Online shopping gathers momentum in Vietnam

By Ngan Anh, TN News

Email Print

A Facebook page that functions as an online clothing store. Photo: Diep Duc Minh A Facebook page that functions as an online clothing store. Photo: Diep Duc Minh

RELATED NEWS

Nguyen Hai Ha, 34, of Hanoi’s Hoan Kiem District often shops online since she does not have much time to go to shops. 

She says about her online shopping experience: “I selected two sweaters from an e-commerce website. Just two hours later, they were delivered to me. The deliverers were very courteous and the goods were wrapped in a nice bag. One of the two sweaters was actually not as nice as it looked on the website. I was able return it.” 

“It's extremely convenient. 

“With a few clicks, I can buy anything, from electric home appliances to garments and books." 

The government’s efforts to promote Internet use and e-commerce over the last decade have helped promote the business. Online trade has become popular for goods and services like air tickets, tours, hotel rooms, mobile phones, computers, electronic products, garments, footwear, and cosmetics. 

Unlike traditional stores that are steadily losing ground, shopping websites are mushrooming in Vietnam, with names like Lazada, Sendo, eBay, and Thegioididong at the forefront. 

Nguyen Van Nam,  an economist who was former director of the Trade Research Institute, said online retailers provide customers a world of products at lower costs because they don't have to rent shops and pay electricity bills. 

Tran Nhat Linh, an online service manager at leading IT retailer Thegioididong, said his firm’s online sales reached nearly VND1 trillion ($47.6 million) in the first half of 2014, equal to the figure for the whole of the previous year. "Our online sales grew by 300 percent over the previous year, with more than 500,000 hits each day." 

Nguyen Thi Bach Diep, CEO of FPT Digital Retailer, said her firm, together with store expansion in many provinces, is also focusing on online trade. In the first six months of 2014 the company’s online sales increased six-fold year-on-year. 

Shopping online has become very popular with young people as the Internet users community grows. 

A recent survey by the Ministry of Industry and Trade’s E-Commerce and Information Technology Department found that more than 39 percent of the 90 million Vietnamese population used the Internet with 58 percent of them shopping online and spending an average of $145 each last year. 

The number of people using social media sites for shopping increased to 53 percent in 2014 from 45 percent the previous year. 

According to the Vietnam e-Commerce Association, shopping websites became a fad in 2011 and have been growing together with online payment methods. 

Dang Thanh Nga, a 21-year-student living in Hanoi’s Thanh Xuan District, said she imports garments from China and South Korea for selling online, and rents shopping sites or even uses Facebook to advertise. 

“You need to provide the sites some basic information, and pay them a little money, just a few hundred dollars a year,” Nga said. 

“It is very easy. You can complete all procedures to start your online trading within a few minutes.” 

Over 350 websites have registered with the Ministry of Industry and Trade to carry on e-commerce, but the number actually operating is much bigger, according to the E-Commerce and Information Technology Department. 

B2C (business-to-consumer) e-commerce turnover in Vietnam was worth nearly $3 billion, or 2.12 percent of total retail trade, in 2014. 

But the huge potential notwithstanding, e-commerce in Vietnam is held back by a low-trust environment. 

Though payments can now be made easily online through cooperation between e-commerce websites and banks, they still account for a very small proportion of payments in Vietnam. Most firms collect payment on delivery. 

The survey showed that 64 percent of online shoppers pay cash while 37 percent use electronic wallets and 14 percent use bank accounts for payments. 

The survey also found that 81 percent of the shoppers worried about exaggeration of quality and 51 percent about poor delivery services. 

Foreign interest

Foreign companies are looking at business opportunities in the emerging industry as the middle class grows and number of Internet users increases. Big global players like Alibaba, eBay and Amazon are rapidly building their presence in the country. 

Websites owned by foreign investors accounted for 59 percent of total online trade in 2014, up from 44 percent the previous year, the survey found. 

Lazada, a consumer goods retail website owned by German-owned Rocket Internet, topped e-commerce websites in terms of revenues, accounting for a whopping 36.1 percent of overall sales. 

It was followed by Sendo belonging to Vietnamese tech firm FPT Corporation, which accounted for 14.4 percent of e-commerce revenues. 

Sendo late last year announced a tie-up with three leading Japanese Internet firms SBI Holdings, Econtext Asia and Beenos, which together will buy 33 percent of Sendo. 

Local retailers want to cooperate with foreign investors to benefit from their deep pockets and experience in e-commerce. 

Economist Nam said Vietnam has been rated one of the most attractive online retail markets in Asia in recent years, and so foreign investors want to expand their business in the country despite challenges related to infrastructure, payment and delivery.

 

 

More Business News