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< From Overseas Office> [ Vietnam ] Rapid Expansion of E-commerce in Vietnam and Sales Channels Expected to Grow in the Future

Today’s topic is " Rapid Expansion of Vietnam’s E-commerce and Sales Channels Expected to Expand in the Future”.

According to a report by the Department of E-Commerce and Digital Economy of the Ministry of Industry and Trade of Vietnam, the e-commerce market in Vietnam is expected to reach $5 billion (674.8 billion yen) in 2020 and an estimated $13 billion (1.7544 trillion yen) in 2021.  The volume of e-commerce market is expected to develop significantly over the next few years. Vietnam will rank second to Indonesia in terms of market size by 2025, and could overtake other Southeast Asian countries such as Thailand, the Philippines, Malaysia, and Singapore.
Although e-commerce in Vietnam appears to have expanded rapidly in recent years, the groundwork for its expansion has actually been laid for some time. One is the delivery culture, and the other is the high rate of use of social networking services.

　1USD = 134.96 yen (as of December 5, 2022)

■Flexible and convenient motorcycles that fit Vietnam's road conditions

I, the author (Imamura) started living in Hanoi in 2007. Since public transportation is limited to inconvenient buses, the main means of transportation for citizens is motorcycles. More than 80% of the visitors to Hanoi (according to the author's perception) always commented, "I wonder how accidents don't happen in this situation. Unfortunately, accidents were frequent, but the sight of the overwhelming number of motorcycles skillfully slipping through intersections with no traffic signals was impressive.
One of the reasons for the rapid spread of motorcycles is that their flexibility and convenience suited Vietnam's road conditions. Motorcycles can enter the city's non-public streets, which are less than one meter wide, and park in tight spaces.  You don't get sweaty in the heat like bicycles do. Motorcycles became a necessity for their daily life.

■Motorcycle Taxi and Personal Motorcycle Delivery Culture

■Integration with social media and the remarkable sales channel "TIKTOK

Another reason for the expansion of e-commerce is the high usage of social networking sites. Most people use social networking sites. According to research firms Hootsuite and WeAreSocial, the average daily Internet usage is 6 hours 47 minutes, of which the average social networking usage is 2 hours 21 minutes.(*)

　Source of reference：VN express international https://e.vnexpress.net/news/news/vietnamese-spend-more-time-on-internet-social-media-than-asian-peers-report-4232155.html

Currently, in terms of the number of social media users, first place is Facebook (93.8%), second place is Zalo (91.3%), and third place is Tiktok (75.6%). TIKTOK was an application with a strong entertainment element for posting and viewing short videos, but in recent years it has attracted attention as a new business tool.

　　Source：Market insight Report ''The e-commerce pivot in Vietnam.2022'' 　Source: By Acclime Vietnam, supported by Kantar Worldpanel

According to Tiktok's own survey, approximately 30% of respondents indicated that influencer reviews and live commerce have influenced their purchasing decisions. TIKTOK also has a "TIKTOK SHOP" where users can purchase products they like on TIKTOK through live commerce. At this time, this feature is only available in limited areas of China, Indonesia, Malaysia, Thailand, the Philippines, Singapore, the United Kingdom, and Vietnam. This service started in Vietnam from April 30, 2022.

On the live function of TIKTOK SHOP allows you not only to have in-shop shopping experience by asking questions at home, but you can also purchase the product introduced in the video by clicking its tag on the screen. TIKTOK SHOP allows users to complete the entire process from product selection to purchase within the app.

The key users, Generation Z (currently aged 10-27), are purchasing fashion items and accessories without any resistance. Sellers are also expanding the provision of information through video and live commerce that suits their perspective, driving the expansion of sales via e-commerce.

■Fashion, beauty, and shoe categories have a high affinity for video "TIKTOKSHOP"

I believe that videos that suit Generation Z's perspective are videos that "show total coordination at a glance”. Recently, shoe fashion has become more diverse in southern Ho Chi Minh City, with boots becoming more popular with both men and women, etc. If videos can be viewed on a vertical screen like TIKTOK's, it saves the time of changing phones and allows the viewer to understand total coordination, texture of materials, and size at a glance. TIKTOK's live commerce and fashion-related videos are highly compatible, and the products sold in the TIKTOK SHOP include women's clothing, beauty products, shoes, and men's clothing, in the order they appear in the application. The high demand for fashion-related products is evident.

■E-commerce purchase of fashion items

Intage Vietnam Monthly Consumer Confidence Index (December 2022)

Looking at the consumption change (base value of 3.0) in Intage Vietnam's monthly Consumer Confidence Index(*), fashion spending is high, with "fashion" rising from 3.16 in January 2022 to 3.56 in June, the highest value in the first half of this year, and holding at 3.56 in September. The expansion of purchases via e-commerce is one of the driving forces behind this trend.

　　Source：VIETNAMESE CONSUMER CONFIDENCE INDEX ,LATEST UPDATE. https://intage.com.vn/vietnamese-consumer-confidence-index-latest-update/

According to data(*) from the Vietnam Chamber of Commerce and Industry (VCCI), the purchase rate of "fashion, shoes, and beauty products" on e-commerce sites is 43%. This is second only to the top category, food products (52%).
In addition to the impact of the new COVID, the main reasons are said to be the improvement of e-commerce site quality control and the development of standards for images and product descriptions, but another major factor is that the above-mentioned purchases by young users are boosting e-commerce sales in the fashion category.

    Source：The White Book on Vietnamese E-Business 2022　By: Vietnam E-Commerce and Digital Economy Agency, Ministry of Industry and Trade https://wtocenter.vn/file/18855/bctmdt2022-final-pdf_08c88.pdf

※Monthly Consumer Confidence Index...An economic indicator that quantifies consumer sentiment (optimistic and pessimistic) about a country's current and future economic trends based on a survey. Monthly survey of adults aged 18 and older living in Hanoi, Ho Chi Minh City, using Intage Vietnam's online survey platform Asian Panel. The average value is 3.0 and is one of the leading indicators of economic trends, as optimistic consumers are expected to increase their consumption. (4,000 subjects as of December 2022)

■Lastly,

The expansion of live commerce on social networking services, combined with the refinement and streamlining of the delivery culture that has taken root in Vietnam, has led to the expansion of e-commerce sales for products that were once mainly sold in stores, such as fashion items. Vietnam has declared its intention to promote a country-wide DX program and is expected to focus more and more on the development of IT technology. Combined with the active purchasing power of the younger generation, the expansion trend of e-commerce in Vietnam is likely to continue for some time to come.
For me, the author, e-commerce is also essential for purchasing lunch, dinner, snacks, stationery, and electronics. Although I have never purchased fashion, I may soon be buying a nice shirt via live commerce.

   1USD = 134.96 JPY (as of December 5, 2022)

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  Author profile

  Nobuto Imamura

  INTAGE VNM Director.
  After working for domestic and international advertising/research firms, I was posted to Hanoi in 2007 and Ho Chi Minh City in 2017. Engaged in marketing support for Japanese companies, focusing on research. Holds a master’s degree in Business Administration. Specializes in segmentation and brand management.

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  Editor profile

  Yuki Makino

  In charge of customer support at INTAGE VNM. After working as a Japanese language teacher and secretary to the principal of a private Japanese language school in Ho Chi Minh City for 4 years, now links between the in-house research team and Japanese corporate clients.
  Supports projects by providing analysis results and improvement measures using various data.

• Dec 09, 2022
• 1220 Views