A TIGER AWAKENS: E-COMMERCE IN VIETNAM - A GUIDE FOR AUSTRALIAN BUSINESS - Austrade
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A TIGER AWAKENS:
E-COMMERCE IN VIETNAM
A GUIDE FOR AUSTRALIAN BUSINESS
CONTENTS
A tiger awakens: Vietnam’s internet economy landscape 05
Rapid Growth 05
Low revenue per capita 08
Key drivers 10
The rise of a connected, mobile-first population 10
A dramatic increase in licensed e-commerce platforms 11
Proactive participation of SMEs in e-commerce 12
Future potential 14
The golden population structure and an emerging middle class 14
Consistent inflow of foreign direct investment (FDI) 14
Government policy and regulation frameworks 15
Improving logistics 15
Challenges 17
Key players in Vietnam’s e-commerce industry 20
Vietnam’s biggest e-commerce platforms 21
Vietnam’s online consumers 24
Purchasing on mobile 24
High-value items 25
Instant gratification market 26
High social media usage and video consumption 26
Cash on delivery preferred 27
Popular e-commerce product categories 30
Entry points for Australian businesses 35
Existing relationships 35
No existing relationships 35
Cross-border online exporting 35
Conclusion 36
How Austrade can help 37
References 39
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02 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 03
A TIGER AWAKENS:
VIETNAM’S INTERNET ECONOMY LANDSCAPE
E-commerce has taken off in Vietnam thanks to soaring internet connectivity and smartphone adoption, a young
tech-savvy population, and rising disposable incomes. The appetite for online shopping is growing and the number of
licensed e-commerce platforms is expanding rapidly.
The development of Vietnam’s online industry can be broken down into three distinct periods:
› 1998 to 2005: the establishment of the first ever internet infrastructure
› 2006 to 2015: mass proliferation of the internet. Almost 50 per cent of the population goes online for the first time,
allowing Vietnamese to engage in e-commerce every day
› 2017 to 2020: further expansion, with e-commerce crossing into new areas of the economy.1
RAPID GROWTH
Vietnam’s internet economy has experienced rapid growth since 2014. Starting from a total business-to-consumer
(B2C) revenue of US$2.97 billion, the sector doubled its value in three years to reach US$6.25 billion by the end of
2017.2
Since 2017, the internet economy in Vietnam has been well established with four key active sectors: e-commerce
(first-hand goods); online travel (online flights, hotels and vacation rentals); online media (advertising, gaming,
subscription music and video on demand); ride hailing (transport, food delivery).
Figure 1 - B2C E-commerce revenue and average annual value per customer (US$)
10B 10B
CAGR - 20%
350
350
8B
300
Revenue (US$ Billion)
Value per customer
6B 25% 6.25B
250
23% 5.00B
4B 200
37% 4.07B
2.97B
170
2B 150
160
145
0B 100
2014 2015 2016 2017 2020f
Total B2C revenue Average annual value per customer
Source: Vietnam E-Commerce And Digital Economy Agency, Vietnam E-Commerce Association
1. Vietnam E-commerce Association
2. Vietnam E-commerce Association
04 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 05
Having tripled in value from 2015 to the end of 2018, Vietnam’s online market is now the fourth largest in Southeast The most dynamic part of Vietnam’s online economy is sales of durable goods. This sector grew by 22 per cent in
Asia. Amongst the region’s major economies, Vietnam’s online market is also the fastest growing, with a compound 20175, and almost doubled in 20186. Sales reached nearly US$3 billion in 2018 and are forecast to reach US$15
annual growth rate of 35 per cent over the same period.3 billion by 2025. This means durable goods will constitute almost half of all online sales in Vietnam.7
According to recent industry reports, Vietnam’s online economy will continue to grow strongly, and be worth US$10
billion by 2020.4 If trend rates continue, Vietnam’s online economy will be worth US$33 billion by 20253, making it
the third-largest digital market in Southeast Asia. Figure 4 - SEA e-commerce market size (GMV, US$ Billion)
Figure 2 - SEA internet economy market size (GMV, US$ Billion) 41%
28% 53B
100B
34% 30% 43%
21%
18%
42% 49% 87%
94% 27%
22%
13B 15B
12.2B
7.0B 10B
16% 22%
25% 5.0B
1.7B 1.0B 2.0B 0.5B 1.5B 1.0B 1.8B 0.9B 3.0B 0.4B 2.8B
25% 43B
49% 13%
19% 27%
35%
30%
33B Indonesia Malaysia Philippines Singapore Thailand Vietnam
27B 16%
21B 21B 22B
10B 12B 2015 2018 2025 CAGR
8B 8B 9B
5B 5B 7B 6B
2B 3B
Indonesia Malaysia Philippines Singapore Thailand Vietnam
2015 2018 2025 CAGR
The value of Vietnam’s internet economy is also the highest of the major regional economies, with a gross merchandise
value equivalent to 4 per cent of gross domestic product.
Figure 3 - Internet economy GMV as a percentage of GDP (2018)
2.8% 2.9% 2.7% 4.0%
2.7% 3.2%
1.6%
SEA Indonesia Malaysia Philippines Singapore Thailand Vietnam
5. Statistica
3. e-Conomy SEA 2018, by Google and Temasek 6. e-Conomy SEA 2018, by Google and Temasek
4. Vietnam E-Commerce and Digital Economy Agency, Vietnam E-Commerce Association 7. Statistica
06 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 07
LOW REVENUE PER CAPITA
Vietnam’s online shopping cart value per capita is still low in comparison with other markets. This can be attributed in part to Vietnam’s
low GDP per capita. In 2017, online shopping cart values averaged US$23 per shop in Vietnam, compared to US$42 in Thailand and
US$36 in Indonesia.8
Even after a decade of rapid economic development and huge improvements in the country’s overall quality of life, Vietnam’s GDP remains
significantly lower than most other Southeast Asian nations.
