B2C platforms in our country, with C2C e-commerce platforms also experiencing swift growth.
Although the number of B2B e-commerce platforms is less than B2C, the revenue growth rate from B2B exchanges is higher
In the financial services and banking sector, our country has introduced electronic banking activities, including electronic goods and securities Consumers can conveniently access e-banking services via the internet through internet banking or through mobile networks using SMS banking.
In the realm of electronic securities, users can access market and account information, register to open accounts, manage their investment portfolios, execute trading orders, and receive updates on transaction results.
Passenger transport companies, particularly in the railway and aviation sectors, have embraced online ticket sales to enhance customer convenience The adoption of electronic ticketing is essential for compliance with the International Air Transport Association (IATA) standards Notably, Jetstar Pacific, previously known as Pacific Airlines, pioneered the sale of e-tickets in Vietnam, launching this service in March 2006.
By the end of 2008, Vietnam had launched various online public services, including electronic customs declarations, tax declarations, and business registration certificates This initiative aimed to expedite the government's "one-stop" plan, fostering a transparent and open environment for public services Additionally, since 2009, Vietnam has implemented e-government procurement, facilitating online bidding for major entities such as VNPT, EVN, and the Hanoi People's Committee.
By the end of 2007, over 30 provinces had approved local e-commerce development programs aimed at enhancing their digital marketplaces by 2010 Notable examples include the Ho Chi Minh City E-commerce Development Program for 2008-2010 and the Bac Ninh Province E-commerce Development Plan for 2007-2010, both of which demonstrate high feasibility and quality in their planning.
Vietnam is increasingly focused on expanding its e-commerce sector while fostering international cooperation The country actively engages in multilateral e-commerce forums such as APEC, UNCITRAL, UN/CEFACT, and UNCTAD Additionally, Vietnam is enhancing bilateral e-commerce partnerships with nations like China to boost trade activities and collaborating with the United States to strengthen personal data protection capabilities.
Many major US corporations in the information technology and e-commerce sectors, including Microsoft, IBM, Intel, IDG, Yahoo!, Google, and eBay, are now officially operating in the Vietnamese market.
Scale of Vietnam's e-commerce in 2025
The SYNC Southeast Asia annual report by Facebook and Bain & Company, released on November 25, highlights Vietnam's leadership in harnessing digital transformation to drive change and capitalize on development opportunities in the post-COVID-19 era.
Despite the challenges posed by the COVID-19 pandemic in 2020, Vietnam's e-commerce sector experienced remarkable growth, establishing itself as one of the fastest-growing markets in Southeast Asia The Vietnam E-commerce White Paper reported an 18% growth rate, with the market size reaching $11.8 billion, making Vietnam the only Southeast Asian country to achieve double-digit e-commerce growth Experts from Google, Temasek, and Bain & Company project that the market will continue to expand at a rate of 16%, potentially exceeding $14 billion Furthermore, the average growth rate from 2020 to 2025 is anticipated to be 29%, with projections suggesting that by 2025, Vietnam's e-commerce could surpass $52 billion, securing the third position in the ASEAN region with a growth rate of 34%, the highest in the area.
Competitors
Vietnam's e-commerce sector is witnessing a new wave of competition, as more businesses enter the market, old businesses deploy more services.
3.1 Rookies" massively entered the market:
Since the beginning of 2020, the e-commerce market has witnessed the massive entry of a series of new businesses The first "big hand" is Nagakawa Group to join the
Nagakawa has entered the e-commerce arena by partnering with leading platforms and launching its online sales website, shop.nagakawa.com.vn The company's ambition is to lead the development of e-commerce in the refrigeration and home industries, positioning itself as a strong competitor to established players like Green Electricity and MediaSmart.
In April 2020, Elise Fashion launched its e-commerce site, www.elise.vn, featuring over 1,500 fashion items, including clothing, handbags, shoes, and accessories Greg Fleming, the CEO of Elise, aims to increase the company's online sales from approximately 1% to 10% by focusing on multi-channel sales development.
Pacific E-Commerce and Advertising Media Joint Stock Company has introduced an innovative application designed to facilitate e-commerce exchange services for brand enthusiasts Notably, this platform leverages advanced machine technology to effectively distinguish between authentic and counterfeit products.
3.2 "Veterans" strengthened to dominate the playing field:
The entry of new recruits into niche markets and the expansion of the ecosystem are revitalizing the market, making it more appealing However, the involvement of financially robust giants equipped with advanced technology poses a significant threat to e-commerce platforms like Lazada, Tiki, Sendo, and Shopee.
In March 2020, Grab launched GrabMart in Ho Chi Minh City, quickly becoming a popular service among users, driver-partners, and business partners The platform has experienced consistent double-digit weekly growth, with a notable increase in both the average number of daily orders and the number of business partners.
As of July 2020, Grub Mart has significantly increased its partner network, expanding services across various provinces and cities to cater to the growing online shopping demands of customers.
Recently, the Vipshop app and VinShop.vn website have emerged on the App Store and CH Play, signaling Vingroup's potential re-entry into the e-commerce sector with the evashop application, which aims to connect retail grocery owners with suppliers.
