Vietnam - e-commerce boost in 2016

vietnam flag ecommerce

E-commerce Vietnam market

With the increase in mobile phone usage and internet penetration, e-commerce Vietnam are taking the storm in Vietnam. According to the Global Retail Development Index (GRDI) by AT Kearney, Vietnam is ranked 11th in 2016. Unlike other more developed countries in the ASEAN region, the market is still unsaturated despite it having one of the highest GDP growth in ASEAN. As a result, with high economic growth due to high export growth and FDI inflow, this has resulted in the growth of the e-commerce retail sector.

One reason for the boom of e-commerce Vietnam has been due to the favorable conditions in Vietnam. The widespread availability of mobile phones and internet, geographical advantages, low labour costs, and high consumption demand has allowed more people to resort through online means for trading purposes. As a result, online shopping is becoming a norm in the Vietnamese society.

Which sectors are gaining momentum?

With the growth of e-commerce, there are various sectors that are starting to offer its products and/or services online. However, not all sectors are growing as big or as fast as other sectors. Several e-commerce Vietnam sectors that are becoming more important in society include:

• Online Retail Market

• Online Travel Market

• Online Entertainment and Service Booking Market

• Online Gaming Market
 • Online Advertising Market

• Online Payment Gateway Model

Although all these sectors are becoming integral, some sectors in Vietnam trade are growing at a faster rate than others. In the online retail market itself, due to the rise in internet penetration rate, increasing disposable income, and cheaper prices offered through various online stores compared to brick and mortar stores, this sector is expanding at a fast rate. In the retail market itself in particular, it is dominating the clothing and consumer electronics segment.

Similarly, the online payment gateway market is rising as more people are using online means as their payment method, depicting a rising consumer confidence in online payments. Reasons for this include various online payment gateways putting secure safety measures in place and the variety of payment method offered for online transaction.

What does this imply for Vietnam trade?

With internet penetration reaching 45% (of the Vietnamese population) and a high potential e-commerce Vietnam market worth US$4.07 billion, according to Vecita, there is growth potential in this market yet to be exploited. Effective usage of e-commerce channels would open up new markets for Vietnam exports, resulted from a lower budget required for its operation. Yet, according to the survey done by Vecita on 800 Vietnam exports firms, despite 73% agree that using online channels for exports is effective less than 8% actually use it when conducting Vietnam trade.

Despite the benefits from online channels, Vietnamese firms have not turn to using e-commerce Vietnam channels for their exports due to their inability to achieve success, resulted from having undetailed product information and low effectiveness rate. For firms wishing to achieve maximum effectiveness, having certificates to guarantee their quality and safety would enable consumer confidence to rise despite using e-commerce Vietnam.

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