Addressing expectations
Vietnam’s e-commerce market is on the way up and is expected to grow even stronger into the future if further improvements are embraced.
Addressing an e-commerce development conference at the end of 2023 in Hanoi, with the theme “Sustainable e-commerce development”, a Deputy Minister of Industry and Trade said Vietnam’s e-commerce sector has been experiencing outstanding development over the last decade. Growth has been in the order of 16-30 per cent each year, and the market size is anticipated to have reached $20.5 billion in 2023. The official emphasized that this proves that e-commerce is increasingly becoming a key component of Vietnam’s digital economy, and the e-commerce market has formed secondary service supply systems, including technology platform services supporting e-commerce transactions, marketing, online marketing communications, and delivery.
VIBRANCY ON SHOW
According to the General Department of Taxation, Vietnam currently has 139 ecommerce trading floor owners, of which 41 are sales floors and 98 are service floors.
The country’s e-commerce market is also witnessing increased competition and the dominance of four major e-commerce platforms: Shopee, Lazada, Tiki, and Sendo. Shopee and Lazada are considered the two largest, while Tiktok Shop has become the third-largest retail e-commerce platform in Vietnam despite only being in operation since mid-2022.
According to Mordor Intelligence, Vietnam’s e-commerce market size is estimated to reach $14.7 billion in 2024 and $23.77 billion by 2029, posting a compound annual growth rate (CAGR) of 10.09 per cent during the 2024-2029 period. In particular, during year-end holidays in 2023 like Christmas and also the upcoming Lunar New Year, or Tet, holiday in 2024, the ecommerce market will become more vibrant than ever. E-commerce platforms in Vietnam offer consumers a multitude of shopping opportunities throughout the year, with attractive discounts on special days such as September 9, October 10, November 11, and December 12, or on special anniversaries for each e-commerce platform.
For instance, on December 12, figures provided from Shopee show that it recorded a 28-fold increase in product sales globally through the Shopee Live livestream compared to normal days. In Vietnam, the ecommerce platform reached a milestone of 26 million products sold during 1.4 million hours of livestreams with the participation of celebrities, vendors, and brands throughout its Birthday Sale event. “The success of the Shopee Live Birthday Sale on December 12 once again affirms the effectiveness of Shopee’s increased investment in livestream and leveraging the KOL Affiliate network, or Influencer Marketing,” said Mr. Tran Tuan Anh, Managing Director of Shopee Vietnam. “During the peak shopping season at the end of the year, these marketing trends not only accelerate the growth of businesses on the platform and help them achieve their revenue goals, but also offer numerous benefits to users in terms of promotions, entertainment, convenience, and savings.”
In addition to offering enticing sale programs, e-commerce platforms also engage in other activities to capture customer attention. With the message “December 12 - Sale up to 90%”, Lazada offered a yearend surprise with “The Pinky Storm” campaign in Ho Chi Minh City, aimed at engaging customers and boosting sales during a specific promotional period. The campaign was designed to coincide with Lazada's anniversary and major sales events like Singles’ Day or Black Friday, which are significant in driving e-commerce sales. “Understanding the shift in consumer psychology and shopping behavior in the current period, Lazada continues to invest aggressively to bring more value to consumers choosing to shop on the platform,” said Ms. Pham Thi Quynh Trang, Chief Operating Officer (COO) of Lazada Vietnam. “Activities include actively cooperating with domestic and international sellers, deploying various promotional programs, enhancing the use of AI and augmented reality (AR) technologies to elevate the user experience, and intensifying User Engagement activities.”
A recent report from Google, Temasek, and Bain & Company released on November 23 highlights that Vietnam has had the fastest-growing digital economy in Southeast Asia for two consecutive years, in 2022 and 2023, and is forecasted to maintain this position in 2024. Gross Merchandise Value (GMV) in Vietnam is expected to post a CAGR of 20 per cent, increasing from $30 billion in 2023 to nearly $45 billion in 2025. In particular, growth in GMV over the next two years in Vietnam’s digital economy will be driven by the e-commerce sector.
