Already a strong and growing marketplace, the online shopping scene in Vietnam has seen the positive effects of social distancing and people working from home this year. As the country jockeyed for position as one of the region’s most digitally developed nations, the startups in the country were focusing on becoming significant players in the eCommerce in Southeast Asia arena.
As with many of the eCommerce startups in Southeast Asia, tech firms and online retailers in Vietnam have witnessed phenomenal growth in recent years. This upward trend looked set to continue as 2020 began, but the global COVID-19 crisis catapulted it to stratospheric levels no one could have predicted.
Since 2019, internet use in Vietnam has increased by 10%, rising to 68.17 million users, 70% of the total population of the country. While this is a massive leap, there has also been a knock-on effect on eCommerce. By the end of 2019, around 75% of all Vietnamese aged between 16 and 64 had purchased something online. The volume of purchases is not the only indicator of success, as it also lies in the amount spent. During 2019, all sectors of eCommerce saw a rise in spending, with clothing, food and personal care, and toys or hobbies being the biggest winners.
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With movement restrictions, fears of catching the virus and more people working from home, the habit of purchasing online really started to catch on in this developing nation.
High conversion rates
As the country’s internet infrastructure improves, consumer engagement levels have also increased. Governmental commitments to developing the online economy, teamed with support for the move to 5G capabilities is helping Vietnam to compete with its ASEAN neighbours when it comes to digitalisation and ease of doing business. One added ace up Vietnam’s sleeve, however, is the conversion rate. With the highest conversion rate in the region at 1.3, compared to Indonesia and Singapore at 1.1, the country is a prime market for emerging startups and established brands alike. Vietnamese don’t just browse, they buy.
Leaders of the pack
As the eCommerce ecosystem strengthens, one surprising trend has emerged: local is giving outside competition a run for its money. While Shopee may still be the most-visited shopping platform in Vietnam, local companies such as Thegioididong, Tiki and Sendo take up the next three places, pushing Southeast Asian giant Lazada into fifth place. This move towards buying from Vietnamese firms is further aided by the remaining top 10 most-visited shopping portals also being locally owned.
With the increased use of social commerce through platforms such as Facebook and Zalo—yet another local company—eCommerce in Vietnam is on solid ground.
As with most countries in the world, Vietnam saw an increase in demand for online grocery shopping as the pandemic tightened its grip. The need for contactless deliveries and avoidance of crowded areas had many turning to their mobile phones and laptops to buy their essential items such as groceries, personal hygiene and healthcare products.
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But these aren’t the only sectors to witness a boom in business. In order to pay for these goods without coming into contact with another person, eWallets and online payment products have come into their own. Popular ePayment products momo, Moca and ZaloPay were amongst those to benefit from the 76% increase in non-cash transactions. Fintech has been lagging somewhat in the country, but with such a sharp rise in usage, more startups and banks will consider entering the field as Vietnam moves to a society less dependent on cash. Investors in the sector will be watching closely as firms such as VayMuon, Finhay and Utop start to make waves with the investments they recently received.
Peer-to-peer lenders VayMuon have already secured seed funding from NextTech and VietinBank Insurance and are pitching for Series B funding as they expand. Meanwhile, financial services one-stop-shop Finhay recently received an undisclosed amount in their latest funding round. With Utop receiving backing from Japanese SBI Holdings and Vietnam’s FPT Corporation to the tune of $3 million USD, this loyalty card and consumer data security firm also look set to thrive.
As shopping malls and smaller outlets start to see footfall again as the pandemic eases its grip on the region, eCommerce startups in Southeast Asia have little to fear. The Corona crisis has made online shopping a habit for many more people, and as Vietnam continues to digitise and improve its infrastructure, they are likely to emerge as one of the influential players of the eCommerce in Southeast Asia scene.