Figure 5 - Average e-commerce shopping cart value & GDP per capita of Southeast Asian countries (US$)
100 62K
60K
90
80
Average shopping cart value
50K
40K
GDP per capita
60 56 54
42 30K
40 36
20K
23
20 11K
7K 10K
3K 3K 4K
- K
Vietnam Philippines Indonesia Thailand Malaysia Singapore 90
Source: E-Commerce shopping cart value recorded by iPrice, July 2016 - Jun 2017,
GDP per capita by International Monetary Fund 2017
11k
7k
3k 3k 4k
8. Statistica
08 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 09
KEY DRIVERS A DRAMATIC INCREASE IN LICENSED E-COMMERCE PLATFORMS
As the number of online shoppers continues to climb, so too has the number of licensed e-commerce platforms. Direct sales websites hosted
by individual brands have been the fastest growing, and currently represent the highest number of e-commerce operators.
Figure 8 - Licensed e-commerce direct sales Figure 9 - Licensed online promotion & auction
websites & trade platforms in Vietnam websites in Vietnam
14,000 13,510
100
93
90
12,000
80
75
10000 9,429 70
Vietnam’s e-commerce sector has developed as a result of three key factors: a rapidly growing online population; the establishment 60 60
of user-friendly e-commerce platforms; and the uptake of online business transactions by small and medium-sized enterprises (SMEs). 8,000
50
6,000
THE RISE OF A CONNECTED, MOBILE-FIRST POPULATION 40
4,653
4,000 30
The expansion of e-commerce in Vietnam has been fuelled by a growing online population, which reached 52 million
in 2017. An impressive 65 per cent of the online population has participated in an e-commerce activity, and this 20 19 20
number is predicted to increase steadily until 2020.9 2,000 13 13 14
10
674 492 682
0 90 283 0
Figure 6 - Total Population vs. Total Internet users in Vietnam Figure 7 - Percentage of internet users who
Direct e-commerce E-commerce trade Online promotion Online auction
(million) participated in e-commerce in Vietnam sales websites platforms websites websites
2013 2014 2015 2016 2013 2014 2015 2016
120M 68% 67%
93M 94M 95M 96M Source: Vietnam E-Commerce And Digital Economy Agency Source: Vietnam E-Commerce And Digital Economy Agency
100M 88M 89M 90M 91M 66% 65%
90
80M 64%
As e-commerce platforms have become more established in Vietnam, many have started to offer alternative payment options, including
62%
60M 52M 62% cash on delivery. This has made buying online more convenient than ever and, coupled with appropriate consumer-protection policies, has
44M
41M resulted in a high ratio of return customers for e-commerce sites. The results of a 2016 survey by the Vietnam E-commerce and Digital
40M 38M
31M
33M 35M 60% Economy Agency confirmed this, with 42 per cent of 2,593 e-commerce platform owners reporting that at least 10 per cent of their
27M
58% customers would re-purchase.
20M 58%
0M 56%
2010 2011 2012 2013 2014 2015 2016 2017 Figure 10 - Customer return rates for e-commerce websites as a proportion of all websites
54%
Total Population Total Internet users
52%
2014 2015 2016 2020f 40% 11k
7k
Source: World Bank, Ministry of Information & Communication Source: Vietnam E-Commerce And Digital 35% 3k 3k 4k 35%
Economy Agency
30%
Vietnamese consumers have become increasingly mobile, with smartphone usage exploding in the past few years. In
2017, the total number of smartphone users in Vietnam was estimated at 28.8 million and is forecast to reach 38.4 25%
million by 2020.10 This level of penetration means one in five Vietnamese can make online purchases via a smart 23% 23%
device. 20%
Mobile phones are effective facilitators: according to a study by Criteo11, 82 per cent of Vietnamese say it is more 15%
convenient to buy goods via mobile apps than websites. The study highlighted that more than 90 per cent of
people who install e-commerce apps on their smartphones end up buying goods at least once a month, while 60 per 13%
cent do so three times or more a month. 10%
6%
5%
0%
9. Vietnam E-Commerce Association >50% re-purchase 30-50% re-purchase 10-30% re-purchaseCredit card payments for online purchase are less popular in Vietnam than in other countries in Southeast Asia. However, Vietnam’s
e-commerce platforms do offer a range of alternative payment options.
Figure 11 - Payment solutions offered by merchants in Southeast Asia contries (%)
100% 100% 100%
94% 95%
88% 90%
82% 84%
81% 80%
80%
65%
60% 60%
52%
50% 49%
47% 46%
43%
40% 38%
41%
25%
20% 20%
17% 18% 15% 13% 15%
10%
8%
4%
0%
Bank Transfer Cash On Delivery Credit Card Installment Offline POS
Vietnam Indonesia Thailand Philippines Malaysia Singapore
Source: iPrice e-Commerce merchant database, 2017 n= 1000
90
PROACTIVE PARTICIPATION OF SMEs IN E-COMMERCE
Social networks, especially Facebook, have become increasingly popular among SMEs as online business tools. In 2017, the proportion of
all enterprises transacting business via social networks reached 32 per cent, according to the Vietnam E-commerce Association’s Vietnam
E-business Index 2018 Report.
