Investors flock to Vietnam as e-commerce market expands

Friday, 27 February 2015
Foreign-run online shops in the past have been less popular than Vietnamese-run ones, which understand local customers, but that trend is changing as more retailers invest in Vietnam.
Last year, the German Rocket Internet announced a huge investment deal of $250 million in Lazada, and Rakuten, an online retail group from Japan, is reportedly considering the possibility of cooperating with a Vietnamese e-commerce firm.
Observers commented that now is the right time for foreign investors to gear up their investment plans in Vietnam. Most market reports have predicted there would be an online boom in the near future.
Tran Trong Tuyen, director of DKT, which owns the e-commerce solution Bizweb, forecasted that the Vietnamese e-commerce market in 2014-2015 would be double that of 2013.
Vietnamese customers use online shopping through smart mobile devices such as smartphones and tablets.
A 2013 report of Epinion, a market survey firm, showed that 50 percent of Vietnamese internet users use online shopping. Vietnam expects to have an online Black Friday this year.
Lazada’s CEO Alexandre Dardy thinks that shopping online through smartphones will be the tendency in the future, which will be favored by young customers.
Flurry Analytics, a market survey firm, has reported that Vietnam ranks second in the world in terms of an increase in the number of smartphone users. This gives one more reason for e-commerce firms to open more online retail channels through mobile apps like iOS or Android.
Large traditional retailers in Vietnam like FPT Shop, Nguyen Kim and The Gioi Di Dong last year began to increase their investments to develop online retailing.
According to Nguyen Thi Bach Diep, CEO of FPT Retail, the retail revenue through the online channel FPT Shop grew by 600 percent in the first half of 2014.
Some companies like Lazada and Zalora Vietnam have shifted from B2C (business to customer) to C2C (customer to customer), while Tiki.vn, which specializes in trading books and cultural products, has expanded its business scale by trading digital products, electrical equipment and fashion products.
Payment problems
Though Vietnamese often surf on the internet and place orders online, making payments remains a problem for online shopping.
Pham Tien Dung, chair of Banknetvn, noted that troubles occur more regularly with payment from domestic cards than international credit cards, causing consumers to hesitate to buy goods online.
Nguyen Ngoc Dung, chief representative of VECOM’s HCM City Branch, the Vietnam e-commerce association, noted that the problem does not lie in technological solutions, but in consumers’ habits.
Vietnamese want to see products in person before buying. Therefore, e-commerce firms now have to accept payments after delivery of goods to customers.
Source: TBKTSG