These movements show that e-commerce continues to be an attractive field for businesses, despite fierce competition.
3.3 Fierce competition between Vietnam e-commerce and foreign e-commerce:
Recently, many Vietnamese enterprises have had to withdraw from the e-commerce market in the process of competing with foreign enterprises.
In December 2019, Vingroup announced its exit from direct retail to concentrate on industry and technology, resulting in the merger of Adayroi’s e-commerce platform into VinID Earlier, in March 2019, Robin Online, previously known as Zalora, suspended all sales activities despite achieving a peak of 965,000 monthly visits in Vietnam.
The Vuivui e-commerce platform, operated by Mobile World, has ceased operations after two years due to insufficient revenue and high operational costs Chairman Nguyen Duc Tai highlighted that running an e-commerce site demands significant capital investment, yet Vuivui.com generated only VND 73 billion annually, which was inadequate for sustainable growth.
The growth of the e-commerce market in Vietnam
Reasons for the development of e-commerce
Reputa's 2021 analysis reveals that the Covid-19 pandemic has played a crucial role in driving substantial growth in the e-commerce market, serving as a catalyst for future innovations and advancements.
The Covid-19 pandemic significantly transformed shopping habits in 2021, disrupting traditional business activities and goods distribution E-commerce emerged as a vital solution, eliminating barriers of space and time, and boosting the consumption of essential goods and agricultural products during the crisis As a result, E-commerce is poised to drive rapid growth in Southeast Asia's Internet economy over the next decade.
1.1 The advent of new technology makes internet access faster:
The rise of smart mobile devices has accelerated the transition to Industry 4.0, significantly increasing the demand for internet access Additionally, the prolonged impact of the COVID-19 pandemic has transformed consumer behaviors, shifting preferences from traditional shopping at markets and supermarkets to online shopping and home delivery services.
The global e-commerce market was valued at USD 9.09 trillion in 2019, with a projected compound annual growth rate (CAGR) of 14.7% from 2020 to 2027 As internet penetration rises, more individuals are using smartphones, leading to a surge in e-commerce opportunities such as digital content, travel, financial services, and online retail This increase in internet users is expected to enhance customers' technical knowledge, positively impacting market growth Additionally, the demand for faster browsing experiences has driven advancements in connectivity, resulting in the widespread adoption of 4G and 5G technologies.
The adoption of 4G and 5G technology is expected to significantly enhance market growth by providing users with a seamless and uninterrupted connectivity experience Additionally, the rapid increase in smartphone usage is further driving customer engagement in online shopping.
E-commerce allows the organization to reach out to more clients, resulting in essential exposure to the firm The increasing importance of online marketing tools such as Google advertisements and Facebook ads is also driving e-commerce Due to the prominence of social media applications, marketing alternatives are aplenty these days, which aids in propelling the e-commerce market along growth paths
Using images of famous people on popular platforms such as Tiktok, and Youtube with attractive words and attractive incentives has made it easier to reach users and fans
The COVID-19 pandemic has significantly accelerated the trend of online shopping, as many consumers turn to digital platforms due to the closure of physical stores This shift has notably affected major economies, including the United States, China, India, and Italy.
Business to Business (B2B) dominated the e-commerce industry in terms of revenue in 2019, with a share of 63.1 percent, and is predicted to grow at the quickest rate from
From 2020 to 2027, the B2B e-commerce sector is projected to grow significantly, fueled by businesses' growing preference for online sales and the acquisition of goods and services Additionally, the rise in smartphone adoption and internet usage will further propel this segment during the forecast period.
Business-to-business (B2B) e-commerce involves the buying and selling of goods and services between companies, offering innovative platforms that reduce operational and inventory costs This trend is anticipated to drive growth in the sector over the coming years Additionally, the emergence of specialized or vertical marketplaces is creating new opportunities within B2B e-commerce, as these markets provide a wide range of products within specific categories Furthermore, specialized marketplaces enhance the shopping experience by offering value-added services like volume discounts and multiple payment options.
The global trend of businesses engaging in B2B e-commerce platforms is on the rise, with companies utilizing either the marketplace model or the direct model In the marketplace model, businesses showcase their products alongside competitors on a shared platform, while in the direct model, companies establish their own private B2B platforms to sell directly to buyers.
1.4 Progressive improvements and changes in the e-commerce platform:
The e-commerce business is becoming more efficient and accessible as technology becomes more widely accepted
The way individuals sell and buy goods and services has changed dramatically thanks to the internet Customers' purchasing experiences are altering as a result of e- commerce or internet retail.
Banks and e-commerce companies are enhancing online security by offering reliable payment gateways, ensuring safe transactions for customers To facilitate seamless online trading, industry players are prioritizing innovative improvements to their business models.
Regional Perspectives
In 2019, the Asia Pacific region held a dominant 55.3 percent share of the e-commerce market and is expected to experience the fastest growth from 2020 to 2027 This surge is primarily attributed to an increasing trend among businesses to utilize B2B e-commerce platforms Additionally, improvements in infrastructure and a rise in internet users are anticipated to further propel market expansion in the region.
