IT Advisory / Digital Transformation

What You Should Know About Ecommerce in Vietnam?

Linh Pham

March 18, 2020

E-commerce is one of the top 5 trends in Vietnam in 2020. E-commerce has put it on the map thanks to the application of advanced technology in trading products between customers and businesses. 2020 is a year that Vietnamese e-commerce is predicted to boom and attract more foreign investors. The article will help you dig deeper into e-commerce in Vietnam.

What is e-commerce?

Before analyzing any concept, it is essential to know the definition of what we are studying. So what is e-commerce? E-commerce, in other words, electronic commerce is a form of transaction that buyers and sellers exchange goods using the Internet. E-commerce is not only limited to selling physical products online, but it also refers to commercial transactions made through the Internet.
Four types of ecommerce models
There are four types of e-commerce models: business to business (B2B), business to customer (B2C), customer to customer (C2C), customer to business (C2B). 
Based on four e-commerce models, a variety of transaction forms between business and customers are popular including retail, wholesale, dropshipping, crowdfunding, subscription, physical products, and services. 
Retail: selling a product to a consumer without intermediaries
Wholesale: selling a product in a bulk to retailers
Dropshipping: selling a product and shipping it to a customer via the third party
Crowdfunding: collecting money from consumers in advance and using that money to raise the startup capital
Subscription: the automatic recurring purchase of a product or service until the subscriber cancels
Physical products: tangible products that need to be stored
Digital products: downloadable digital goods, templates and courses that must be purchased for consumption to use
Services: a set of skills provided to exchange the compensation
You have been provided background knowledge about e-commerce and the next will help you know about e-commerce status in Vietnam.

E-commerce status in Vietnam

According to a summary report of the Vietnamese e-commerce market in 2019, Shopee VN leads the highest monthly traffic with 33.6 million, thegioididong and Sendo are the top three brands leading the monthly traffic. The highest rank in the number of traffic belongs to Shopee VN with 33.6 million visitors. Shopee VN had done a good job in hitting customers’ attention by introducing Shopee Live in March featured with Cristiano Ronaldo which was supported financially by SEA Limited. By the first three months of 2020, Shoppe has launched Shopee Feed with great success with a view to providing social connections among buyers, sellers, and friends.
Meanwhile, Sendo tried their best to attract more new customers. This e-commerce platform’s new users had increased by 24% in the Q1 and Q2 of 2019. Besides, Sendo ranked the second position nationwide regarding new downloads. 
ecommerce achievements
In 2019, Tiki released a new Livestream feature called TikiLive and tried to improve their warehousing and fast delivery capacity, which got a positive result of positioning the second place of the popularity on social media.
On the other hand, Lazada came up with an idea of integrating the platform with entertainment activities namely Lazada Super Party, Guess It game show, and the Lazada Music Festival. Thanks to these activities on mobile phones, Lazada ranked 2nd in terms of app users, yet ranked 5th in the website traffic recording 23.8 million visitors per month. 
According to iPrice’s research, four most-used e-commerce apps are Shopee, Lazada, Tiki and Sendo. In spite of the participation of a lot of foreign platforms like Aliexpress, SHEIN, Wish, the order still stayed the same. From the review, it is pointed out that Vietnamese customers are loyal to their favorite e-commerce platform. They will go to the website to look for their items. 
Based on the achievements of giant Vietnamese e-commerce platforms, consumer behavior towards online shopping has changed. Vietnamese buyers have preferred online shopping and been more trusted in the quality of products selling online. 

Prediction about e-commerce in Vietnam

2020 is believed to be a dynamic year for Vietnam’s e-commerce. According to the iPrice Group, three predictions are expected for e-commerce heading forward.

1. Focusing more on profitability instead of growth

Obviously, investors are more careful about investing in an area that produces a lot of profits and has sustainability in the future. This creates a trend in boosting profits among a variety of companies. Teddy Oetomo, chief strategy officer of Indonesia’s unicorn Bukalapak, shared that “Our focus is no longer growth, but to build a sustainable company.” 
Vietnam also follows the tendency. Two Vietnam’s e-commerce companies have been trying to focus on more profitable business sectors including Lotte.vn and Adayroi by closing online marketplaces. Lotte.vn has closed its website to change the company’s plan of retail strategy and Adayroi also shut down the website with a view to shifting to a new retail model. 
Giant Vietnamese e-commerce players now are relying on foreign investors’ capital. According to the iPrice Group, the four biggest e-commerce companies consisting of Shopee, Tiki, Lazada, and Sendo suffered a huge loss in 2018 then continued to raise money from oversea investors. 
These four companies have pointed out their plan of generating more profits in 2020 rather than emphasizing on the website traffic or merely the number of users.

2. Putting effort in infrastructure

According to a new survey conducted by Parcel Perform and iPrice Group, users are still not satisfied with their e-commerce delivery service. Researching on more than 80,000 e-commerce users across Southeast Asian countries, the study has found key factors improving customer satisfaction. 
Faster parcel delivery will lead to higher customer satisfaction ratings. Besides, communicating proactively with buyers on expected delivery time and meeting the expectation will easily facilitate e-commerce platforms to gain 5-star ratings. Because around 90% of negative feedback stems from transit time and late delivery, it is essential for e-commerce companies to address this pain point.
Plus, in the study’s findings, Vietnam is booming in e-commerce with the highest delivery ratings in Southeast Asia, which signals a positive outlook for the development of e-commerce in Vietnam. Despite the highest customer happiness in delivery service, Vietnamese e-commerce giants should continue to improve the speed of delivery in order to compete with other countries within the region. 

3. Opportunities for SMEs e-commerce companies

Not only big leading e-commerce players but also new e-commerce comers are helping e-commerce service in Vietnam become more abundant and competitive. 
The most notable startup that is worth mentioning is Lozi. The Vietnamese consumer-to-consumer company has ten branch companies providing services using the Internet to users. Lozi is now setting its eyes to become a one-stop solution for Vietnamese customers within one-hour delivery needs. 
Other than Lozi, there are many other Vietnamese startups in the e-commerce field. With the entry of newcomers, online payments, logistics, and customer relationship management tools are more accessible that fit lots of organizations’ demands. 
In addition, since the Coronavirus outbreak, customers prefer online shopping and online learning, hence e-commerce services and items have more chances to advance the quality of provided products. 
You can also find further information about the Vietnam technology guideline in 2020.
Generally, 2020 is a year leading and newbies in Vietnamese e-commerce continue to grow and achieve new achievements. Opportunities and challenges can be clearly seen from owners’ perspectives, however, Vietnam is still considered as a potential market. If you have the intention of investing in Vietnam, let’s consider the e-commerce area.  

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