Retailers on full-out offensive in e-commerce

Retailers gallopping over to e-commerce

The boom of e-commerce

In 2018 retailers seem to have had a successful year with great revenue figures. For instance, FPT Retail, the owner of FPT Shop and F.Studio by FPT, maintained e-commerce revenue growth with 21 per cent in 2018. Previously, this firm reached e-commerce revenue of VND2 trillion ($87 million) by the end of 2017, up 45 per cent more than 2016.

Nguyen Bach Diep, FPT Retail’s general director, said that e-commerce will contribute a significant proportion to the total revenue of the company, with VND2.43 trillion ($1.6 million) in 2018, up more than VND400 billion ($17.39 million) since 2017.

FPT Retail also posted a total revenue of VND15.29 trillion ($664.78 million) on its website, up 16 per cent against 2017, while after-tax profit reached VND348 billion ($15.1 million), up 20 per cent compared to 2017. This retailer also opened 60 retail outlets during the last year, bringing the total number of shops to 533.

Online purchasing has become the trend and enterprises who do not invest enough to ride the waves will be left behind. FPT Retail's statistics show that its website received more than 360 million visitors, an increase of 41.6 per cent compared to 2017, including 1.78 million direct interactions.

Sunhouse Group JSC in the household goods segment also invested early in e-commerce. In 2015, Sunhouse launched its website sanhangtot.com. By owning over 60,000 retail outlets, Sunhouse reports 150-200 per cent growth in e-commerce revenueper year.

Nguyen Thi Mai Phuong, Sunhouse’s director of e-commerce, claimed that even this high growth is below Sunhouse’s expectations. In the upcoming time, the corporation will step up investment in its online platform to reach the revenue goal of VND5 trillion ($217.39 million) in 2020.

Savills’ latest report showed that Vietnamese consumers are changing their behaviour in 2017-2018 compared to the previous two years. One of the main reasons is the appearance of online shopping.

Numerous other supermarkets have been deploying online sales. For example, VinMart can now be accessed from Adayroi.com (Vingroup’s e-commerce platform), while Co.opmart developed its own private website. Others like AEON, Lotte Mart, and 7-Eleven have all created smartphone apps.

Earlier, in 2016, Nguyen Kim Trading JSC, one of the leading electronics retailers and whose 49 per cent stake is held by Thai conglomerate Central Group, acquired Zalora.vn, an e-commerce fashion platform. However, the company seems rather sluggish in its application of the O2O model in its retail chain.

E-commerce in Vietnam has just begun its very first steps. However, this market is highlighted for its potential, and its fast growth will strongly impact the retail industry.

$10 billion market

Vietnam’s population is over 97 million, with the majority being young. Therefore, the Vietnamese market is one of the world’s most attractive retail scenes.

According to the Ministry of Industry and Trade (MoIT), the growth of e-commerce in Vietnam was 25 per cent in 2018 and may maintain the same speed through to 2022. In the next few years, the market is expected to reach $10 billion.

This market potential has attracted many foreign funds and corporation to invest in domestic e-commerce website and enterprises.

Last October, Auchan Retail Vietnam, one of the leading retailers in Europe, and Lazada Vietnam signed a memorandum of understanding on strategic co-operation with regard to the launch of their O2O model. Accordingly, customers could visit Auchan’s online store on Lazada.vn featuring thousands of high-quality authenticated goods and hundreds of private label products.

The Chinese technology giant, Alibaba also seems to foresee strong growth in the Southeast Asian e-commerce market, particularly in Vietnam, as it entered Vietnam in 2016.

Even Amazon has decided to enter the country.

The American Chamber of Commerce in Vietnam (AmCham) together with the Vietnam Internet Association (VIA), and the Vietnam E-Commerce Association (VECOM) held a seminar with the theme “unlocking the full potential of Vietnam’s digital economy” in November 2018.

In this seminar, Adam Sitkoff, AmCham’s executive director, said, “The strong development of Internet and technology are expected to create a support platform for the digital economy to rapidly grow and contribute to the Vietnamese economy in the coming time.”

Along with prompting the development of Internet and technology, e-commerce is becoming an important factor in Vietnam. Enterprises who can capture and exploit this new retail trend will be the winners of the future.