According to the SYNC Southeast Asia report, Vietnam is positioned at the forefront of driving change and capitalizing on opportunities in the region's digital economy, particularly in the post-pandemic era As a key player in a vibrant and rapidly evolving region, Vietnam is well-placed to thrive through digital transformation The country's strategic location and adaptability make it an ideal hub for innovation and growth in Southeast Asia's digital landscape.
Southeast Asia is described as a pioneer in digital transformation in Asia-Pacific, withVietnam as one of the best performers, according to the research
According to the survey, seven out of ten Vietnamese consumers have access to the internet, and the country will have 53 million digital users by the end of 2021
In Vietnam, online consumer purchasing saw a 50% increase in goods categories compared to 2020, alongside a 40% rise in the number of online retailers This growth contributed to a 1.5-fold surge in total online retail sales across the nation.
Within the last three months, 49% of Vietnamese consumers migrated to a new online marketplace, citing price incentives (45%), product quality (34%), and availability of goods as reasons (33 percent).
THE E-COMMERCE MARKET IN VIETNAM
Thegioididong.com is the leading player in the Vietnamese eCommerce sector, generating $335 million in revenue in 2021 Fptshop.com.vn ranks second with a revenue of $254 million, while shop.vn follows closely behind.
$234 million In all, the top three stores in Vietnam contribute 10% of all online revenue
Vietnam is the 25th largest eCommerce market, ahead of Norway and behind the United Arab Emirates, with sales of US$8 billion in 2021
In 2021, the Vietnamese eCommerce market experienced a remarkable 24% growth, aligning with a global increase of 29% The rise in online shopping is evident, as new markets emerge and existing ones continue to expand This trend is expected to persist in the coming years, particularly in East and Southeast Asia, where the burgeoning middle class and underdeveloped offline purchasing infrastructure are set to drive significant growth in the eCommerce sector.
The E-Commerce market includes online sales of tangible commodities to private end-users (B2C) This definition includes purchases done on a computer, as well as transactions made on smartphones and tablets.
Reasons to Invest in the E-Commerce Industry in Vietnam
In Vietnam, e-commerce is growing, with nearly half of the population utilizing it by 2020, up from roughly 28% in 2017 Vietnam is expected to become a significant e-commerce hubby 2025.
Vietnam stands out in the ASEAN region for its advantageous regulatory environment for e-commerce startups As of 2021, the country has entered into thirteen free trade agreements (FTAs), facilitating the import and export of goods with reduced or eliminated tariffs.
Vietnam's e-commerce landscape is thriving with platforms like Tiki, Shopee, Lazada, and Thegioididong showcasing the country's potential in digital commerce A notable investment from Japan's SBI Holdings, amounting to US$51 million in Sendo.vn, further highlights this growth Additionally, regional giants Grab and Gojek are considering the implications of a potential merger, indicating a dynamic shift in the competitive landscape.
Vietnam's digital economy is projected to reach a value of $220 billion by 2030, drawing interest from major corporations like Goldman Sachs and JD.com By 2025, eCommerce is expected to represent 10% of all retail sales in the country, with online shopping in Ho Chi Minh City and Hanoi potentially surpassing 50% of total sales.
Number of recognized and registered e-commerce sites in
E-commerce Via mobile app The company's website Social media 0%
Number of people accessing shopping platforms in 2021.
According to the chart above, the online business before the pandemic was small and quite limited with the percentage of online businesses decreasing.
ECommerce Concept
E-commerce or e-commerce refers to the form of business transactions conducted online The most common e-commerce is the purchase and sale of products or services through the Internet or on any device These transactions will include purchase,payment, order, advertising, delivery,
Overview of Vietnam's e-commerce market today
Since the Covid-19 pandemic, Vietnam's e-commerce market has experienced rapid growth, expanding across various sectors and becoming a widely recognized business model among companies and consumers The integration of diverse activities, participants, operational processes, and supply chains, supported by robust Internet infrastructure and modern technology, has established e-commerce as a crucial pillar in the development of the country's digital economy.
Since 2015, Vietnam's e-commerce market has experienced significant growth, tripling from approximately VND 90.1 trillion in 2015 to VND 315 trillion in 2021 Projections from the Ministry of Industry and Trade indicate that by 2025, this market could reach nearly VND 400 trillion, positioning it to potentially surpass Thailand's e-commerce sector in the near future.
Scale of Vietnam E-commerce market (unit: tril- lion DONG)
E-commerce Market Trends
The 2020 pandemic significantly transformed customer behavior, leading to a remarkable sales increase of up to 30% driven by unprecedented consumer demand Additionally, it is essential to recognize key market trends that emerged between 2020 and 2022, which continue to shape the industry landscape.
3.1 The trend of turning social networks into sales channels:
In Vietnam, social commerce thrives on platforms like Facebook, YouTube, Instagram, and the emerging TikTok, each offering unique advantages for sales tailored to various product types The integration of e-commerce features within these social networks presents significant opportunities for businesses, enabling users to conveniently shop from partner retailers without exiting the app.
Facebook, the leading social networking platform, promotes the use of its integrated Facebook Shop feature for retailers, making product uploads easier In 2020, Instagram introduced a Shopping tab that enhances user experience by allowing individuals to explore personalized product recommendations.
