VOV.VN - Though Euromonitor International estimates that although e-commerce made up just 3% of the Vietnamese retail market last year, the smallest figure among the major economies of Southeast Asia, the potential for growth remains alluring.
This is part of a report published recently by news outlet bnnbloomberg.ca.
A study conducted by Google suggests that the country’s digital economy is anticipated to grow to US$52 billion by 2025, marking an annual increase of 29% from 2020.
Startups backed by Warburg Pincus LLC and JD.com Inc., along with regional players such as Singapore’s Sea Ltd.’s Shopee and even Amazon.com Inc., are also targeting rapidly-growing Vietnamese middle class. Between 2016 and the first half of 2020, financiers invested US$1.9 billion into the country’s online sector, a study by Google, Temasek, and Bain indicates.
“Vietnam is at the beginning of becoming a digitalised society with a young population that loves technology,” said Ralf Matthaes, managing director of Ho Chi Minh City-based Infocus Mekong Research, “So all these companies are tripping over themselves to offer these services.”
The Vietnamese Government is aiming for online shopping to account for 10% of local retail sales, and as much as 50% in Hanoi and Ho Chi Minh City by 2025. In order to create a more transparent modern economy, authorities hope to increase cashless payment transactions for public services, whilst simultaneously improving the regulatory framework for e-payment.
A consortium led by Alibaba Group Holding Ltd. and Baring Private Equity Asia is in the process of investing US$400 million for a 5.5% stake in Vietnamese conglomerate Masan Group Corp.’s retail arm.
M-Service JSC, a local startup that operates the MoMo payment app, more than US$100 million in January raised from a group of investors, including Warburg Pincus.
For the first time, Vietnamese shoppers are being wooed with customer-first retail which is already common in developed economies, with dozens of e-commerce companies building loyalty among the nation’s growing middle class.
Matthaes said the impact of the novel coronavirus (COVID-19) pandemic has given digital retail a boost, with an increase of 30% in terms of local shoppers buying goods online last year.
Furthermore, Jeffrey Perlman, managing director of Warburg Pincus in Singapore, said the Vietnamese retail landscape is shifting faster compared to mature markets. Its move to modern retail skipped catalog shopping and stand-alone department stores due to malls emerging over the past decade.
Tiki is currently the nation’s largest homegrown e-commerce site among dozens of local online shopping platforms, including some operated by retailers who have established their own websites.
According to Crunchbase, investors such as Sumitomo Corp. and JD.com have backed the startup with US$192.5 million.
Henry Low, a former Amazon and Coupang Corp. executive, expressed his hope that there will be additional funding rounds and plan for an eventual initial public offering.