May 14, 2024 | 16:00 GMT+7

More opportunities for e-commerce

Anh Nhi -

E-commerce seems certain to remain a highlight within Vietnam’s digital economy into the future.

Vietnam’s e-commerce sector has now gone through ten years of outstanding development, continually posting growth in the range of 16-30 per cent a year. Growth of 18-20 per cent is forecast for 2024, with revenue on business-to-consumer (B2C) online retail platforms predicted to reach an estimated VND650 trillion ($26.5 billion).

Outstanding growth

E-commerce continues to be a popular modern shopping channel for enterprises and consumers alike and is also a pioneering feature of the digital economy. Figures from the Vietnam E-commerce and Digital Economy Agency at the Ministry of Industry and Trade reveal that the size of the country’s retail e-commerce market was estimated at $20.45 billion in 2023, up 25 per cent against 2022.

Vietnam was recognized by Statista as being among the top 10 countries in the world in terms of e-commerce growth as of December, 2023. An estimated 61 million people engage in online shopping, with an average annual spend of $300 each.

According to the recent Southeast Asia Digital Economy report from Google, Temasek, and Bain & Company, the country’s e-commerce sector rose 11 per cent year-on-year in 2023. The market is projected to grow at a compound annual growth rate (CAGR) of 22 per cent to 2025, with total product value estimated at $24 billion.

Figures from e-commerce data platform Metric’s 2023 Online Retail Market Overview and 2024 forecast, also released recently, put B2C e-commerce revenue at nearly VND500 trillion ($20.4 billion) last year and an estimated VND650 trillion ($26.5 billion) this year.

Vietnam is leading the way in Southeast Asia in e-commerce growth, with product sales via retail e-commerce platforms to stand at over VND310 trillion ($12.6 billion) in 2024, a year-on-year increase of 35 per cent.

Figures also reveal that there were 2.2 billion product units successfully delivered in 2023 on the country’s five largest e-commerce platforms - Shopee, Lazada, Tiki, Sendo, and TikTok Shop - for a 52.3 per cent increase against 2022; the highest in the last three years. There are currently 637,273 shops on Shopee, Lazada, Tiki, and Sendo.

However, 2023 witnessed a decline of 1.3 per cent in the number of shops receiving new orders via e-commerce platforms, resulting from economic instability, disruptions to global supply chains, fiercer competition, and especially shortcomings at businesses, such as failing to choose the right target market or lacking appropriate production and business plans.

2024 trends

Many new forms of shopping developed strongly last year, most typically livestreaming and multi-channel sales, which brought significant revenues to professional sellers. Recent studies show that e-commerce can expect changes in trends this year and the next few years as mobile commerce grows strongly.

The development of social media commerce has also changed the way people discover, choose, and buy products online. This is forecast to continue growing strongly in 2024, offering new opportunities for businesses to access and attract customers.

According to a recent study from Meta, some 45 per cent of consumers often buy products at e-commerce platforms after seeing related information on Facebook or Instagram, while 20 per cent of consumers buy products directly via Facebook.

The application of new technology such as AI, augmented reality (AR), and virtual reality (VR) has increased the online shopping experience, boosted the personalization of the shopping experience, and optimized shopping via voice search.

Video has been forecast to dominate online shopping this year, with more brands interacting with customers via the method. Online shopping via livestreaming has gained particular attention given that it allows customers to interact in real time to discover and purchase products.

The retail channel is tipped to continue developing strongly in 2024. Omnichannel platforms will represent an effective tool for businesses to expand their customer base and increase revenue in the virtual environment.

A representative from multi-channel sales management platform Sapo said the trend of expanding multi-channel sales is clearly evident, with 55.4 per cent of sellers doing business via at least two channels (physical stores and online channels). E-commerce floors continue to be the most popular online retail sale channel, with sellers having a preference for TikTok Shop last year, which accounted for 5.9 per cent of sales, up slightly compared to 2022.

“Multi-channel selling is considered a ‘lifesaver’ in the context of economic changes, fluctuations in rental price for ground floor retail space in major cities, tightened regulations on e-commerce platforms, and changes to social media algorithms that have affected marketing and sales,” the Sapo representative said.

The most popular trends in the retail industry this year will be growth in sales channels (29.37 per cent), use of social channels such as Facebook and Zalo (27.07 per cent), e-commerce floors (21.96 per cent), and TikTok Shop (20.66 per cent), according to Sapo.

New openings

The expansion of sales channels, selling products via different business platforms, and making use of online sale channels and Shoppertainment & Edutainment, the representative went on, will be among the leading trends in the retail industry this year.

Meanwhile, Metric believes that cross-border sales will become an inexorable trend in the market, particularly official stores in China and South Korea, which have become more popular in Vietnam. Livestreams and multi-channel selling will continue to be the main source of rising revenue among sellers.

While 2024 is forecast to see a boom in the market, this does not mean that all businesses will enjoy the growth opportunities. In 2016-2018, any business that moved to online sale channels earned handsome profits. But, more recently, e-commerce floors have adjusted the rules of the game and “players” have become smarter. This indicates that only businesses that have clear and well-planned strategies will survive in the long run.

Industry analysts agree that e-commerce is developing rapidly and has significant potential to continue doing so. For success, businesses must grasp and apply the latest trends and create unique value for customers. Staying abreast of trends counts among the most effective tools to support business activities.

A representative from Metric emphasized four trends that will continue in 2024: Direct to Consumer (DCT); AI, machine learning, and big data analysis; sustainable consumption; and rising spending online by “Baby Boomers”.

As DCT becomes more popular, price competition will become even fiercer. Manufacturers will be able to deliver directly to customers at the best price, with no intermediary costs. Metric’s Marketing Director Pham Bao Trung said that although there are opportunities for sellers to increase their customer base, it can also be a “trap”, and manufacturers need to identify reasonable sales policies to maintain traditional distribution channels - sale agents - while also expanding online channels.

Advanced science and technology like AI, machine learning and big data, meanwhile, have indeed become more popular and easier to apply. Many businesses have focused on improving their interface and made it more convenient, more accurate, and safer.

Businesses that take social and environmental responsibility will receive greater attention from consumers, who are paying greater attention to sustainable consumption these days. Certain activities that could be promoted in 2024 include producing more environmentally-friendly products, using sustainable packaging materials, and securing materials or products from ethical suppliers.

The most interesting factor in 2024 will be the expansion of shopping by “Baby Boomers”. Time spent on social media by this generation has risen to nearly 90 minutes a day around the world. They have money in their pockets, and are willing to spend more to own high-quality products.

Acknowledging the challenges facing e-commerce, Mr. Trung said foreign sellers in Vietnam developed quickly in 2023. Figures show that sellers with warehouses based abroad earned nearly VND3 trillion ($122 million) via Shopee in the fourth quarter of 2023, a year-on-year rise of 30 per cent. Many analysts believe that foreign sellers, particularly those from China, will pose a major challenge into the future.

However, he went on, both foreign and domestic sellers can focus on enhancing their competitiveness via e-commerce platforms. Vietnamese businesses need to pay attention to the value of their products, creating core values or unique features to attract customers, such as offering local specialties, personalized products, environmentally-friendly products, or products made from Vietnamese materials.

At the same time, it is necessary to pay due regard to delivery and transport optimization and supply chain management, to cut operational costs and offer more benefits to consumers. Applying big data to analyze markets, keeping a close watch over markets, and building an effective business plan are among the proactive actions used by businesses that have posted significant e-commerce growth.


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