According to a 2019 survey by the E-Commerce Agency, 95% of online stores leverage social media for sales promotion, with 38% utilizing Twitter and 48% opting for Instagram Notably, all online stores in the food and personal health sectors exclusively use Instagram and Facebook for their marketing efforts.
3.2 Trends in the variety of payment methods:
COVID-19 has made Vietnamese consumers wary of cash payments It's no surprise that e-wallets and digital banking have seen a surge in popularity Most online and
Vietnamese stores use social network sales
2.5 offline stores now accept digital payments through the mobile app The top players in this rapidly emerging landscape include VNPay, Momo, and ShopeePay.
Experts predict a significant shift in payment methods, with cash usage declining in favor of e-wallets and wire transfers This trend highlights the growing acceptance and robust development of the electronic payment market in Vietnam.
Payment Methods For Online Shopping
Card Transfer Cash E-wallet Other
3.3 Trends in the use of domestic brands and retail retailers:
In the wake of the epidemic's significant economic impact, many consumers are increasingly supporting domestic SMEs, which has led to a boost in sales and business sustainability for these enterprises Additionally, a recent survey indicates that 65% of consumers prefer purchasing from environmentally sustainable brands, highlighting a growing trend towards responsible consumerism.
The emphasis on "green consumption" and sustainable development highlights the commitment of brands to environmentally friendly practices As consumer habits evolve, Mr Brad Houldsworth forecasts that this trend will increasingly shape the market in the years ahead.
A recent report reveals that approximately 35% of consumers in Vietnam identify as environmental activists or eco-conscious individuals, which is notably lower than the global average of 59% However, there has been a significant shift in attitudes towards environmentalism in Vietnam over the past few years, primarily driven by various outreach campaigns designed to influence consumer behavior.
Eco Dismissers Eco Consideres Eco Acitves
In today's information-saturated world, brands face intense competition for consumer attention, making visual communication essential Businesses are leveraging high-quality photography, videos, and augmented reality (AR) to engage customers effectively Similar to a multichannel strategy, visual commerce can significantly boost revenue, with Shopify research indicating that customers who view a product in AR are 65% more likely to complete a purchase.
Demographics and Market Segmentation
Definition
1.1 Demographicsis a very popular type of market segmentation and requires market classification based on age, gender, income, race, etc At a minimum, most companies have a general idea of getting their product purchased demographics.
1.2 Market Segmentation is the process of dividing the overall market into different groups of customers according to certain criteria so that each group of customers has the same characteristics, needs, and buying behaviors.
Segmentation by geographic location
Percentage of new online consumers in the first half of 2021
New online consumers( suburbs area) New online consumers(inner city area)
Contrary to the belief that e-commerce is predominantly thriving in large, developed cities, recent data reveals a significant shift in user demographics While major urban centers like Hanoi and Ho Chi Minh City show signs of market saturation, nearly 4.5 million new online consumers emerged from suburban areas, representing 55% of Vietnam's total 8 million new online consumers in the first half of 2021 This trend indicates a burgeoning e-commerce market in Vietnam, highlighting the gradual narrowing of the gap between urban, suburban, and rural areas.
The e-commerce market in the region is experiencing a gradual decline, yet the potential for growth remains significant due to several factors The limited market model has failed to capture the interest of companies, while underdeveloped internet infrastructure hampers online transactions Additionally, discrepancies in delivery services create challenges for consumers, and lingering doubts about service reliability further inhibit market expansion.
Market segmentation by demographic
A 2021 report from DataReportal reveals that in Vietnam, over 85% of digital users aged 35-44 (Generation Y), nearly 84% of those aged 45-54 (Generation X), and more than 75% of users aged 55-64 (Boomers II) made at least one online purchase in January 2021 These statistics highlight the widespread appeal of e-commerce across all generations, challenging the common belief that online shopping is primarily a young person's activity.
Generation Y(35-> 44) Generation X(45-> 54) Generation Boomers II
Online purchase rate of at least one product by
Online purchase rate of at least one product by January 2021
The average income varies significantly by age, as illustrated in the chart During adolescence, individuals typically rely on parental support, resulting in an income classification of type 6, ranging from 0 to 1,499,000 VND As they transition into young adulthood, many begin earning through part-time jobs, placing their income in type 5 In contrast, adults and middle-aged individuals enjoy more stable and diversified income sources, with adults predominantly falling into income group 2, while middle-aged individuals exhibit a more balanced distribution across income groups, with type 2 being the most common.
E-commerce offers opportunities for individuals of all ages to enter the market, with the potential for higher value goods correlating with different age groups.
Adolescence Young people Adults Middle-aged
Income structure of people in different age groups in Vietnam
From 0-1,499,000VND From 1,500,000VND- 2,999,000VND From 3,000,000VND- 4,999,000VND From 5,000,000VND- 7,499,000VND
Từ 7,500,000VND- 14,999,000VND From 15,000,000VND- 29,999,000VND
Online shopping in Vietnam shows significant trends, with consumers spending over VND 5 million representing the largest share at 35% Those spending between VND 3 million and VND 5 million make up 22%, while purchases ranging from VND 1 million to VND 3 million account for 26% Additionally, the average online shopping value per person reached 202 USD, reflecting an 8.6% increase in 2020.
