E-commerce sees 18% currentvalue growth in 2019 to reach VND58.4 trillion; government seekingto create more favourable conditions for the development of e-commerce through legislation; mobile World JSC is the leading player in 2019, with a 22% value share...
E-COMMERCE IN VIETNAM - ANALYSIS Country Report | Mar 2020 HEADLINES Market Sizes E-commerce sees 18% current value growth in 2019 to reach VND58.4 trillion Sales of E-Commerce Government seeking to create more favourable conditions for the development of e-commerce through legislation Retail Value RSP excl Sales Tax - VND billion - Current - 2005-2024 Mobile World JSC is the leading player in 2019, with a 22% value share 58.380 Forecast 200.000 E-commerce is forecast to see a 16% current value CAGR (11% at constant 2019 prices) over 2019-2024 150.000 PROSPECTS Younger consumers form the core consumer base 100.000 Consumer electronics is the largest product category in e-commerce (apart from “other”), supported by the fact that the young tech-savvy consumers who are the most prominent online shoppers are also the most interested in new consumer electronics products Indeed, younger consumers often see personal electronics such as smartphones and smartwatches as a way to express social status Therefore, many young urban consumers like to replace their electronics regularly in order to have the latest products Younger consumers’ interest in fashion also contributes to the continued importance of apparel and footwear to e-commerce Digital channels, particularly social media, play an important role in driving fashions amongst younger consumers, and it is a short step for them to purchase fashionable apparel and footwear online Moreover, consumers can also compare prices between different online retailers in order to make the most affordable purchases Targeting this demand, many digital fashion players distribute trendy clothing at low prices imported from neighbouring countries such as Thailand, Cambodia and China 50.000 2005 2019 2024 Sales Performance of E-Commerce % Y-O-Y Retail Value RSP excl Sales Tax Growth 2005-2024 18.0% Forecast 200% Cash on delivery still popular, but electronic wallet services emerging Cash on delivery (COD) remains one of the most common payment methods for online businesses in Vietnam COD allows consumers shopping online to inspect products before making payment Many consumers feel safer using this method, as online fraud is still prevalent in Vietnam and many consumers are cautious about using financial cards on e-commerce websites Furthermore, COD also allows small businesses to set up their shops quickly, as they not have to invest in an online payment system The rise of third party electronic wallet services, such as Momo and Zalo Pay, is giving ecommerce players and consumers another choice of payment method As these companies focus on financial services, they are perceived to provide high levels of security and trustworthiness Therefore, many consumers are more willing to use their bank accounts or financial cards through these third party services, rather than directly on an e-commerce website To raise awareness of these services, many retailers collaborate with the service providers to launch promotions For example, Tiki and Zalo Pay give customers discounts and shopping vouchers New legislation may increase consumer confidence 150% 100% 50% 0% 2005 2019 2024 Sales of E-Commerce by Category Retail Value RSP excl Sales Tax - VND billion - Current - 2019 The Vietnamese Government is making efforts to facilitate the development of ecommerce by strengthening legislation relating to internet security In particular, the new Law on Cybersecurity (Lu?t an ninh m?ng), which came into effect on January 2019, aims to provide a more secure cyber-environment and greater control over the contents posted on the cyber-network The new law covers all IT infrastructure networks, telecommunication, internet, computer systems, databases, information processing, storage and controlling systems, and regulates activities of every enterprise providing services in cyberspace and internet users, including e-commerce, as well as websites, online forums, social networking and blogs Such activity has the potential to increase consumer confidence in e-commerce and accelerate growth in the channel Growth Performance Mobile E-Commerce 27.438,5 Cross-border E-Commerce 58.379,7 E-Commerce by Product Category 58.379,7 0% E-COMMERCE 58.379,7 CURRENT YEAR % GROWTH 40% % CAGR 2014-2019 75% % CAGR 2019-2024 COMPETITIVE LANDSCAPE Mobile World JSC continues to grow share Mobile World JSC retained the lead in e-commerce in 2019, as it maintained a trend of value share growth that persisted throughout the review period The company benefits © Euromonitor Interna onal 2020 Page of from a focus on the distribution of consumer electronics and digital products, key product areas in e-commerce Mobile World JSC also utilises an excellent customer database management system and many online-exclusive promotions With a multichannel strategy, the company’s online business is supported by its extensive network of outlets that are located in all provinces and cities of Vietnam, resulting in a localised customer service experience and efficient delivery Mobile World JSC places a strong emphasis on customer service in both its stores and online In addition, it spends heavily on social media marketing to reach consumers and bring them directly to its online shopping website Competitive Landscape Company Shares of E-Commerce % Share (NBO) - Retail Value RSP excl Sales Tax - 2019 Mobile World JSC 21.7% 3rd Party Merchants 13.0% Tiki JSC 9.2% Tiki JSC maintains strong growth FPT Corp 5.3% Tiki JSC remained the most dynamic player in e-commerce in the final year of the review period The company’s continuing efforts to strengthen its position in the market include innovation to attract consumer attention, such as TikiSave and the TikiNow subscription service, which generated considerable attention amongst consumers in the country’s six major cities: Hanoi, Ho Chi Minh, Cantho, Haiphong, Danang and Nhatrang TikiNow targets professionals who have little time for shopping and are willing to pay for additional services in order to increase speed and convenience Typically, the standard delivery time for online orders on tiki.vn and other e-commerce sites in Vietnam is around three to five days With an additional service fee of VND499,000 per year, consumers in the six major cities have the option of receiving their products within two hours, which confers a notable advantage on tiki.vn compared with other sites in the midst of intense competition in e-commerce Besides rapid delivery, TikiNow also offers exclusive discount prices for certain products Since June 2019, TikiNow members have automatically been eligible for a new service, TikiSave, which automatically provides a 10% discount on regular product orders such as nappies/diapers, dairy products, and personal care products Nguyen Kim Trading JSC 2.0% VinGroup JSC 1.7% Recess Retail & Delivery 0.8% Pico JSC 0.7% Others 45.6% Shopee adopts different strategy to main rivals Shopee entered the e-commerce market later than rivals, Tiki JSC and Lazada, and has, therefore, employed a different strategy to establish its position in the market The company targets suburban and rural areas where there is less competition from Tiki JSC and Lazada In addition, Shopee constantly offers promotions and discounts to attract consumers’ attention It also looked to raise brand awareness by signing footballer, Cristiano Ronaldo, as its regional brand ambassador Brand Shares of E-Commerce % Share (LBN) - Retail Value RSP excl Sales Tax - 2019 Mobile world 21.7% Tiki.vn 9.2% 3rd Party Merchants 7.5% 3rd Party Merchants 5.5% FPT Shop 5.3% Nguyenkim - Saigon Shopp 2.0% Vien Thong A 1.7% Lazada 0.8% Pico 0.7% Others 45.6% Increasing share © Euromonitor Interna onal 2020 Decreasing share No change Page of ... remained the most dynamic player in e-commerce in the final year of the review period The company’s continuing efforts to strengthen its position in the market include innovation to attract consumer... with other sites in the midst of intense competition in e-commerce Besides rapid delivery, TikiNow also offers exclusive discount prices for certain products Since June 2019, TikiNow members have... shopping and are willing to pay for additional services in order to increase speed and convenience Typically, the standard delivery time for online orders on tiki.vn and other e-commerce sites in