Foreign Investors sense opportunities in Vietnam’s E-Commerce
The Vietnamese online retail market has seen an inflow of foreign direct investment into its largest online retail brands in recent years. Alibaba made the largest, 1 Billion USD investment in Lazada, while other investments are in the range of tens of millions USD. The most recent investment was made by JD.Com’s share purchase in Tiki.vn, Lazada’s competitor. Some other online retail stores joined in or have plans to compete in the Vietnamese online retail market: among them Amazon, AeonEshop or Shopee.
More revenue is to be made in this part of the retail segment, with expected sales volume increasing 2.5-fold to USD 10 billion between 2016 and 2020, making up 5% of the total retail sector in the country. Some more optimistic estimates expect even a five-fold increase by 2020.
Popularity of online shopping has soared thanks to the now near-ubiquitous smartphones and readily accessible digital services. Vietnam had 50 million internet users by the end of 2017 and placed 12th in world-wide rankings in 2016. With continuous regional development in infrastructure, growing wealth of the population, more accessible electronic devices and mobile data coverage, we can expect this number to continue increasing in the coming years as well.
Despite the growth, online retail is not without challenges in Vietnam. While in many other countries, online payments using credit cards are the norm and popular for their security and easiness, most Vietnamese still prefer to use cash and insist on examining goods in-person before purchase.
Investors do not seem to be deterred by this reality though. Some brands came up with a partial solution in the form of cash-on-delivery. In addition, large players such as Samsung or Alibaba have announced plans to invest in e-payment solutions, betting that eventually, Vietnam will learn to pay online.
Sources: Vietnamnet, Voice of Vietnam