Alongside the robust development of the digital economy, consumers constantly have
greater expectations about their online shopping experience, and the competition in strategies to meet new consumer trends is intensifying among e-commerce platforms. “In the current context, we believe that consumers will continue to raise their expectations for receiving added value when shopping, especially on e-commerce platforms,” said Ms. Trang. “They will perceive their spending as more reasonable if their shopping experience is personalized, involves interactive activities to receive gifts or promotional offers, or if the products are delivered quickly with excellent after-sales service.”
GROWING SUSTAINABLY
Despite the many positive results, the official from the Ministry of Industry and Trade believes that e-commerce also faces a host of difficulties and challenges, such as ensuring the origin of goods and the safety and security of personal information, e-commerce logistics infrastructure failing to keep pace with market growth, and boosting consumer confidence in online transactions. Therefore, he asked that the State and businesses jointly propose solutions to apply digital technology in improving the e-commerce ecosystem and protecting consumers and others conducting online transactions.
Ms. Le Hoang Oanh, Head of the Ministry of Industry and Trade’s Vietnam ECommerce and Digital Economy Agency, said that for e-commerce to develop sustainably, it is necessary to ensure five factors: positive and stable growth; balance and harmony in the interests of related parties; green development; trust in the sector; and human resources.
Firstly, Vietnam’s e-commerce market has been evaluated as posting growth within the Top 10 globally, and it is predicted to continue advancing in the next two years. Therefore, stable and positive growth can be considered a bright spot for the country’s market, but there is significant pressure on maintaining such growth into the future. “This bright spot therefore needs to be consistently preserved and protected through improvements to the legal framework and regular communications to ensure effective law enforcement in both businesses and society,” Ms. Oanh emphasized.
The second factor, balance and harmony, refers to balancing the interests of various stakeholders, including manufacturers, ecommerce platforms, logistics providers, payment providers, and consumers. It is also necessary to bridge gaps and move towards balancing e-commerce development in different regions. Investments in developing supporting infrastructure such as logistics, technological infrastructure, and training to improve the capacity of the workforce should therefore focus on leveraging regional advantages and resources rather than favoring the development of specific localities. Developing supply chain links within regions would generate overall strength for local products to be competitive when participating in the e-commerce market.
In regard to green development, e-commerce can contribute significantly to energy conservation and minimizing hazardous waste in the environment. “Together with consumers, e-commerce platforms and digital platforms can encourage green products and prioritize the use of environmentallyfriendly products, including packaging,” Ms. Oanh explained. “Through information technology systems, businesses can establish control processes, evaluate the implementation of green processes, and enhance awareness about environmental protection.”
Sustainable e-commerce development cannot afford to overlook the issue of trust. In the past ten years, despite the rapid growth in Vietnam’s e-commerce market in terms of volume, the greatest obstacle consumers perceive when shopping online is a lack of faith in the sales unit and problems verifying quality. Ms. Oanh said that to change such a situation, it is necessary to continue improving the legal framework relating to the e-commerce environment, enhance regulations on protecting consumer rights, conduct frequent inspections, checks, and monitoring to promptly detect and address violations, and establish business rules and standards in the online environment.
The final factor she touched on is human resources. E-commerce is a rapidly developing but still relatively new field, and the scale of the associated workforce has not kept up with development needs. It is estimated that only 30 per cent of the workforce in companies providing e-commerce solutions is formally trained. This means that some 70 per cent have been recruited from other fields of study, such as commerce, business, or information technology. There is significant demand for human resources in e-commerce, and if a suitable workforce can’t be provided then the sustainability of the sector will be at question.
Related digital infrastructure such as smart logistics services, electronic payments, electronic invoices, electronic contracts, and electronic identity verification have all made rapid progress in recent years. “Having sufficient resources and materials to build a comprehensive e-commerce ecosystem focused on quality and protection for consumers and all stakeholders, including sellers and service providers, is a crucial factor,” Ms. Oanh said.