Vietnam home to Southeast Asia's 2nd biggest e-commerce market
Updated at Wednesday, 14 Aug 2019, 22:25
The Hanoitimes - VECOM predicted with the growth rate of 2019 and 2020 remaining at 30%, by 2020 the market size would reach US$13 billion.
Vietnam’s e-commerce market size currently ranks second in Southeast Asia with 40 million online shoppers, only behind Indonesia, according to Lai Viet Anh, deputy head of Vietnam E-commerce and Digital Economy Agency (VECITA) under the Ministry of Industry and Trade.
“Vietnamese customers spend some US$210 per year on average on online shopping, but the figure is fast rising and they are becoming more demanding for the quality and price of products,” Anh said at the Vietnam Online Market Forum (VOMF) 2019 held on August 14.
Overview of the forum. Source: Nguyen Tung.
“This trends require micro, small and medium enterprises (MSMEs) to seek for new online marketing approaches and stay competitive,” Anh added.
This was the fourth consecutive year that such event has been held in Vietnam, attracting 35 speakers coming from major online market study and e-commerce businesses such as Nielsen, Google, Facebook, comScore, Amazon, Coc Coc, among others.
Chairman of the Vietnam E-commerce Association (VECOM) Nguyen Thanh Hung said the VOMF 2019 would support local e-commerce businesses to identify their online marketing strategy and claim a bigger share of the market.
Le Minh Trang, senior manager at Nielsen Vietnam, said connected consumers will be a new source of growth. “They are the kind of people using the Internet regularly and willing to pay,” Trang stated.
According to Trang, connected consumers tend to buy on multiple channels (omnichannel). Before buying, they collect and search for product information for reference from both online and offline sources.
“Four out of five connected consumers will rely on product reviews on online channels (83%) and especially they will search for comments from social networks (74%) before deciding to buy that product or not,” Trang continued.
In terms of growth rate, in parallel with the steady development of the economy and GDP growth rate of over 7%, 2018 continued to witness strong growth of e-commerce, said representative of VECOM, adding the growth rate of e-commerce in 2018 topped 30% year-on-year.
In spite of a low starting point of just over US$4 billion in market scale in 2015, the scale of Vietnam’s e-commerce market in 2018 was US$7.8 billion, including online entertainment, online retailing, online traveling, online marketing, and online shopping for other digitized services and products.
VECOM predicted with the growth rate of 2019 and 2020 continuing to be at 30%, by 2020 the market size would reach US$13 billion.
“This scale will be higher than the target stated in the e-commerce development master plan for the 2016 – 2020 period, targeting the scale of e-commerce retailing (B2C) to reach US$10 billion by 2020,” stated the representative.
Effort required to promote e-commerce in rural areas
However, VECOM revealed most e-commerce activities take place in the two largest cities of the country – Hanoi and Ho Chi Minh City - and some nearby provinces such as Bac Ninh, Vinh Phuc, Dong Nai, Binh Duong and municipalities such as Hai Phong, Da Nang and Can Tho.
“Online business activities in most other provinces are still weak and there is a risk of falling behind compared to the two leading cities,” said VECOM’s Chairman Hung.
An estimate showed that Hanoi and Ho Chi Minh City accounted for 70% of e-commerce transactions nationwide. E-commerce scale in other localities, especially in rural and remote areas, is still very small.
Meanwhile, about 70% of the population living in rural areas has great potential consumption and is also a supply of various products suitable for online sales.
VECOM stated that it is necessary to narrow the digital divide between localities, especially to support rural areas to sell online in order for e-commerce to develop quickly and sustainably.
Hung suggested it is time for state agencies as well as professional social organizations to have synchronous policies and solutions to turn e-commerce opportunities into reality in every locality, enterprise, and citizen.
“In addition to communicating to local consumers on the benefits of online shopping, the key factor is to actively support small and medium enterprises and households in rural areas to sell goods and provide services online,” Hung added.
According to the 2018 economy SEA Report of Google and Temasek, the scale of Vietnam's e-commerce market in 2018 was US$9 billion. The report also forecast the average growth rate (Compound Average Growth Rate - CAGR) of the 2015-2018 period was 25% and the market would reach US$33 billion in 2025.
If this scenario occurs, the scale of Vietnam e-commerce market in 2025 will rank third in Southeast Asia, after Indonesia (US$100 billion) and Thailand (US$43 billion).