Figure 12 - Proportion of enterprises doing Figure 13 - Proportion of enterprises doing
business on social networks businesson e-commerce marketplaces
11k
40% 40% 7k
3k 3k 4k
34%
32%
30% 28% 30%
20% 20%
13% 13%
11%
10% 10%
0% 0%
2015 2016 2017 2015 2016 2017
Source: VECOM’s Vietnam E-business Index 2018 Report Source: VECOM’s Vietnam E-business Index 2018 Report
12 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 13FUTURE POTENTIAL GOVERNMENT POLICY AND REGULATION
FRAMEWORKS
IMPROVING LOGISTICS
Recognising e-commerce’s potential to attract investment and In an attempt to address some of the biggest obstacles facing
drive Vietnam’s economy, the government has made clear its e-commerce in Vietnam, the government has lifted some
commitment to the sector. The approval of the ‘Masterplan To restrictions on foreign investment and announced a commitment
Develop E-Commerce From 2016–2020’ signifies the government’s to developing Vietnam’s logistics capabilities. A new legal
support of e-commerce as a crucial economic pillar. Further framework means local logistics companies can expect more
investment in improving regulatory frameworks, tax rules and data financial and resources support.
security policies is also scheduled.
From 2018, investors can establish 100 per cent foreign-owned
In November 2017, the Ministry of Finance drafted a proposal to logistics companies or joint ventures in Vietnam with unlimited
develop the tax administration law. The proposal, which is foreign participation. In a meeting with the Deputy Prime
expected to be approved in 2019, is designed to improve and Minister in June 2017, the World Bank committed to providing
centralise the country’s online tax system.13 Once it comes into human resources and expertise to improve Vietnam’s logistics
effect, e-commerce platforms can expect significantly faster, more industry.14
The outlook for e-commence in Vietnam is positive. The country is experiencing a ‘golden population’ period, meaning more than half of the convenient tax procedures. The proposal sets out a framework for
population are of working age, with rising incomes. In addition, there is a consistent flow of foreign direct investment and a high level taxing merchants operating on social media platforms such as
of government support to create legal frameworks and infrastructure to ensure a robust online economy. Facebook, Instagram and Zalo. Merchants will be required to
register when their revenue exceeds a certain amount, and submit
e-receipts and a record of all transactions every quarter.
THE GOLDEN POPULATION STRUCTURE AND CONSISTENT INFLOW OF FOREIGN DIRECT
AN EMERGING MIDDLE CLASS INVESTMENT (FDI) A streamlined tax procedure for e-commerce platforms combined
with appropriate tax regulations for individual merchants may see
more merchants transitioning to e-commerce once the plan is
Since 2007, Vietnam has been in a period known as the ‘golden As growth continues in Vietnam’s e-commerce industry, global approved, resulting in a more centralised e-commerce environment.
population structure’, a state in which more than half of its and regional conglomerates have been investing in the country. In
population are of working age. The United Nations Population Fund January 2018, JD.com – Alibaba’s direct competitor in China – The government is looking to increase cashless payments in
12. The Boston Consulting Group
says that with a total dependency ratio of below 50 – meaning announced a US$44 million investment in Vietnam’s leading B2C urban areas to 50 per cent by 2020. The government and the
13. PwC Vietnam News Brief, 29 November 2017
only one dependent for every two or more working people aged platform Tiki.vn. In February 2018, an affiliate of private equity firm State Bank of Vietnam have issued instructional documents on
14. Customs News of The General Department of Vietnam Customs,
15–64 years – Vietnam has a unique opportunity to ‘increase its Creador approved an investment of US$43.8 million in digital payment methods as well as a list of 25 non-bank
savings and boost its socio-economic development from now Thegioididong.com – Vietnam’s largest mobile and electronic organisations licensed to provide payment services. 28 June 2017
until 2041.’ device retailer. In March 2018, Alibaba – the Chinese e-com-
merce giant – raised its total investment in Lazada Group to 90
It is expected that Vietnam’s middle and affluent class will US$4 billion and brought in its own executives to lead Lazada’s
increase from 12 million to 33 million between 2012 and 2020, a regional office in Ho Chi Minh City.
rate much faster than any other ASEAN country over the same
period.12 It is this tech-savvy, convenience-driven segment of the
population that will be the most likely to drive e-commerce
forward in Vietnam.
11k
7k
3k 3k 4k
14 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 15CHALLENGES
While the government and local e-commerce players have taken measures to create and maintain a healthy environment for growth,
challenges remain for the market’s long-term development.
From the perspective of an e-commerce platform owner, the first challenge is ‘unhealthy competition,’ which stems from the lack of a
consistent set of regulations, particularly regarding dispute resolution.
Figure 14 - Barriers and challenges according to e-commerce platform owners (mean score)
Unhealthy competition 1.22
High logistics cost 1.08
About the business
Incompetent human resources 1.05
Unguaranteed online security 1.02
Difficulty in intergrating digital payment 0.91
Customers’ concern about security when making online payment 1.01
About customers
Customers lack trust in the quality of products 0.87
Customers’ concern that personal data is disclosed or traded 0.65
0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30
Question: How do you rank these barriers and difficulties in operating an e-Commerce platform, from 0 to 2 with 0 being “Not an obstacle”,
1 being “Somewhat an obstacle” and 2 being “A great obstacle” n=2593
Source: Vietnam E-Commerce And Digital Economy Agency Nationwide Survey for Licensed e-Commerce platform Owners, 2016
Logistics infrastructure is another impediment facing almost every e-commerce operator in Vietnam on a daily basis. Despite huge
investment, online shoppers still complain about faulty products or non-delivery of goods. Poor management of e-logistics data has
exacerbated the problem. Most e-commerce sites in Vietnam work with third-party providers in the hope of achieving a smooth ordering
and delivery process for consumers. It hasn’t, however, always worked.
