Changing customer habits bring online retail to fore

Even grocery shopping has a more comfortable, hassle-free online alternative

New consumption habits

Like most other friends of her age, 25-year old Hoang Thuy is tech-savvy and always carries a smartphone on her. Besides the time dealing with her work, Thuy said shopping online is her favourite hobby.

“In my spare time, I browse through all sorts of ads on Facebook, Zalo, and other online newspapers to keep myself updated with the latest trends in fashion and lifestyle,” Thuy said.

Working for a foreign company with a monthly income of around $2,000, each month Thuy spends about VND10 million ($450) buying fashion products from clothing, glasses, to footwear and other accessories whenever there are appealing sales promotions from famous brands like Mango, Zara or Gap.

Before placing an online order, Thuy gathers all information about the product from both online and offline channels. Especially, she and several other friends will look up comments about the product from diverse social sites and even visit shops to check the product’s quality before making a purchase on online shopping platforms.

“Pricing is important. I often hunt for product discounts and promotion programmes. The available smartphone apps help me find the best price for products,” she noted.

Tech-savvy consumers aged between 21-35 like Thuy who earn relatively high incomes and are willing to spend are expected to create sweeping changes in the domestic retail market scene in the coming years.

They are the target customers for retailers as Vietnam is home to about 94 million people, 65 per cent of whom are young. These customers mainly carry out transactions through smartphones. In emerging markets like Vietnam, smartphones are the main devices allowing users to surf the Internet anywhere and anytime.

Not only that, consumers today can place orders to buy fresh products during the day through a slew of new services. Registration procedures are very simple. One of the most useful services for busy people is to pre-order a service, such as a meal or grocery shopping, to wait at their convenience.

For registration, you only need to directly contact the specialised service provider through an electronic device, such as a smartphone or a laptop.

Online and multi-channel shopping have become increasingly popular among consumers in Vietnam and the Asia-Pacific region. The sales of ‘private retail’ goods brought from foreign countries has also increased rapidly in the country.

Some years ago, ‘private retail’ goods or buying products directly from global online trading platforms were not popular in Vietnam. Now, the service is favoured by young tech-savvy customers.

Race to match changing appetites

Shopping centres and supermarkets are facing growing challenges from the booming development of multi-channel retailers, as well as heated competition from traditional retail outlets. Retailers not only compete for good places, but also in terms of new service technology.

Customers’ shopping habits have been changing swiftly. As technology is evolving quickly, more and more new services have been put in place to scale up customers’ convenience.

Big retailers like Vincom, Lotte, AEON or Saigon Co.op have launched online selling on their websites with alluring promotions to attract buyers.

With the Vincom shopping mall brand, Vingroup now possesses the largest retail space for lease in Vietnam. It currently operates an extensive system of 46 shopping centres in 22 cities and provinces nationwide. This year, Vingroup is set to open 50 centres more to boost its presence.

Vincom seems to be the top choice for global brands when penetrating the Vietnamese retail market. Reacting to the vigorous development of e-commerce, Vingroup plunged into the field nearly four years ago by forming VinE-com Ltd., and positioned the new field as its spearhead sector in the future. It has also established online trading floor adayroi.com. Vingroup’s strong investment into e-commerce aims to turn VinE-com into a heavyweight rivalling Lazada, the largest e-commerce website in Southeast Asia.

According to an adayroi.com representative, apart from selling products made by Vingroup’s members (Vinmec, Vinpearl, VinMart, VinEco, VinPro, and VinDS), the site has joined hands with reputed suppliers present on the shelves at Vincom shopping centres to bring their products online.

Last year, electronics items and motorised vehicles brought adayroi.com the highest revenue, whereas consumer goods reported the largest order volumes.

Significantly, adayroi.com is also the single unit selling cars and motorbikes online, as well as the exclusive distributor of Vinmec hospital product packages. Entertainment services have also reported a sharp growth as it offers vouchers for Vingroup’s best resorts at competitive pricing.

AEON Mall, a member of Japan’s AEON Group and specialised in developing shopping malls, is growing its presence in Vietnam with four operating shopping malls in Hanoi, Ho Chi Minh City, and the southern province of Binh Duong. It will open two more malls in Hanoi and the northern port city of Haiphong. Its target is to have 20 shopping centres in Vietnam by 2025.

To catch up with the current online shopping spree in Vietnam, early last year AEON Vietnam, also an AEON Group’s subsidiary, launched e-commerce site AeonEshop to sell Japanese and local goods. The birth of AeonEshop has contributed to alleviating Vietnamese customers’ thirst for quality Japanese products. Most of the projects on the shelves at Aeon supermarkets are available for sale at AeonEshop, and the several hundred products under the Topvalu brand (AEON’s own brand) have been continuously updated.

The products earmarked to mothers and new-borns have been praised by customers for their high quality. In the coming time, AeonEshop will be expanding to other cities and provinces, and aims for nationwide distribution in the not-so-distant future.

South Korean retail giant Lotte Group has set to open 60 trade centres in Vietnam by 2020. In late 2016, the group opened e-commerce site Lotte.vn for online sales to meet growing customer demand.

According to Lotte.vn Marketing and Sales director Moon Jung Soon, the company will support three options (web, mobile web, and app) to ease shopping experience for customers. Customers can place orders on mobile devices or computers anywhere with a couple of simple clicks and taps.

Long-term commitment

After more than nine months of operating in the Vietnamese market, Lotte.vn reported reaching the one million order benchmark last year. The company has injected $25 million into e-commerce market development. According to Soon, the company’s investment into e-commerce will jump to about $100 million per year by 2020.

Meanwhile, last year marked spectacular growth for Vingroup’s adayroi.com as the site’s total order volume doubled and transaction value quadrupled compared to 2016. Adayroi.com also topped the market in customer satisfaction. The site is stepping up efforts to attract reputed brands while boosting its logistics system to create distinct advantages.

Though the Vietnamese e-commerce market has the potential for robust development, it has yet to garner customers’ trust as dispute cases related to online transactions have become commonplace in recent years. The main causes are quality and delivery.

According to analysts, trade centre operators must pay attention to bringing customers unique experiences as competition does not revolve around pricing anymore. They were even told to cut down on the number of trade centres and focus on quality. Modernising online trading platforms is also suggested to enrich customers’ shopping experience.