Market segmentation according to psychology and preferences
Sp a s erv ice s, b ea uty
DV D, vid eo , m usi c, g am e
Co ns ulti ng , tr ain ing
Sta tio ne ry, bo oks
Clo thi ng , sh oe s, c osm eti cs
Air far e, tra in tic ket s, b us tic ket s
Bo ok ho tel s, t ou rs
Các mặt hàng được mua trực tuyến phổ biến
Online consumers predominantly favor spa services, DVDs, videos, and games, each capturing 45% of preferences, which is more than double the 20% for electronics Consulting and training services rank third, accounting for nearly 40% of consumer interest Meanwhile, office supplies, airfare, and hotel bookings lag behind, each at approximately 25%.
Vietnamese consumers are increasingly embracing online shopping, shifting from traditional face-to-face business interactions to a preference for digital transactions This change reflects their growing comfort with and appreciation for the convenience of purchasing products online.
Market segmentation by behavior
Friends, relatives introduced View comments, reviews View ads
Wed/ Reputablely labeled app Wed/Application registered with the Ministry of Industry and Trade other
Reasons for choosing wed site/Application.
Wed/App Design Information privacy policy
How to order Customer Service Return and exchange policy
Shipping and delivery Payment method Seller's reputation Quality of goods/services
Customer factors of in- terest
Modern consumers prioritize aesthetics and information security policies, which together influence approximately 90% of their purchasing decisions Following these factors, the complexity of the ordering process plays a significant role, accounting for nearly 60% of consumer interest In contrast, price is a minor consideration in the decision-making process, contributing only a small fraction, while other factors collectively represent about 30% Ultimately, today's buyers place greater importance on personal information security and convenience over simple price comparisons.
When selecting a website to visit, various factors play a crucial role in the decision-making process Notably, the highest influencing factor has a rate of nearly 0.8, which highlights its significance Interestingly, it is surprising that advertisements do not rank among the top reasons for website visits.
E-commerce offers consumers a wider selection of products and services, significantly reduces the time and travel expenses associated with shopping, and provides opportunities to purchase items at lower prices Additionally, it enhances access to valuable information, empowering consumers to make informed decisions.
PROFITABILITY OF THE E-COMMERCE MARKET
E-commerce "crowned" in covid-19 pandemic
During the Vietnam E-commerce Panorama Forum 2021, held by the Vietnam E-Commerce Association on April 20, experts highlighted that despite the adverse effects of the Covid-19 pandemic on most economic sectors in 2020, Vietnam's e-commerce sector experienced significant growth, achieving the highest growth rate in Southeast Asia.
In August 2021, Lazada, Southeast Asia's leading e-commerce platform, reported that 52% of sellers across Indonesia, the Philippines, Thailand, Vietnam, Malaysia, and Singapore experienced significant revenue growth in the first half of the year.
2021, while 70% expected that the revenue growth would continue to be increased by 10% in the third quarter of 2021.
By the end of 2020, Vietnam emerged as one of Southeast Asia's fastest-growing e-commerce markets, ranking just behind Indonesia Alongside Indonesia, Vietnam experienced significant increases in e-commerce website traffic, highlighting its robust growth in the region.
In Vietnam, according to the E-commerce White Paper 2021, B2C e-commerce revenue has also continuously increased sharply in the past 5 years Specifically, in
From 2016 to 2020, Vietnam's digital economy experienced significant growth, increasing from 5 billion USD in 2016 to 11.8 billion USD in 2020, marking an 18% rise from the previous year Projections by major global firms like Google, Temasek, and Bain & Company suggest that by 2025, Vietnam's digital economy could exceed 52 billion USD, positioning it as the third largest in the ASEAN region.
In particular, Google's Southeast Asian internet economic report forecasts that Vietnam's e-commerce will reach about US$29 billion by 2025 with a growth rate of 34% compared to 2020.
By 2020, Vietnam boasted the highest percentage of new online shoppers in the region, accounting for approximately 41% of its total online shopper base In comparison, Southeast Asia's average stood at around 36%, with Indonesia and the Philippines at 37%, Malaysia at 36%, and both Singapore and Thailand at 30%.
According to the annual report "SYNC Southeast Asia" released by Facebook and Bain & Company on November 25, 2021, Vietnam is projected to become the fastest-growing e-commerce market in Southeast Asia by 2026, with a total e-commerce merchandise value (GMV) expected to reach $56 billion—4.5 times the estimated value for 2021 The country is leading the way in embracing digital transformation and capitalizing on development opportunities in the post-COVID era.
A recent study involving approximately 16,700 digital consumers and over 20 senior staff across six Southeast Asian nations, including 3,579 participants from Vietnam, highlights Southeast Asia's leadership in digital transformation within the Asia-Pacific region, with Vietnam recognized as one of the top-performing countries.
Changing traditional buying habits
In 2021, Vietnam's e-commerce experienced significant growth, becoming a key driver of socio-economic development and shaping new consumption trends The variety of goods purchased by Vietnamese online shoppers surged by 50% compared to 2020, while the number of online stores increased by 40% year-on-year, resulting in a 1.5-fold rise in total online retail sales nationwide Notably, 49% of Vietnamese consumers transitioned to online shopping in the past three months, motivated primarily by price incentives (45%), product quality (34%), and product availability (33%).