Logistic costs currently account for 30 per cent of e-commerce revenue in Vietnam – more than in other ASEAN countries.15 High logistics
costs translate into higher shipping fees for consumers, which ultimately influences their willingness to buy online more frequently.
15. Vietnam Briefing, E-commerce Logistics: Emerging Opportunities in Veitnam, 6 June 2017
16 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 17Compounding the problem in Vietnam is the lack of investment in high-tech logistics infrastructure. With the excep-
tion of a few e-commerce players, such as Tiki and Lazada, most do not operate their own central distribution centres.
This results in longer order processing times and a greater chance of incomplete or non-deliveries.
A 2016 survey of consumers by the Vietnam E-commerce and Digital Economy Agency identified the major barriers
to online purchasing as a lack of trust in how products are advertised, a lack of trust in merchants themselves and the
inability to check product quality.
Figure 15 - Barriers perceived by current Figure 16 - Barriers perceived by non
e-commerce users (%) in 2016 e-commerce users (%) in 2016
False advertising 80% Difficult to check quality 50%
Lack of trust for the
48%
Incompetent customer merchants
44%
service
Easier to shop at stores 48%
More expensive than
43% No prior experience in
offline purchase 21%
shopping online
Incompetent logistics 40% Privacy concern 21%
Lack of information to 17%
Privacy concerns 36% decide
No digital payment
Incompetent web 17%
solution
23%
design
No need for shopping
12%
online
Complicated order
process 19%
Complicated order
11%
process
Complicated payment
15% Few product choices 10%
process
0% 20% 40% 60% 80% 0% 25% 50%
Source: Vietnam E-Commerce And Digital Economy Agency Source: Vietnam E-Commerce And Digital Economy Agency
18 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 19KEY PLAYERS IN VIETNAM’S VIETNAM’S BIGGEST E-COMMERCE PLATFORMS
E-COMMERCE INDUSTRY Lazada.vn Tiki.vn
Lazada is the leading e-commerce website in Vietnam Tiki.vn has morphed from a local online bookstore into
and has the highest number of average visits per an e-commerce giant in eight years.
month.
Tiki is Vietnam’s version of Amazon, entering the market
Lazada, founded in 2011 by Germany’s Rocket Internet, in 2010 selling books online. In 2013, Tiki expanded its
entered Vietnam in 2012 as Lazada.vn. The original product range to include electronic devices, lifestyle
business model was to sell goods to customers from its products and miscellaneous products such as airline
own warehouse. In 2013, Lazada introduced the tickets. In 2017, Tiki introduced a marketplace feature,
marketplace model, allowing third-party merchants to allowing merchants to sell goods on its platform.
sell via its platform. This became popular quickly,
accounting for 65 per cent of total regional sales by the Tiki has an advantage over its competitors with its
end of 2014.16 third-party logistics. By retaining total control of its
There are four main types of e-commerce platforms in Vietnam: direct sales websites, trade platforms, online supply chain, Tiki has established a reputation for high
promotional websites and online auction websites. Of these, direct sales websites and trade platforms are the leading Operating throughout Southeast Asia, Lazada raised customer satisfaction, which includes a two-hour
players. around US$700 million in investment up to 2014. delivery policy.
Alibaba now owns 83 per cent of Lazada Group and
Direct sales websites are those set up by brand owners to sell their own goods and services. The original business recently invested a further US$2 billion. The move has JD.com – the direct competitor of Alibaba in China –
model is B2C, but several direct sales websites, such as thegioididong.com, fptshop.com.vn and vietnamairlines.com, helped Alibaba expand its business in Southeast Asia has made a further US$44 million investment in Tiki,
have recently incorporated a new customer-to-customer (C2C) model. and allows more Alibaba merchants to sell on this committing to help the brand improve its payment
platform. integration, warehousing and delivery systems. The
Trade platforms provide a marketplace for merchants, individuals and companies. The business model can be B2C or investment makes JD.com the largest partner in Tiki,
C2C, with well-known platforms including tiki.vn, foody.vn, vatgia.com and shopee.vn. Thegioididong.com along with VNG, Vietnam’s top provider of internet
content.
Thegioididong.com is the leading mobile phone and
Lazda Thegioididong Tiki Shopee Sendo Adayroi Lefair electronics retailer in Vietnam and part of Mobile World Shopee.vn
Investment Corporation (MWG). Following Mekong
Business B2C B2C B2C B2C B2C B2C B2C Capital’s first investment in 2007, Mobile World has Shopee.vn, a newcomer to Vietnam’s e-commerce
model C2C Physical C2C C2C Physical shop
shop (VinPro, quickly scaled up its retail network from seven to landscape, has adopted a promising and different
VinMart, etc...) thousands of stores in just 11 years. business model.
