Retail e-commerce small but growing in Vietnam

November 05, 2016 | 10:54
Vietnam remains a largely underdeveloped retail ecommerce market, with digital commerce accounting for only a small fraction of the country’s total retail sales, said experts at a recent conference in Hanoi.
retail e-commerce small but growing in vietnam hinh 0

However, growth is expected over the next few years as increasing numbers of young consumers go online for the first time, largely through smartphones, said speakers at the conference.

Deputy Minister Ho Thi Kim Thoa of the Ministry of Industry and Trade (MOIT) told the conference participants he has set a target to grow e-commerce to reach 5% of the nation’s total retail sales by 2020.

Which, he said, in absolute dollars equates to US$10 billion for 2020.

Tran Thi Phuong Lan, deputy director of the Municipal Department of Industry and Trade, in turn said he estimated that retail e-commerce revenue in the capital city of Hanoi registered US$1.16 billion last year.

Mr Lan also predicted that the e-commerce retail sector would see strong growth over the next few years.

However, despite all the optimism and the strong growth forecasted, retail ecommerce would still account for just 5% of total retail sales by 2020, if the target were to be reached, which puts Vietnam well behind Western countries.

Most notably Vietnam lags far behind China, where retail ecommerce has been estimated to reach 18.4% of total sales in 2016 and is anticipated to grow in the double digits through the end of 2020.

Lai Viet Anh, deputy head of the MOITs E-commerce and Information Technology Department, said she believes the country’s population with its relatively young median age would help expand the e-commerce consumer class.

Vietnamese youth are learning to access the internet via smartphones at a very young age, said Ms Anh, and consequently have shown much more of a willingness to make purchases on their mobile devices than the older generations.

Ms Anh opined that the number of digital shoppers—those who browse or research products online but who haven’t necessarily completed a purchase transaction would also see their ranks grow over the coming years.

Though Ms Anh is sanguine for the prospects of e-commerce in Vietnam she openly acknowledged that the country lags far behind others in the region in e-commerce (including m-commerce) development.

If one just looks at the absolute dollar value of e-commerce revenue the disparity is obvious, she said, noting that while online sales reached just US$4 billion in Vietnam for 2015— in China it was US$617 billion, the Republic of Korea (US$39 billion) and India (US$14 billion).

The growth of m-commerce over the next few years should make the US$10 billion of revenue by 2020 target readily attainable, noted Ms Anh.

Nguyen Thanh Hung, president of the Vietnam E-Commerce Association, said most urban residents are familiar with e-commerce with the number of rural residents using it is climbing steadily.

This, he noted would also help strengthen e-commerce usage over the next few years.

The implementation of robust 4G networks by mobile carriers (which is already underway) would also help drive increasing digital purchases made via smartphone, particularly from the rural areas.

In addition, the declining costs of 4G devices and service plans would make it much easier for consumers to research, browse and buy via smartphones noted Mr Hung, making the targeted US$10 billion by 2020 a realistic and achievable target.

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