The Industrial Revolution 4.0 has significantly boosted e-commerce, leading to the rise of online sales through platforms like Amazon, Alibaba, Sendo, and Shopee This shift has made online shopping a primary, safe, and efficient distribution method, particularly during the pandemic, ensuring that essential goods are readily available to consumers.
Lazada Vietnam's report covers e-commerce in Southeast Asia and Vietnam in
2021, where e-commerce has promoted and contributed strongly to economic growth in the context of the pandemic.
In 2021, despite the challenges posed by the Covid-19 pandemic, Southeast Asia's digital economy thrived, with e-commerce emerging as the primary growth driver Statista reports that the region's e-commerce market has surged 24 times over the past six years, escalating from 5 billion USD.
2015 to 120 billion USD in 2021; and is expected to reach 234 billion USD by 2025. Vietnam's retail e-commerce market is forecasted to increase by 300%, from 13 billion USD in 2021 to 39 billion USD in 2025.
The report highlights that the growth in the e-commerce sector is primarily fueled by the rising trend of online grocery shopping, an influx of new sellers eager to expand their businesses through digital platforms, and the positive consumer engagement with Shoppertainment activities.
(shopping combined with entertainment) In particular, the strong investment in internal logistics systems has helped e-commerce platforms to solve the difficult supply chain disruption problem in the past year.
The COVID-19 pandemic has significantly transformed consumer shopping habits, leading to a surge in e-commerce As more consumers turn to online shopping, businesses have a prime opportunity to enhance their digital media strategies and strengthen their online presence E-commerce has emerged as a preferred transaction method for both businesses and consumers, driving the trend of shifting from traditional business models to digital platforms This transition not only addresses current market challenges but also provides effective solutions for businesses to expand their reach and optimize flexible export resources.
In 2021, there was a significant shift in consumer habits, with a broader age range of online shoppers engaging with e-commerce platforms This trend is characterized by increased time spent on these platforms and a greater willingness to place larger and more valuable orders.
Outstanding development trends
A significant 58% of Vietnamese consumers express their intention to continue shopping at department stores through e-commerce platforms, highlighting the convenience of this method Furthermore, 53% acknowledge that online shopping at department stores has integrated into their daily lives, reflecting a shift in consumer habits.
Vietnamese consumers are increasingly willing to spend more online, with a notable rise in the percentage of shoppers making purchases over 5 million VND in 2020 compared to 2019 Lazada reported impressive order values, including a single order reaching 300 million VND and an average of 50 million VND per order Additionally, the LazMall genuine store system gained traction in 2021, further enhancing the online shopping experience.
Analyzing changes in the sales audience, the report found that e-commerce platforms attracted more sellers, especially from FMCG’s fast-moving consumer goods.
Recent reports from Lazada Vietnam indicate that the number of sellers in Q2 2021 has doubled compared to the same period last year Additionally, the third quarter witnessed significant participation from major food and beverage (F&B) brands on the platform This surge has led to the highest growth in the number of fast-moving consumer goods (FMCG) sellers in 2021.
In the past year, there has been a notable rise in new sellers from non-urban areas, with Lazada reporting that 40% of new sellers on its platform originate from these regions during the first 11 months of 2021 In contrast, new sellers from Hanoi and Ho Chi Minh City account for 29% and 31%, respectively.
How are businesses adapting to the new normal?
Experts highlight that the key distinction between online and offline businesses lies in the aspects of experience and connection While offline shopping allows customers to physically interact with products, online sellers must invest additional effort to establish trust and engagement with their audience.
Shoppertainment, a shopping strategy that merges entertainment with activities like live streams and product reviews, is essential for brands and sellers to drive revenue For instance, during the peak of social distancing in 2021, the LazGame "Lizzie Star" attracted over 750,000 players, leading to a 22-fold increase in revenue from LazLive Additionally, Lazada's 11.11 Shopping Festival saw the SuperShow concert garner 26 million views, resulting in a 20-fold boost in sales through the event.
Last year, logistics emerged as a key differentiator for e-commerce platforms, driven by strategic investments in internal infrastructure and community initiatives Lazada implemented various measures to enhance stability and expedite delivery, effectively addressing the essential needs of consumers In response to the extended social distancing measures in Ho Chi Minh City, Lazada proactively established five additional satellite sorting centers in Tan Phu, District 4, Thu Duc City, and Hoc Mon District, ensuring timely goods distribution.
AI technology is also applied to the delivery stage to ensure the shortest transportation route.
During the 2021 Shopping Festival, Lazada set a remarkable record for the fastest delivery, completing an order in just 30 minutes Even more impressively, at the 12.12 Shopping Festival, Lazada reduced this time to an astonishing 8 minutes, showcasing their commitment to rapid delivery and exceptional customer service.
The global e-commerce market is projected to experience substantial revenue growth in the upcoming years, as highlighted in the 2021 Vietnam E-commerce White Paper published by the Department of E-commerce and Digital Economy According to a report from eMarketer, global B2C e-commerce revenue surged from $4,280 billion in 2020 to an anticipated $4,891 billion in 2021, with projections reaching $5,424 billion by 2022.
