Vietnam's Dot-Com Boom

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Since discovering the sites in July, she’s bought clothes for her kids, pots and pans for her home, and facials for herself. “I sometimes buy things I don’t need, but it’s too good a deal to pass up,” she says.

Consumers like Phuong are attracting online entrepreneurs to a market they believe is on the cusp of an online revolution, one that could soon create Internet success stories on par with China’s Baidu (BIDU) and Tencent. “There’s a lot of interest in Vietnam’s information technology space right now,” says Deepak Natarajan, the Singapore-based director of Intel Capital, the chipmaker’s venture capital arm. “There’s huge growth potential there.”

Of Vietnam’s 88 million people, about one-third are online—and most of those are young urban dwellers ready to shop. They’re “getting to the age where they are going to start consuming services online,” says Jonah Levey, chairman of Navigos Group, which owns VietnamWorks, a jobs website modeled on Monster.com (MWW). “It’s perfect for e-commerce.”

Vietnam already has more than two dozen sites mimicking Groupon, the Chicago company that offers steep discounts to spas, restaurants, and other merchants. The leaders include NhomMua, with 1 million registered members, along with Muachung and Cung Mua. “The market still has a lot of room to grow,” says Nguyen The Than, deputy general manager of Vietnam Communications, which owns Muachung.

The companies have to make some big adjustments to adapt the U.S.-spawned group-buying model to a country that lacks a lot of infrastructure. Since most Vietnamese don’t have printers, NhomMua employs a team of over 100 couriers who scoot around Hanoi and Ho Chi Minh City on sky-blue Honda motorbikes delivering vouchers to customers. The messengers also collect payment in cash, since few Vietnamese have credit cards or use PayPal-like e-wallet services.

Such problems have kept NhomMua confined to major metropolitan areas. “The growth rate is a lot slower than other countries because we have to handle the logistics,” says Tom Tran, chief executive of MJ Group, which owns NhomMua.

Solving the online payment problem is the biggest challenge for Vietnam’s e-commerce players, says Ha Hong Hao, the CEO of Tretho Information Service, which owns a parenting website with 700,000 members. “For payment, you have to work individually with each bank and cooperate with many middle guys,” she says. “It’s still a big barrier for this business.”

The bottom line: One-third of Vietnam’s 88 million people are online, and some entrepreneurs talk of an Internet boom.

The authors of this article: Einhorn is Asia regional editor in Bloomberg Businessweek's Hong Kong bureau. Ha is Vietnam bureau chief for Bloomberg News. Pham is a reporter for Bloomberg News.