Type of Individuals - Registered Individuals Individuals Registered Registered
seller Registered enterprises and and enterprises enterprises Mobile World owns the largest retail chain store in Shopee is managed by Sea, a Singapore-based
enterprises only Registered Registered only only
enterprises enterprises Vietnam. Originally an electronic device retailer, the company that made its debut in Vietnam in August
company expanded its product mix to include household 2016. In just two years, Shopee has risen to fifth place in
Product General Electronic General retail General General General High-end appliances through dienmayxanh.com, which has 719 terms of average monthly traffic, according to the
Categories retail devices Tourism/ retail retail retail retail
Transportation grocery storefronts; groceries via bachhoaxanh.com, which has company’s 2018 first quarter data.
approximately 360 storefronts; and pharmaceutical
Payment Processed - Processed Processed Processed - - products through seven storefronts. Thegioididong.com Unlike other e-commerce operators in Vietnam, Shopee
method for weekly monthly instantly into instantly into
sellers partner’s partner’s e- itself owns 1,745 storefronts. established a C2C marketplace model from day one,
account wallet SenPay
Partner can Partner can meaning its merchants are usually individuals or small
withdraw withdraw All of Mobile World’s brands have established e-com- businesses. The company assists in delivery and
money money merce websites. In the first two months of 2018, online
anytime anytime payment, and takes a commission for each successful
revenue reached a record high of approximately US$87 order made via the platform. To protect customers,
Quarterly 42 .4 million 39.1 million 22.6 million 24.6 million 20.8 million 5.3 million 694 thousand million, contributing nearly 12 per cent of total group Shopee only makes payments to merchants once
Traffic revenue.17 buyers have verified the product’s quality.
Ownership Majority Mobile World JD.com Sea FPT VinGroup Leflair
owned by Group In the past financial year, Shopee reached annualised
Alibaba
gross merchandise volume of over US$3 billion.
Australia - No No No No No No No
based
procurement
Annual fee None - - None None - -
for C2C
partners
Logistics In-house In-house In-house Partner with Partner with In-house Partner
(LELExpress) 3rd party 3rd party with
Partner with 3rd party
3rd party for
delivery
Online promotional websites sell vouchers and display promotions from companies other than the website owner.
Well-known sites include nhommua.com, hotdeal.vn and muachung.vn. 16. Lazada’s Marketplace platform accounts for 65% of its sales revenue,
7 November 2014
17. Mobile World Investment Corporation, CEO Report For First Two Months
Online auction websites host auctions for goods and services owned by individuals and companies other than the website
owner. While the business model can be B2C or C2C, it is mostly C2C. Well-known sites include weshop.com.vn (part of 2018
eBay) and chilindo.com.
20 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 21Foody.vn Adayroi.com
Foody.vn is one of Vietnam’s most successful startups, Adayroi is the e-commerce arm of Vingroup, one of
growing from a simple food and dining review forum Vietnam’s largest real estate companies. Launched in
into an online restaurant directory, reservations and 2015 as a subsidiary of Vingroup, Adayroi attracted an
delivery service. initial investment of around US$50 million.
Foody launched in 2012 as an online review forum of Adayroi is a valuable addition to the Vingroup ecosys-
food outlets throughout Vietnam. It then added a tem as it is capable of managing a large number of
restaurant table-booking service, TableNow, and a stock-keeping units (SKUs) on its pages. Adayroi
delivery platform called NOW to its ecosystem. effectively acts as a distribution channel for all of
Vingroup’s products and services, with offerings ranging
Singapore-based company Sea first invested in Foody from groceries and other fast-moving consumer goods
in 2015, buying 6 per cent of the platform. When to cars and houses.
Cyberagent Ventures divested its 17 per cent ownership
stake in September 2017, Sea bought a further 82 per While there have been no official statements about
cent (a deal presumed to be worth US$64 million18) and Vingroup’s plans for Adayroi, it is reasonable to assume
became Foody’s largest stakeholder. the company will continue to use the platform to
distribute its trademarked products and services,
NOW is Foody’s most profitable platform. It includes including Vinfast cars and Vsmart phones.
food delivery, table reservations, housekeeping, grocery
shopping and even flower delivery. In 2017, NOW
deliveries reached a capacity of 10,000 orders per day.
Leflair.vn
Leflair is a niche player in the market focusing on mid-
Sendo.vn to high-end products. Founded in 2015, Leflair focuses
on providing products to Vietnam’s growing middle
Fast-growing Sendo.vn is backed by Vietnamese tech class using a flash-sales model. It presents itself as a
giant FPT Corporation, and is one of the country’s stylish e-commerce platform, servicing high-end
largest e-commerce companies. shoppers with premium on-trend fashion and beauty at
a discount.
Sendo is a subsidiary of FPT Corporation, which
inherited the technology platform of 123Mua – previous- After only two years in operation, Leflair has built up a
ly one of the most popular e-commerce platforms – in a membership of more than 700,000, with 1,000 new
deal with Vietnamese internet content provider VNG in subscribers daily. This high-potential startup has raised
2014. US$4 million and intends to invest in more mid- to
high-end brands while establishing itself in Singapore.
Rather than investing in central distribution centres, Brands currently working with Leflair include Abercrom-
Sendo focused on connecting consumers with micro, bie & Fitch, Balenciaga and local Vietnamese designers
small and medium-sized enterprises (MSMEs). The such as Võ Công Khanh and Trương Thanh Hải.
company also partnered with Google to create Shop
Ads – a service allowing all Sendo merchants to
advertise on Google at a reduced rate.
As of 2017, Sendo was Vietnam’s most prolific e-com-
merce platform, with over 120,000 online shops. Sendo
ranks in the top five in website traffic, according to the
iPrice Map of E-Commerce.
