Doing Business

Vietnam e-commerce: Potential for future growth and predicted trends for 2022

Trường Lăng

May 31, 2022

Doing Business

Vietnam e-commerce: Potential for future growth and predicted trends for 2022

Trường Lăng

May 31, 2022

In recent years, e-commerce has cemented its position as one of the most popular forms of purchasing for the Vietnamese public while the digital industry continues to play a significant role in Vietnam’s economy. With such impressive potential, Vietnam e-commerce has risen to become an attractive market in Southeast Asia. Vietnam’s potential to foster e-commerce was strongly demonstrated through the tremendous growth despite the unprecedented pandemic, the reasons behind that growth and the predicted trends for the year 2022 are also worth considering to further its development. 

The Potential – How did Vietnam e-commerce unanticipatedly thrive despite the Covid-19 pandemic?

When thousands of people across Vietnam entered a lockdown in 2020, a ripple effect throughout the economy was inevitable. Despite those difficulties, the e-commerce sector in Vietnam seems to be in a pretty good place amid the pandemic. 

According to the Vietnam E-commerce White Paper 2021 issued by the Ministry of Industry and Trade, the Vietnamese e-commerce market has seen a steady growth over the past 5 years, the value of this market started at 5 billion USD in 2016 then significantly doubled to reach over 10 billion USD by 2019. This upward trend continued in 2020, with 11.8 billion dollars, a rise of 18% over 2019. In the light of the Covid-19 pandemic, there has been a significant growth in the digital economy in general and e-commerce in particular. According to a report by Google, Temasek and Bain & Company, the total merchandise value (GMV) of the e-commerce industry in Vietnam grew dramatically from 8 billion USD in 2020 to 13 billion USD in 2021. 

digital economy
Figure 1: GMV of Vietnam ecommerce (Source: Google, Temasek and Bain & Company)
Figure 2: Esimation of GMV of Vietnam 2030 (Source: Google, Temasek and Bain & Company)

These figures clearly prove that Vietnam’s e-commerce sector has surmounted the challenges posed by the Covid-19 and is predicted to prosper in the “new normal”. This growth is even more astonishing than the period before the pandemic, placing Vietnam second in Southeast Asia in terms of e-commerce market growth and third in size, behind Thailand and Indonesia. This makes Vietnam’s e-commerce a great investment opportunity. 

The reasons behind – Why is e-commerce in Vietnam thriving? 

The pandemic has impressively opened previously untapped customer desires for online purchases of food, necessities, and even entertainment. Lockdown restrictions boostled demand for industries that help people stay busy while social distancing and caused them to spend online more than ever before. According to Adsota and SOL Premier’s study, e-commerce platforms in Vietnam have seen a 41% increase in new users since the outbreak of the pandemic.

Even if the pandemic comes to an end and shoppers are returning to physical stores, there is no sign of a decline in online shopping thanks to the tremendous effort in marketing activities of such e-commerce platforms as Shopee or Lazada, and it is considered to continue to thrive further as online shopping has become a habit of consumers. 

Besides, the significant growth of e-commerce also stems from the staggering rate of foreign investment and international partnership. The success of national platforms such as Tiki and Thegioididong demonstrates Vietnam’s potential to foster e-commerce. These platforms have grown into big e-commerce powerhouses thanks to investments from foreign countries like Japan, Germany, the United States, South Korea and China. 

The adoption of digital payments is another contributor to the growth of e-commerce while it has replaced the conventional cash-on-delivery method. With just a few clicks on an e-wallet platform installed in ones’ mobile phone, customers now can easily pay for their lunch or even electricity and water bills. Consumers’ preference for using digital transactions has risen as a result of the prolonged lockdowns that kept them at home for months.

According to a survey of 15,000 retailers, cashless payments in 2021 made up 72.8% of total transactions, up 9% year-on-year. The government has also put significant effort in promoting the usage of digital payments when signing a decision to approve a project on developing Vietnam’s non-cash payment for the 2021-25 period which aims to accelerate the growth of cashless payments in Vietnam and make cashless payment methods more popular to people in both urban and rural areas.