2023, revenue will reach $ 5,908 billion and in 2024, $ 6,388 billion.
Success factors of the e-commerce market in Vietnam
Social commerce - take advantage of social networking as a potential commercial channel
From late 2021 to early 2022, a significant trend emerged that integrated e-commerce with social media platforms This strategy leverages the vast user bases of popular networks like Facebook and Instagram, allowing businesses to reach and engage with a large audience effectively.
Twitter, or most recently TikTok, helps sellers and brands increase engagement with customers
According to a survey by Remarkable Commerce, more than 90% of social media users access their favorite platforms using a mobile device 54% use social media to research products and shop
Social media platforms enable users to effortlessly discover quality products through engaging activities like commenting, live streaming, shopping, and product evaluations, all enhanced by vivid visuals This interactive environment not only helps consumers find the right items but also allows sellers and brands to connect with a broader audience, expand their customer base, and boost their visibility Consequently, incentive programs and marketing campaigns have become more effective in driving engagement and sales.
A livestream of shopping on the Lazada app Photo source: Lazada Vietnam
Utilizing modern technologies like 3D images, 360-degree videos, AI, and live streaming on social networks can enhance the shopping experience, making it more user-friendly and engaging for customers.
A Nielsen report reveals that 63% of consumers continue to embrace online shopping habits in the new normal, despite the resurgence of traditional sales Many users cite the convenience, time savings, and year-round deep incentives of online shopping as key reasons for maintaining this preference.
Shoppertainment is becoming increasingly popular, blending shopping with entertainment to help consumers unwind after a long day Both small retailers and major domestic and international brands are tapping into this trend Notably, live streaming product launches and sharing customer experiences over the past year has enabled many brands to achieve record sales.
During the "New Year, Sale to" shopping festival from January 5-14, 2022, Lazada experienced a remarkable 2.5-fold increase in users engaging with Livestream, with orders on the LazLive channel quadrupling Livestream views surged over four times, reflecting strong user enthusiasm for entertainment content at The Spring Online Festival, including events like Tet Gala and Loto Sale Additionally, LazLive achieved nearly an 8-fold increase in sales compared to the same period last year.
Recent data indicates a growing trend of consumers engaging with entertainment content through e-commerce and live streaming platforms The original content produced by live streamers, sellers, and brands has emerged as a significant asset for enhancing e-commerce channels.
Users can enhance their experience with products by sharing reviews, short videos, unboxing content, and usage instructions on their pages This approach not only serves as a modern marketing strategy that boosts sales and encourages shopping but also empowers consumers to make more informed purchasing decisions.
Personalization to provide the optimal user experience
This year, personalizing the user experience is a crucial e-commerce trend that can significantly enhance customer satisfaction for businesses, sellers, and brand partners alike.
According to Remarkable Commerce's report, 80% of consumers prefer shopping from brands and e-commerce sites that offer personalized experiences and appealing incentives Additionally, online platforms that focus on enhancing user personalization have seen a 20% increase in order conversion rates.
According to Lazada Vietnam's e-commerce panorama report and market trends
In 2022, personalization aims to improve the shopping experience for customers By aggregating information with customer consent, e-commerce platforms and sellers can enhance the multi-channel shopping journey, ultimately leading to a more satisfying user experience.
AI technology enhances the e-commerce journey by streamlining information collection and processing, allowing platforms to tailor experiences to individual consumer habits and preferences By analyzing collected data, e-commerce businesses can gain deeper insights into customer behavior, leading to improved personalized experiences that boost order conversion rates.
Personalizing the shopping experience enables brokers to better understand consumer spending habits Additionally, the variety of payment options—such as e-wallets, bank cards, credit cards, and cash on delivery (COD)—is tailored to meet the diverse needs of all consumers.
Electronics and consumer goods industry quickly ascends to the throne
The pandemic has significantly altered consumer behaviors and impacted sales across various industries on e-commerce platforms During the fourth wave of Covid-19 in 2021, the Fast-Moving Consumer Goods (FMCG) sector experienced remarkable growth, evident in the surge of orders and sales, as well as an increase in the number of new sellers entering the market.
Lazada Vietnam's recent reports indicate that new seller registrations in the second quarter of 2021 doubled compared to the same period in 2020 This growth continued into the third quarter, with new sellers increasing by more than 1.5 times, and the upward trend persisted through the end of the year.
In the past year, numerous food, beverage, and restaurant brands in the F&B sector have leveraged applications to enhance conversion and business on Lazada Established partners like Nestlé and Vinamilk, along with emerging brands such as Star Kombucha, have consistently achieved impressive sales and order records.
The surge in e-commerce has resulted in a significant increase in the number of sellers over the past year, particularly in the fashion, home & lifestyle, and electronics sectors, which have demonstrated strong appeal through impressive sales figures.
Prominent among the brands that achieved "huge" sales in the shopping festival
"New Tet, sale " recently on Lazada is the brand Of Co, founded by Mr Le Duc Duy.
