The rapidly-growing ecommerce market in Vietnam offers commercial potential for US companies.
Vietnam’s ecommerce market recorded a value of $5 billion in 2019, rising by 81% against 2015, and is forecast to reach a value of $23 billion in 2025. Vietnam E-Commerce Association (VECOM) reported that Vietnam’s ecommerce market grew at an average annual rate of 30% from 2015 to 2019. The most popular products purchased online are clothes and footwear; consumer electronics and household appliances, personal care products. Key ecommerce operators include Tiki, Lazada, Shopee and Sendo.
The main drivers of this robust growth are progressive government policies, increased middle-income, a tech-savvy class, and fast-growing internet economy.
The Government of Vietnam actively promotes a non-cash payment society with the goal of reducing cash transactions to below 10 percent of all payments and reaching 70 percent of the banking population. Specifically, the Government of Vietnam issued Decree 02/NQ-CP in 2019 to spur increased non-cash payment for public services, such as tax, school fee, and bills of electricity and water.
The middle-income class in Vietnam has been growing steadily over the past eight years. Its percentage grew from 7.7 percent of the total population in 2010 to 13.3 percent in 2016. According to World Bank, roughly 1.5 million people were added to Vietnam’s middle-income class every year during 2014-2016 and is estimated to account for 16.3% in 2018. Their increased disposable income is expected to spur domestic consumption via digital payment platforms.
Vietnam’s internet economy is booming due to fast growing internet and smart phone penetration. A recent report by Google and Temasek shows that Vietnam’s internet economy reached USD $12 billion in 2019, accounting for 5 percent of the country’s GDP and is projected to reach USD $43 billion by 2025. According to Internet World Stats, there are roughly 68 million internet users as of December 2018, posting penetration rate of 70 percent. In the meantime, according to Statista, a market and consumer data service provider, Vietnam’s smart phone penetration is approximately 32 percent of the population and is forecast to reach almost 43 percent in 2022. The high penetration of internet and smart phone encourages and supports the strong growth of e-commerce.
• Long delivery time
• Low non-cash payment usage
• Security risks and concerns over electronic payment
Opportunities for US companies
The rapidly-growing e-commerce market in Vietnam offers commercial potential for US companies in the following sub-sectors:
Financial Technology (FinTech)
• Electronic payment
• Risk management (electronic Know-Your-Customer)
• Intrusion Prevention System (IPS)
• Distributed Denial of Service (DDoS)
• Web Application Firewall
• Endpoint and End-user Protection