Rising internet and smartphone penetration coupled with a large young population will propel the Vietnamese e-commerce market, which is projected to grow at a compound annual growth rate (CAGR) of 16.3 per cent from VND218.3 trillion ($9.5 billion) in 2019 to VND399.5 trillion ($17.37 billion) in 2023, according to forecast from GlobalData, a leading data and analytics company.
GlobalData’s latest report, "Vietnam Cards & Payments: Opportunities and Risks to 2023", states that the country’s e-commerce market has doubled during the past five years, with total online spending increasing from VND90.1 trillion ($3.9 billion) in 2015 to VND218.3 trillion ($9.5 billion) in 2019.
Nikhil Reddy, Banking and Payments analyst at GlobalData, said, “While the traditional payment instruments such as cash, cards, and bank transfers are widely used for e-commerce purchases, consumer preference for alternative payments is on the rise. There is a growing demand for faster and more convenient payment means, especially among tech-savvy millennials.”
According to GlobalData’s 2019 Banking and Payments Survey, cash is still the most preferred payment mode for e-commerce purchases in Vietnam, accounting for 35.6 per cent in 2019. Alternative payment solutions are gradually gaining ground and accounted for 15.5 per cent. MoMo is the most preferred alternative payment solution in Vietnam, followed by PayPal.
Strong growth has prompted global companies to invest in Vietnamese e-commerce companies. In 2018, e-commerce company Tiki received $5.3 million and $44 million funding from VNG Corporation and Chinese investor JD.com, respectively. In the same year, another company Sendo secured $51 million from SBI Group (a Japan-based financial services company) and other investors. Furthermore, Chinese e-commerce giant Alibaba invested an additional $2 billion in Lazada, one of the leading e-commerce companies in the country.
Reddy concludes that, “Improving payments infrastructure, coupled with rising consumer confidence in online shopping and the availability of convenient payment solutions are expected to further drive e-commerce growth in Vietnam.”