18. Vietnam Investment Review: Sea seizes 82 per cent of Foody, 3 October
2017
19. Leflair.vn
22 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 23VIETNAM’S ONLINE CONSUMERS HIGH-VALUE ITEMS
Contrary to speculation that a lot of online purchases made in Vietnam are of low value, official statistics from the
E-Commerce and Digital Economy Agency indicate that Vietnamese consumers have shown a willingness to buy a
diverse set of products at a wide range of price points.
The agency’s 2016 survey revealed that over one-quarter of the most frequently purchased products in Vietnam had a
value range from around VND1 million (US$45). The agency also reported in the same year that approximately 50 per
cent of Vietnam’s online shoppers spent more than VND3 million (US$130) per year. As the economy continues to
grow and GDP per capita improves, this amount is expected to rise.
Figure 18 - Most often purchased product’s value range recorded by e-commerce platforms (%
platforms)
The profile of Vietnam’s online shoppers reflects the country’s total online population – mostly young, urban and
predominantly single. They have grown up with the internet and largely consider themselves to be digital natives. They
are undoubtedly e-commerce’s ‘early adopters’ – willing to try, spend and set trends. 13%
21%
PURCHASING ON MOBILE Under VND 200K
VND 200K - VND 500K
A study of Vietnamese consumers’ online behaviour in 2017 by Decision Lab confirmed that almost half of all online 13%
purchases had been made using mobile phones in the last six months. VND 500K - VND 1M
VND 1M - VND 5M
Figure 17 - The devices that consumers used to make online transactions in the past 6 months (%)
23%
Over VND 5M
16%
5% 1%
Mobile phone Source: Vietnam E-commerce And Digital Economy Agency Nationwide Survey for Licensed e-Commerce
platform Owners, 2016 n=2593
Laptop/Computer
49% Tablet
Others
45%
Q: In your most recent online purchase, which device did you use to buy the product?
Source: Decision Lab Device Study, 2017 n=2854
24 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 25INSTANT GRATIFICATION MARKET CASH ON DELIVERY PERFERRED
While convenience is a key attraction of e-commerce over traditional brick-and-mortar outlets, instant gratification is Despite a clear willingness to transition from the traditional shopping experience to online, Vietnamese consumers still
pivotal to boosting the appeal of online shopping worldwide. Vietnamese consumers are no different. They not only have some concerns, especially when it comes to payment. The overwhelming majority of online shoppers, 90 per
expect immediate delivery, but have expressed a willingness to pay extra for it. This emphasises the need to optimise cent, still prefer cash on delivery as the payment method, while only 23 per cent said they used a credit or debit card.
logistics and transport infrastructure.
This behaviour is very much related to a lack of trust of both product quality and merchant reputation, amplified by the
absence of a user-friendly return policy at many e-commerce platforms. As a result, consumers are happy to revert to
Figure 19 - Expectation and willingness to pay extra for delivery cash on delivery as insurance, as they can check the product before paying.
45%
Figure 21 - Preferred payment methods of online shoppers (%)
41%
40%
100%
35%
91%
90% 89%
30%
28%
25% 24%
25% 25% 80%
23% 23%
20% 70%
15%
60%
11%
10% 10%
8%
7% 50%
5% 48%
2% 3% 3% 2%
0% 41%
0% 40%
Specific 1-2 Less than 3 Same day Next day 2 days 3-5 business 1 week More than 1
hour time of hours days week
my choosing 30%
Expect goods to arrive Willing to pay extra charge for
23%
20% 20%
Q: For the majority of your online purchases how soon do you expect your goods to arrive? Which of the following
delivery lead time frames are you willing to pay a charge for?
Sourc: PwC, Global Consumer Insights Survery (including Vietnam) 2018 n= 22,480
10% 11%
6% 7% 5%
HIGH SOCIAL MEDIA USAGE AND VIDEO CONSUMPTION 0%
Cash on delivery ATM Credit/debit card Scratch phone card Digital wallet
(COD)
In a bid to reach Vietnam’s online consumers, brands across product categories must incorporate major social media
platforms into their marketing campaigns. Vietnam’s top three platforms currently are Facebook, YouTube and locally
developed Zalo.
2015 2016
Source: Vietnam E-Commerce And Digital Economy Agency
Figure 20 - Most popular social media platforms
Almost all consumers who have access to the internet watch online videos – regardless of their age group.
96%
Figure 22 - The percentage of audiences who have internet access and watch online videos
83% 83%
99% 99% 98%
100% 97%
38% 80%
34%
15%
7% 7% 4% 4% 60%
40%
Facebook Youtube Zalo Instagram Zing Twitter Pinterest LinkedIn Snapchat
20%
0%
Source: Decision Lab’s Device Study 2017 Total Respondents: 528 Gen Z Millennials 35 - 44 y/o 45+
Source: Decision Lab online population study 2017 n= 1.945
26 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 27There was a significant lift in the reach of digital campaigns in 2017. This is a consequence of the increasing number
of people watching online videos, and the improved ability of online video platforms to target the right audiences.
While the majority of Generation Z reported watching online videos, more than half of them closed advertisements as
soon as they appeared. Older users, however, were more likely to engage with an advertisement, especially when
they deemed it to be relevant.21 As a result, advertisers need to work much harder to engage younger consumers in
their digital campaigns.
