With the COVID-19 pandemic hitting Southeast Asia hard, mobile commerce in Vietnam has truly taken flight, propelling it towards regional prominence in the coming year. While online shopping was already emerging as a key selling strategy for most companies in the country, since March of 2020, increased access to apps and a variety of sellers driving prices downwards has made new eCommerce trends in Vietnam exceed the expectations of all sales projections.
Shopping sessions on mobile apps increased by 43% Q2 of 2020, equaling around 12.7 billion instances during the quarter. Social distancing increased in the second quarter of 2020, and, perhaps sparking national pride, there were no new recorded cases of COVID-19 in the country. Mobile grocery shopping matched the overall rise, equating to a 42% rise in Q2. Cosmetics followed with a 21% rise.
We explore why Vietnam’s ecommerce industry is growing aggressively
With increasing convenience, the young, tech-savvy demographic, and an already-established mobile banking infrastructure, Vietnam has seen a significant rise in its mobile commerce sector.
A youthful economy
Thanks in part to the youthful population of Vietnam, apps on Android phones have become increasingly popular in recent years, putting in the groundwork for the surge in contact-free delivery during the COVID-19 era. Millennial customers make for a significant portion of Vietnam’s economy. Consequently, many mobile shopping platforms have pivoted into entertainment style channels to appeal to socially-connected young adults, including TikiLive, Shopee Feed and SenLive.
With a median age of 30.9 years, mobile shopping apps are fiercely targeting this demographic. They are encouraging loyalty in their customers by offering fun options such as games and live-streaming options for consumers as they shop. These features encourage socially-inclined shoppers to remain on sites even as they conduct price comparisons of competitors’ sites. While the data for the age of successful startup founders in Southeast Asia is on-trend at around 45, many of the country’s startups have younger CEOs and the demographics of the country suggests that they are also staffed by young employees who have an insider’s knowledge of how to sell.
The increasing numbers of Vietnamese consumers connecting to shopping apps is likely to continue to grow as young people make up almost half of the population of the country.
Mobile banking leads to mobile shopping
Making online purchases without access to online money or credit is extremely challenging. The banking sector of Vietnam responded to this market gap by offering fintech solutions which have, in turn, led to a sharp rise in internet banking adoption. The established mobile banking infrastructure of Vietnam set it ahead of its neighbours. Finch Capital notes that by the end of April 2018, 92% of banks in Vietnam had invested in digitising options. Apps such as the industry leader VittelPay are making it increasingly easy to access currency to make payments. ViettelPay has several innovative features: it allows consumers to link to their phones, make bank transfers by phone number, and shop from all of Vietnam’s 63 provinces.
We look at the emergence of O2O commerce in Southeast Asia
Grab Holdings: a case study
Even as early as 2018, the online ridesharing apps Grab and Go-Jek were innovating with scannable QR codes and contactless payments that would take longer to become established in other countries such as the United States. This readiness demonstrates how the fintech infrastructure in Vietnam and many Southeast Asian countries were poised to adapt quickly to the challenges of COVID and swiftly introduce contactless payments. Vietnam still boasts the fourth-largest rideshare market in the region, even as it faces challenges in retaining customers and drivers.
To adapt, Grab Holdings, the parent company of Grab, invested $500 million USD in 2019 to diversify the services it offers. It partnered with mobile payments company MOCA to enable the use of prepaid debit cards during delivery or drop-off. Additionally, Grab Holdings formed a partnership with the Vietnamese logistics company Sovico Group to increase the efficiency of pickups and drop-offs.
The example of Grab is just one instance in which established businesses born and grown in Southeast Asia have partnered with other successful companies in Vietnam to expand exponentially. Now that the pandemic has hit the country is determined not to allow it to take hold, mobile commerce in Vietnam will likely continue to grow as online shopping and internet payments are flourishing with people encouraged to stay at home.
The example of Grab Holdings also highlights some of the challenges which face mobile apps in Vietnam – namely, the need to be pioneers in expanding the logistical infrastructure necessary to deliver goods effectively.
eCommerce trends in Vietnam, despite logistical challenges, are already capitalising on the frameworks set in recent years. With a youthful consumer base, a convenient banking infrastructure and the cooperation between a variety of companies regional to Southeast Asia, it is likely that the mobile eCommerce sector of Vietnam will only continue to grow. Even if COVID-19 related slowdowns make in-person purchasing untenable, mobile shopping will become a significant contributor to Vietnam’s economy.