E-Commerce Giants Compete For Tech-Savvy Vietnamese Shoppers

For Nhi Huynh, owner of Wonder Pet House, partnering with online marketplace Shopee from the moment she opened her pet supply business was the best decision she ever made.

“It’s just more convenient for the business. We don’t need to have a shipment process or worry about marketing, sales and promotion as Shopee takes care of all these,” she said, adding that the only downside is the weight limit set by Shopee. “If customers want to buy more cat or dog food, they need to contact us on Facebook so we can deliver the additional items.”

E-commerce has grown tremendously in Vietnam. According to a report by the International Trade Administration (ITA), Vietnam’s e-commerce market was worth $5 billion in 2019, rising by 81% against 2015, and is forecast to reach a value of $23 billion by 2025.

Vietnam’s tech-savvy shoppers turn to e-commerce sites for everything from clothing, footwear and jewelry to pet supplies and electronics.

“The main drivers of this robust growth are progressive government policies, increased middle-income demographic, a tech-savvy population, and fast-growing internet economy,” reads the ITA report.

This expansion in Vietnam’s e-commerce industry – further spurred by covid-related travel and movement restrictions (when island-hopping in Thailand is off limits, a new purse will have to do) – is a significant factor contributing to keeping Southeast Asia’s $100 billion digital economy in robust health.

In a recent report released by the Financial Times, the rapid rise of Sea, a Singapore-based tech group that owns Shopee, is now triggering fresh tie-ups and acquisitions that are set to redraw the landscape in 2021 and beyond as economies start to recover.

In the third quarter of 2020, revenues of Sea’s e-commerce unit which covers Vietnam, rose 2.7 times from a year earlier to $618 million. These new users helped propel Shopee to the top of Vietnam’s e-commerce, ranking as the most-visited online shopping site. This is also true in Indonesia, Malaysia, Philippines, Singapore and Thailand.

In 2019, it was Alibaba-backed Lazada that ruled the roost.

Clash in the online marketplace

Shopee, boasting a healthy 62 million monthly visits in Vietnam, is far outperforming its rivals in the country. Gioi Di Dong, also known as Mobile World, is the closest competitor with 29 million monthly visits during the same period. Tiki, a local e-commerce operator, is breathing down its neck with 22 million, followed by Lazada at 20 million, according to FT.

To counter Shopee, Singapore-based Lazada in November joined forces with Grab in Vietnam, a wide-ranging partnership that offers Grab a way to strengthen its hold on ecommerce. Lazada taps Grab’s customers and driver networks, pointing shoppers to Grab’s food delivery service, and will use Grab’s parcel delivery service to ship products. Grab, in turn, refers its app users to Lazada.

Another noteworthy partnership of Lazada’s, this time with Google, is digital training courses for sellers, giving them expert tips to improve sales. Launched in November 2020, the program is expected to help improve Lazada’s own performance, too. It has also started offering a “sell to China” option, providing cross-border e-commerce opportunities for Southeast Asia’s online merchants.

According to FT, other international companies are now also making strategic moves. Amazon.com of the US is increasing its presence in Singapore. In food delivery, Germany’s Delivery Hero is aggressively expanding in Southeast Asia through its Foodpanda brand. Japanese messaging app Line has Line Man, which is among the most popular food delivery services in Thailand.

Looking ahead

While there were inevitable losses in 2020 because of the pandemic, Vietnam’s e-commerce industry has retained its status as the region’s “darling”. And the fact that the Vietnamese government is actively promoting a cashless society, coupled with the smartphones’ widespread use, will create even more growth opportunities in the field of e-commerce.

In fact, Vietnam’s overall digital economy, including e-commerce, food delivery and ride-hailing, has grown to $14 billion in 2020, up 16 percent from the previous year, and will further expand to reach $52 billion in 2025, reads a Google-led report.

Looking ahead, it is likely that the recovery of the global economy will be digitally-led. In Southeast Asia, major players such as Shopee, Lazada and Grab will be leading the charge with more investment, bolder marketing and more ambitious sales targets. And so the showdown will continue.