In recent years, Vietnam has witnessed remarkable development in its digital economy, both in terms of scale and growth. Its flourishing digital economy, coupled with a favorable regulatory environment makes it a great investment opportunity.
According to a January report by the Ministry of Industry and Trade (MoIT)’s E-Commerce and Digital Economy Department, 53% of the population has joined the online retail market.
Head of the MoIT’s E-Commerce and Digital Economy Department Dang Hoang Hai was quoted saying, “Despite the impact of the COVID-19 pandemic, local e-commerce revenue grew by 18%, reaching US$11.8 billion, accounting for 5.5%of total retail sales, consumer goods and services nationwide.”
This makes Vietnam the only country in Southeast Asia to see double-digit growth amidst the global pandemic.
Impacts of COVID-19
Given strict governmental regulations on travel as an attempt to combat the pandemic, including the lockdown of two of Vietnam’s most bustling cities — Hanoi and Ho Chi Minh City — among other provinces, the e-commerce sector has attracted many first-time online shoppers. Many of those in this category rely on expedited grocery deliveries in order to limit outdoor travels and contact with others in food and beverages outlets.
Nonetheless, the pandemic has negatively impacted other aspects of e-commerce, such as a steep decline in the tourism realm with decreases in hotel and flight bookings, in addition to consumers buying items of lower value — a possible product of corporate downsizing or pay cuts, both results of the global pandemic.
Why is Vietnam’s E-Commerce sector soaring?
This considerable increase stems from greater demand for online commerce and entertainment, the emergence of Vietnam’s e-commerce players in the regional market, as well as international partnerships that led to massive investments into the sector.
Currently, Cash on Delivery (COD) is the most common method of financial transaction for online purchases, but the rapid adoption of e-wallets could be considered a game-changer in terms of further accelerating Vietnam’s e-commerce sector. From Momo, Moca, to ZaloPay and more, e-wallets are predicted to replace a large portion of cash transactions in the country.
In addition, the accelerated development of Vietnam’s 4G infrastructure has made mobile internet access more feasible and affordable for the nation. And this massive internet user base is a core pillar for the booming popularity of selling online.
In a recent report by Decision Lab for Q2 of 2021, it was revealed that Shopee, a Singaporean e-commerce giant, has asserted dominance over all of its online retail rivals. In fact, 51% of the surveyed respondents identified Shopee as their go-to website for shopping online — the first time any e-commerce platform has crossed the 50% mark since 2019.
By age group, however, the one apparent anomaly lies in the fact that Gen X-ers still prefer Lazada, Shopee’s biggest competitor, which launched three years prior in 2012.
Vietnam in the context of ASEAN e-commerce
As reported by the 2020 United Nations E-Government Survey on e-commerce, a survey designed to both assess e-government development through comparative rating and provide a snapshot of country trends and relative ranking, Vietnam moved up two places among 193 nations to rank in 86th place.
Additionally, the MoIT announced in January that Vietnam is among the three nations with the highest growth rate of the retail market in Southeast Asia — alongside Indonesia and the Philippines.
In collaboration with the national master plan for the fiscal future of the country, Vietnam’s MoIT envisions a future in which strengthened coordination with international allies, increased demand, and heightened ease for online shopping among citizens will generate new impetus for economic growth. This is particularly important as businesses look to recover from the pandemic.
The major growth in Vietnam’s e-Commerce economy has presented itself as a huge investment opportunity. With this, the government is also aiming for e-commerce to account for 10% of the country’s retail sales by 2025 — a 4.5% increase from the current contribution to the total retail sales.
Vietnam’s rising e-commerce industry is expected to reach close to $9 billion USD in the near future, providing significant opportunities for investors.
The Vietnamese government’s commitment to strengthen the growth of the economy’s digital transformation has directly led to the development of its e-commerce sector.
In conclusion, with the rising internet access, wider adoption of smartphones and e-wallets, also combined with increased accessibility, demand, and trust in online shopping, Vietnam’s booming e-commerce sector shows no sign of slowing down — now, or ever.