Vietnam’s e-commerce market to reach $20 billion by year end

May 05, 2023 | 17:08
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Vecom forecasts Vietnam’s e-commerce market will increase by 25 per cent to US$20 billion by year end.
Vietnam’s e-commerce market to reach $20 billion by year end
Vietnam's e-commerce market still maintains a growth rate of about 25 per cent to over $20 billion this year. Photo source:

HANOI - Vietnam’s e-commerce market is forecast to increase by 25 per cent to US$20 billion by year end, according to a report on the Vietnam E-Business Index (EBI) 2023 conducted by the Vietnam E-commerce Association (Vecom).

The EBI 2023 averages 19.24 points, compared to 20.37 points last year. This indicates a big gap between Hanoi and HCM City, the two biggest economic hubs of Vietnam, and the remaining localities, according to the report.

HCM City with 89.2 points, continues to top the rankings this year. With 85.7 points, the capital city of Hanoi ranks second, followed by the central city of Đà Nẵng with 39.5 points.

Meanwhile, the Central Highlands provinces of Đắk Nông and Kon Tum are the worst performers with 10.6 and 10.2 points, respectively.

The report is based on three sub-indexes – information technology human resources and infrastructure, business-to-consumer e-commerce, and business-to-business e-commerce.

The booming e-commerce sector in 2023 and development in the following years is aided by a series of growth drivers such as the wave of digital transformation, consumers' trust, technological infrastructure, and favourable mechanisms and policies issued by the Government.

According to this VECOM report, the difficulties of the world economy along with many unfavourable domestic factors impacted negatively the development of the economy and trade last year, especially in the last months of 2022. Those disadvantages are forecast to remain until 2023.

However, continuing the previous two waves of growth, this association report says that Vietnam's e-commerce still gains a high growth rate.

According to experts, the potential for e-commerce development is still huge.

With thousands of businesses nationwide, the e-commerce industry is expected to continue this high growth rate at about 25 per cent until 2025.

Vietnam's e-commerce market is developing at an early stage. Meanwhile, its scale of e-commerce is still small, accounting for about 8.5 per cent of the total retail sales of consumer goods and services.

Exciting business activities on e-commerce platforms and social networks were the highlights of Vietnam's e-commerce sector in 2022 and the first quarter of 2023.

The report said that up to 65 per cent of businesses have implemented business activities on social networks. The number of employees at enterprises who regularly use tools such as Zalo, WhatsApp, Viber, and Facebook Messenger has continuously increased over the years.

Selling on social networks is also considered to be the most effective, surpassing other forms such as business websites or applications as well as e-commerce platforms.

The most prominent is the birth and strong growth of Tiktok Shop. Doing business on this platform has great appeal to a large number of traders in Vietnam.

Business activities on e-commerce platforms continued to grow steadily. In 2022, 23 per cent of businesses sold products on e-commerce platforms, according to the survey.

Metric Data Science Joint Stock Company said the total sales of the top four e-commerce platforms - Shopee, Lazada, Tiki, and Sendo - along with Tiktok Shop were estimated to reach VNĐ141 trillion (about $6 billion).

Shopee and Lazada are the two largest e-commerce platforms, while Tiktok Shop has become the third largest retail e-commerce platform in Vietnam although only operating since mid-2022.

VECOM's report also shows that the percentage of businesses having websites and mobile applications has not changed much. A high number of businesses suspending or dissolving in 2022 and the first quarter of 2023 could be one of the reasons for this situation.

Although the development of websites and mobile applications aims at the promotion of brands, start-ups and business households could prioritise doing business on e-commerce platforms or social networks.

The rate of websites that integrate online interaction features with customers reached 78 per cent. Half of websites that had online interactions with customers used chatbots.

Especially, the number of websites having mobile versions increased to 22 per cent in 2022.

The quality of websites increased, but businesses still believed that selling on social networks and e-commerce platforms was more efficient.

This reflects that besides the function of introducing businesses, products and brands, the development of a website with fully integrated functions such as sales, payment and delivery is not simple.

In 2019, VECOM proposed a sustainable e-commerce development programme. In the past, it actively implemented a number of specific activities under this proposal.

In 2023-2025, VECOM will support State management agencies to research and propose policies and laws towards to sustainable development of the digital economy as well as e-commerce. At the same time, they will propagate and encourage the online business community to implement specific activities.

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