Almost half of all Vietnamese consumers actively research products online before making an offline purchase. This
provides opportunities for online marketers to influence purchasing decisions.22
Google is the most popular search engine in Vietnam, with a reported market share of over 95 per cent in November
2018. Google has led the market since October 2017, when it achieved more than 90 per cent market share. It is
followed by Coc Coc, a search engine integrated into a locally made browser, which accounts for over 3 per cent of
users. Bing and Yahoo are minor players in the market.23
21. Decision Lab: Online population study 2017
22. Think with Google, Be the first and last stop:
Rethinking search strategies for SEA
Consumers, December 2018
23. StatCounter
28 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 29POPULAR E-COMMERCE PRODUCT CATEGORIES When it comes to online transactions in Vietnam, leisure and transportation lead the market, with ride-hailing apps such as Grab and
Go-Viet, and hotel booking sites such as Booking.com and Agoda proving extremely popular. Cosmetics and personal care products are
the most frequently purchased durable goods. The latter is forecast to reach US$335 million in online sales by 2020.
Figure 24 - Product categories purchased online in consumers’ most recent transaction (%)
Long trip (by plane, coach, train, etc) 70 %
A stay in hotel (for leisure purposes) 63%
Short trip (by bike or taxi) 60%
Cosmetics & Personal care 55 %
Clothing & shoes 52%
Mobile phones 4 9%
Data collected from Decision Lab’s Device Study 2017 indicate that the food and beverages sector is the most popular for online sales in
Vietnam. The next most popular sectors are: clothing and shoes; cosmetics and personal care; and non-prescription medicines or vitamins. Movie tickets 4 8%
Household appliances 4 8%
Takeaway/Delivery food 24%
Figure 23 - Product categories purchased in the past 6 months (%) Insurance/Loan 24%
Dairy products 19%
Snacks 18%
Food & beverages* - 50.2% Cooking ingredients 15%
Clothing & shoes - 10% Non-precription medicine or vitamins 14 %
2%2% Alcoholic beverages 11%
3% Cosmetics & personal care - 5.9%
4% Non-alcoholic beverages 11%
4% Non-prescription medicines or vitamins - 5.2% Vegetables 9%
4%
Short trip (by bike or taxi) - 5% Meat & Fish 8%
5% Baby products 0%
Mobile phones - 4.9%
5% 50% 0% 20% 40% 60% 80%
Movie tickets - 4.3%
5% Household appliances - 4% Source: Decision Lab Device Study, 2017 n=2854
6% Long trip (by plane, coach, train, etc) - 3.7%
24. Decision Lab, Device Study 2017
Baby products - 2.8%
10%
A stay in hotel (for leisure purposes) - 2.4 %
Insurance/Loan - 1.6%
Q: Which type of products have you purchased in the past 6 months?
* Food & beverages include: snacks, cooking ingredients, dairy products, vegetables, meat & fish, non-alcoholic beverages,
alcoholic beverages, takeaway/ delivery food n=2854
Source: Decision Lab Device Study, 2017
30 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 31While many food and beverages products are still purchased offline, Vietnamese consumers have taken to researching them online. Online
food and beverages sales are expected to grow at an annual rate of 15.2 per cent up to 2020, contributing US$159 million to Vietnam’s
total e-commerce revenue.
Figure 25
Use penetration growth predic- Average revenue per user in 2018 Revenue growth prediction (in
tion US$)
CAGR 2018-2020 = 15.2%
24% 180M
159M
20% 19.2% 150M
US$ 5.99
16% 15.9% 120M
90M
12% 90M
8% 60M
4% 30M
0% 0M
2018 2020 2018 2020
Source: Statista, Figures include the online sale of fresh and packaged foods (excluding baby food), delicacies and beverages. This market segment covers for example the sale of fruit,
vegetables, pasta, snacks, sweets, refrigerated products, frozen food, soft drinks and alcoholic drinks via a digital channel. Not included in this market segment are delivery services of
ready-to-eat meals.
Australian companies hoping to break into personal care or food and beverages in Vietnam need to establish a strong presence on
Facebook or one of the big local e-commerce platforms to attract Vietnamese consumers. Across all devices, these are the top two means
by which consumers shop for these products.25
25. Decision Lab, Device Study 2017
32 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 33ENTRY POINTS FOR AUSTRALIAN BUSINESSES
Access to the market varies according to the size of the
company, the products and existing relationships within Vietnam. CROSS-BORDER ONLINE EXPORTING
Online exporting provides businesses with more options by allowing
EXISTING RELATIONSHIPS varying levels of control and the ability to monitor offshore sales.
Online exporters can also maintain brand reputation more easily
Companies with distributors or operations in Vietnam should through consistent pricing, marketing and sales. Businesses can
already have an e-commerce strategy in place. adopt a B2B model by using a distributor, although for products
sold online to consumers this is known as a business-to-busi-
Companies with existing supply chains in Vietnam can work either ness-to-consumer (B2B2C) model, which functions similarly to
independently or with local partners to leverage current B2C traditional exporting. In this model, businesses sell products to a
platforms such as Lazada and Tiki.vn. Both platforms are distributor that will then sell products to online consumers.
continuously working to raise their own brand awareness, attract
traffic to their sites, and make it easier for customers to shop Products that require government registration prior to entering the
online. market, such as food, beverages, health and personal care
products, cannot yet be directly exported into Vietnam from
Bricks-and-mortar retail chains in Vietnam have also moved Australia.
online, selling directly to consumers. Vinmart does it via
adayroi.com, AEON has aeonshop.com and Auchan has At the moment, clothing, sports and outdoors, and electronic
Auchan.vn. products must comply with local sale and circulation regulations.