During the recent Tet campaign, Ms Cuong's brand saw a remarkable boost in order conversion rates by participating in promotional programs such as "Deal with Loc Phat 68k price, 88k pronoun" and Freeship Max, leading to a threefold increase in sales and orders.
Mr Pham Minh Hoang's Inuka Store experienced a remarkable increase in sales, doubling during the "New Tet, big sale" shopping festival He noted that the monthly growth rate for the booth is consistently between 20-30%, with major campaigns driving this figure to soar by 3-4 times the usual rate.
In 2021, Lazada Vietnam reported significant data indicating that the e-commerce industry is set to thrive in 2022, showcasing emerging trends Representatives from Lazada emphasized their commitment to assisting partner brands and sellers in overcoming new challenges while enhancing the user experience through various promotional campaigns and shopping festivals.
Foreign investment
The Vietnamese e-commerce market is experiencing significant growth and competition due to substantial foreign investment In 2018, Japan's SBI Holdings invested an additional USD 51 million in Sendo, while Alibaba contributed USD 2 billion to Lazada Southeast Asia Additionally, SEA increased its charter capital for Shopee Vietnam by 1,200 billion VND (approximately USD 50 million) These investments highlight the attractiveness and development potential of Vietnam's e-commerce sector, intensifying competition between domestic and foreign enterprises.
Logistics services
The rapid growth of the e-commerce market has been significantly fueled by advancements in logistics services, particularly last-mile delivery and order fulfillment In Vietnam, leading e-commerce companies are racing to enhance delivery speeds and improve customer experiences For instance, DHL has committed to offering same-day delivery, while Lazada has launched a fast service initiative, and Tiki is implementing its own strategies to boost efficiency.
Shopee offers a "declaration" of delivery within 2 hours and commits to a 4-hour delivery timeframe through its Shopee Express service A survey by the E-commerce Association reveals that Vietnam currently has over 50 fast delivery units, a number that has surged tenfold in the past five years Additionally, online payment trends are experiencing significant growth; in 2019, the preferred payment method among online shoppers was cash on delivery (COD), making up 86%, while domestic ATM cards accounted for 39% and debit/credit cards for 17%.
Resources and equipment needed for an E-Commerce startup
Hiring a team and finding vendors
Starting an eCommerce business is appealing because it requires minimal personnel to launch While hiring additional staff for site management, product packing, and order shipping is an option, it's also feasible to handle these tasks independently.
If you decide you want to build an in-house team, you can expect to pay:
When managing inventory, it's crucial to evaluate costs effectively Whether producing items in-house or sourcing from suppliers, it's essential to partner with vendors that provide high-quality products at competitive prices.
Obtaining insurance and permits for an eCommerce startup
Even though you’re selling your products online and don’t have a physical store, you’ll still need several licenses and permits before you can begin trading These can include:
Professional licenses specific to your industry
In most cases, you’ll need to pay a fee to obtain the necessary paperwork Contact your local authority to find out the rates in your state.
Choosing an integrated payment solution
When starting a new eCommerce business, it's essential to choose a payment system that is efficient, secure, and user-friendly The costs associated with a complete point-of-sale system can differ significantly; some providers charge a flat fee for their services, while others impose transaction-based fees.
Shop around to find a payment processor that meets your needs and that gives you scope to grow in the future.
For more information on how payment processing works, read our Credit CardPayment Processing 101 Guide.
Marketing
Most online shoppers won't stumble upon your store by chance, making effective marketing essential for eCommerce success Search engines rank websites based on algorithms, influencing visibility on results pages Typically, eCommerce businesses allocate 7% to 12% of their total revenue to marketing efforts, which fund ad, social media, and email campaigns aimed at enhancing brand awareness and increasing traffic to online stores.
E-commerce is currently a global trend, attracting great interest from traditional, multinational businesses It is considered a fertile ground for young businesses to develop, and in Vietnam, e-commerce still occupies most of the spotlight in the economic and commercial sectors because it possesses a large market, open business opportunities, and huge potential Moreover, Vietnam is rated as one of the fastest- growing e-commerce markets in Southeast Asia, behind only Indonesia, with the highest proportion of online shoppers in Vietnam (SEA) at 41% It can be seen that e- commerce is the main catalyst to help our economy close the gap, and even integrate with the world economy.
https://www.globaldata.com/vietnams-e-commerce-market-reach-us13-1bn- 2020-says-globaldata
https://www.vietdata.vn/thuong-mai-dien-tu-viet-nam-1262137008(Nguồn: Cục Thương mại điện tử Việt Nam, iprice.vn,)
Thống kê về Mua sắm trực tuyến, Thương mại điện tử và Internet (2022) (webhostingsecretrevealed.net)
Cục Thương mại điện tử và Kinh tế số (2019), Bộ Công Thương, Báo cáo chỉ số thương mại điện tử 2019.
Hiệp hội Thương mại điện tử Việt Nam (2019), Báo cáo chỉ số thương mại điện tử 2019, Sách trắng thương mại điện tử 2019.
Bộ Công Thương - Cục Thương mại điện tử và Kinh tế số (2019) Sách trắng Thương mại điện tử Việt Nam 2019.
Hiệp hội Thương mại điện tử Việt Nam (2019) Báo cáo chỉ số Thương mại điện tử 2019.