ShopBack, one of Asia’s leading cashback reward programs, officially launched in Vietnam on August 8th, 2020 with offers to refund up to 25% for their customers when buying from over 150 brands including but not limited to Lazada, Watson, Booking.com, Tiki, Juno, and Fahasa.
News of the launch came as a surprise since most brands are limiting investments and plans for expansion during the current COVID-19 crisis. However, ShopBack is not the only company to do this as global brands such as UNIQLO, MUJI and Gojek have taken similar steps in expanding within the Vietnamese market.
What are the forces driving Vietnam’s fertile market that allow for these foreign enterprises to make such bold investments during this time?
1. Vietnam - One of the rare bright spots in the world in control of the virus
According to a report by HSBC, Vietnam remains high on the list for business expansion because the country has been able to maintain control during the COVID-19 crisis, while making efforts in reforming policies such as increasing foreign ownership limits.
Still, other countries continue to struggle in stopping the spread of the pandemic by going into lockdown, which has caused significant obstacles for countless brands around the world.
MUJI had to file for bankruptcy in March of 2020 after closing 18 stores across the US. Even preserving business in Japan, MUJI’s main market, proved to be difficult when their revenue plummeted after having lost US$27.2 million in the second quarter.
In Gojek’s case, the current situation of the crisis in Southeast Asia, especially in their main market Indonesia, has caused booking rates to drop significantly. Additionally, transportation orders have dropped as a result of quarantine policies and fluctuations in consumer habits.
In addition to suspending services that promote crowd activity, Gojek has also had to spend to support their rider partners.
Rapid policy changes and early quarantine in anticipation of the virus has allowed Vietnam to control the pandemic well and ultimately open to businesses earlier than other countries.
In fact, even in the first four months of this year amidst COVID-19, Vietnam was still able to increase FDI (foreign investment) compared to 2016-2018 (52.3% increase from 2018, 16.4% increase from 2017, and 79% increase from 2016).
2. Vietnam - A progressive market and a rapidly growing economy
According to the recent edition of the ASEAN + 3 Regional Economic Outlook published on August 6, 2020, Vietnam’s GDP growth is one of the highest among the ASEAN + 3 economies with a predicted 3.1% growth rate in 2020 and 7% in 2020.
Ms. Josephine Chow, ShopBack’s Head of Expansion, shared that since its beta launch in late 2019, ShopBack has attracted approximately 800,000 users. Also, the monthly growth rate is stable as the rate in sales and orders have increased by 1.5 times this year.
GoViet (now known as Gojek) has also seen unexpected growth since entering the Vietnamese market in August 2018 after establishing an ecosystem with a large number of users and creating a significant social impact for Vietnamese riders and restaurant partners.
In its first year of operation, the company reached a big milestone after acquiring “100 million orders, which then again doubled in just six months,” shared Mr. Phung Tuan Duc, CEO of GoJek Vietnam.
According to the Wealth-X report, Vietnam is the fourth fastest-growing high net worth country with a 12.7% annual growth rate. This also significantly contributes to the fast development of Vietnam’s economy.
3. Vietnamese users have adapted well to technological advancements and trends
Source: Vietcetera.
Ms. Josephine Chow, Co-founder of ShopBack, said: "The increasing number of internet users, rising internet penetration, and steady increase of the e-commerce share of total retail sales in Vietnam makes it a core and high-potential market for us."
Furthermore, according to Mr. Jack Ha, Commercial Director of ShopBack Vietnam: "With an immense tech talent pool that includes many forward-thinking individuals, we believe that putting our R&D center here was a wise decision. Also, the potential for rapid growth in the e-commerce sector puts Vietnam in pole position."
What's next?
Based on these advantages, it's not surprising that Vietnam has become a sure destination for businesses during the pandemic.
In his reflection on how to survive the pandemic, James Vuong, CEO of angel investor network tekAngels, explains:
“Make sure what we are building/offering continues to be something people want, even during the downturn. If this is no longer the case, if the existing value proposition ceases to be valuable, changes would be needed. If there were not even any product-market fit to speak of yet, it might be time to pivot."