The trends in 2022 – What will shape the growth of e-commerce in Vietnam in 2022?

The B2C market in Vietnam is fairly huge and has a lot of potential. E-commerce websites, e-commerce trading floors, online promotion websites, and online auction websites are the most common forms of B2C in Vietnam. Thanks to the rise of social media, social commerce as a sub-sector of e-commerce in Vietnam is likely to continue growing, contributing to further growth in the e-commerce industry. Even though social commerce has grown significantly, not enough effort has been put into growing supply chain and other operation support for this sector, which is an opportunity for investors to get involved at an early stage.

In recent years, the B2B e-commerce marketplace in Vietnam has gained momentum. Reaching 13.2 billion in 2020, the growth rate of Vietnam’s B2B e-commerce market is the highest in Southeast Asia. It is expected to grow at a CAGR of 43% by 2025. Various B2B organizations opt to expand their network and collaboration with dealers, VARs, wholesalers, e-commerce platforms, etc. to offer products and services. This demonstrates their ultimate goal of maximizing business potential and achieving extensible development. The COVID-19 pandemic has accelerated this trend, making digital commerce the number one priority for manufacturers, distributors, and brands that hope to thrive.

Several successful B2B e-commerce businesses predict strong growth for the B2B e-commerce market in the coming years. EI Industrial is Vietnam’s first industrial-focused B2B marketplace, with the goal of accelerating the country’s digital procurement. They created the platform where purchasers can easily source from multiple suppliers and identify the best deals available.

The Vietnam-EU e-commerce platform (VEFTA) was launched with the view to helping Vietnamese businesses access the European market more conveniently and boosting Vietnam’s exports to Europe. Telio, with the mission of connecting businesses with retailers, has received funding of 22.5 million USD from Vietnamese tech unicorn VNG, raising its total investment to 51 million USD. 

Niche e-commerce market is another leading trend of 2022 and the coming years ahead. Because the market has been full of big players, it is hard for young businesses to seek a landscape to flourish. Therefore, targeting niche markets is a wise strategy which allows them to avoid confronting big players who have powerful financial capability.

Vietnam’s thriving e-commerce sector creates a diverse ecosystem which covers various areas such as mobile payment, virtual assistants, operation management, logistics, selling trending products and services,… These are areas that big players pay little attention to. Taking advantage of it, young enterprises are developing strategies to build businesses that have a good chance of succeeding – without going up against the big companies.

According to IPrice Insights’ ranking of the top 50 largest e-commerce sites in Vietnam, up to 80% of these are specialized on a certain type of product or service such as luxury goods, imported cosmetics… In addition, by going deep into a particular niche, they are able to offer a variety of related services to both individual and corporate customers. This results in a relatively large revenue.

Nguyen Tuan, Deputy Director of the Investment and Trade Promotion, said that targeting niche markets was appropriate for small businesses in the fiercely competitive situation now. It could help businesses reduce costs for product promotion, lessen competition and even stand out in the market. By learning deeply about the culture and consumption habits of the Vietnamese to identify a niche, small businesses could gain great benefits for future development, he added.

Another trend which can be easily seen is the growing adoption of digital payments, which also refers to the growing collaboration between e-commerce and fintech sectors. According to the Vietnam Investment Report, fintech and e-commerce together accounted for 70% of total venture capital of Vietnam in 2021, and this trend is predicted to continue in 2022.

The figure demonstrates that the pandemic has tremendously triggered major changes in customers’ behavior that leads to the shift of online shopping and digital payments. Offering such same benefits as accessibility and minimized contact for customers, these two sectors will be not only complementary but also intersecting. Therefore, it is advisory for investors to pay attention to the chance of overlapping between these sectors to further business opportunities.

According to the Statista Report, revenue in the e-commerce market of Vietnam is projected to reach US$14.81bn with the user penetration reaching 58.2% in 2022. With thorough research and applicable innovations regarding these trends, Vietnam’s e-commerce is likely to grow tremendously, exceeding these above figures. Though the market is fiercely competitive with multiple big players, the growing demands of Vietnamese create more and more potential niche markets that can provide golden investment opportunities. 



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