International e-commerce companies, such as Lazada, that sells to
As the most frequently purchased online products in Vietnam are multiple Southeast Asian countries, are not currently providing
cosmetics and personal care, Australian businesses operating in products directly from Australia to Vietnam, but there is potential for
this space could link up with key beauty chain stores, such as future international fulfillment services and cross-border exportation.
Medicare, Guardian and Pharmacity. All include their merchants’ In terms of logistics, there are many international freight forwarders
products in their online catalogue, while Pharmacity has instigated like DHL that can help exporters move cargo into the country.
direct online orders on its webpage.
To appeal to increasingly mobile Vietnamese consumers, Australian
businesses must get their products known. This can be done by
NO EXISTING RELATIONSHIPS linking with an e-commerce channel with a local fulfilment service,
or using a local social media platform, such as Facebook and Zalo
Shop, to conduct a branding, communications and self-managed
SMEs without relationships or a presence in Vietnam must get their direct selling strategy.
products into the market via traditional export channels first before
selling on e-commerce platforms. Shopping through social media apps such as Facebook is popular
in Vietnam, so businesses should consider how they will use social
Vietnamese law stipulates that all consumer goods, including food, media as a promotion and sales tool. See the social media section
beverages, skincare and healthcare products, must go through a of Austrade’s export marketing guide.
quality declaration procedure before entering the market. The
importer is responsible for this procedure. New exporters to market Businesses can also set up their own website for direct consumer
should: sales. Please refer to the ‘Exporting from your own website’ section
in Austrade’s Guide to Online Exporting for more information.
connect with potential partners in market
register products with the relevant local government agencies It is important to have an overall strategy to protect your intellectual
property rights (IPR) in Vietnam. Rights must be registered and
arrange for local partners to import the products
enforced in Vietnam, under Vietnam laws, where IPR protection may
list with an e-commerce channel (normally carried out by the be different from Australia. Companies should consider how to
local partner). obtain patent and trademark protection before introducing their
products or services to the Vietnam market, because the granting
Under the ASEAN-Australia-New Zealand Free Trade Agreement of patents and registering of trademarks are based on a first-to-file
(AANZFTA), many products imported from Australia to Vietnam can basis. The National Office of Intellectual Property oversees the IP
enjoy the 0 per cent tariff from 2018. registration procedure following Vietnam’s IP laws.
34 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 35CONCLUSION HOW AUSTRADE CAN HELP
Vietnam is an emerging e-commerce market that will become If you have any questions, please contact the Austrade team either The Australian Trade and Investment Commission (Austrade) is AUSTRADE IN VIETNAM
more dynamic as more global players enter the market. in Hanoi or Ho Chi Minh City. Our mission is to help Australian the Australian Government’s international trade promotion and
E-commerce companies are spending to gain market share and companies connect with potential partners. We look forward to investment attraction agency. Every market is different. But wherever you want to do business,
competition is intensifying. Developments in the industry are introducing you to the one of the most creative, dynamic and local knowledge goes a long way. At Austrade, we can offer you
unlocking new opportunities for foreign businesses. fast-growing economies in Asia. We deliver quality trade and investment services to businesses the experience, insights and contacts you need to make your
to grow Australia’s prosperity. We do this by generating and entry or expansion a success.
Increasing internet access, widespread smartphone usage, Austrade Hanoi Austrade Ho Chi Minh City providing market information and insights, promoting Australian
improved technological infrastructure and improvements in capability, and facilitating connections through our extensive We can help you:
regulations are advancing Vietnam’s e-commerce industry. While Australian Embassy Australian Consulate-General global network.
challenges remain around consumer confidence in product 8 Dao Tan Street 20th Floor Vincom Centre Understand the market: Better understand the market you’re
quality, data privacy, unfulfilled orders, and logistics infrastructure, Ba Dinh District 47 Ly Tu Trong Street, District 1 We also provide financial assistance for exporters through thinking of entering, or discover one you’d never considered. We
rising disposable incomes mean that consumers are paying for Hanoi Ho Chi Minh City programs such as the Export Market Development Grants provide information on export issues, statistics, trends and
higher value products online. Additionally, foreign-branded scheme. regulations relevant to your product.
products are considered to be safe and of high quality so
Email: vietnam@austrade.gov.au Email: vietnam@austrade.gov.au
Australia’s reputation for producing premium quality products is a To discover how we can help you and your business visit Make a connection: We can introduce you to experienced
Tel : +84 24 3774 0300 Tel : +84 28 3827 0600
strong advantage in market. austrade.gov.au or contact us at info@austrade.gov.au or on 13 locals who can help your business with importing, distribution or
Fax : +84 24 3831 7757 Fax : +84 28 3829 1656
28 78 (within Australia). support.
Australian businesses with existing operations in Vietnam should
be actively looking at how to make the most of current e-com- Be more efficient: We can help you make the most of your time
merce opportunities. Alternatively, cross-border online exporting overseas by arranging appointments for you in advance.
offers Australian companies with the potential to expand their
reach and sell directly to consumers, without becoming involved Get feedback: After your visit, we’ll get honest feedback from
in complicated local supply chains. local contacts, giving you an insight into their take on what you
offer, and their poential as business partners.
Promote yourself: When you’re ready to launch overseas, we
can help you with your marketing plan, with access to key trade
shows and ways to reach your target audience.
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38 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 39You can also read
