Understanding Vietnam’s E-commerce Growth: Insights for Sellers
Sellers operating in Vietnam’s rapidly expanding e-commerce market are encouraged to stay informed about economic trends, evolving consumer behaviors, and innovative e-commerce strategies. This proactive approach is essential for driving sustainable growth in an environment marked by rapid changes and fierce competition.
The Explosive Growth of E-commerce
According to the latest online retail report from Metric, Vietnam’s five major e-commerce platforms—Shopee, Lazada, TikTok Shop, Tiki, and Sendo—are poised for significant growth, with revenues expected to soar to VND387.5 trillion (approximately $15.4 billion) by 2025. During this period, the number of products sold is projected to reach 4.2 million, reflecting year-on-year growth rates of 22% for revenue and 23% for product sales.
This remarkable expansion is credited to a nationwide shift towards online shopping, primarily driven by promotional campaigns and seasonal shopping events. Sellers can leverage this trend by continuously enhancing their understanding of market dynamics and consumer preferences.
Spending Patterns of Vietnamese Consumers
In 2024, the gross merchandise value (GMV) for Vietnam’s major e-commerce platforms hit VND318.9 trillion (around $12.7 billion), marking a staggering increase of 37.4% from 2023. This figure represents approximately 6.5% of the country’s total retail sales, highlighting the growing importance of e-commerce in the retail landscape. Notably, the growth rate of online sales channels is substantially higher—4.5 times—than the overall retail sector, which only saw an 8.3% increase.
Leaders in the E-commerce Arena
Shopee and TikTok Shop have emerged as frontrunners in this competitive market, reporting phenomenal year-over-year growth rates of 70% and 181%, respectively. Not surprisingly, the E-Commerce and Digital Economy Agency of Vietnam anticipates the market size will exceed $25 billion by 2024, significantly outpacing earlier estimates from prominent organizations like Google and Temasek.
Daily Consumer Expenditure
Vietnamese consumers showcased their growing preference for online shopping by averaging VND873.6 billion ($34.8 million) in daily spending on the top five e-commerce platforms in 2024. This daily expenditure could be even more substantial when factoring in sales from social media transactions and cross-border platforms.
In total, the volume of goods sold through these platforms surged by more than 50% from the previous year, accumulating to over 3.4 billion products sold. This substantial uptick signifies a robust purchasing power among consumers, affirming the strong market demand for online retail.
Popular Product Categories
Different product categories have thrived in the e-commerce sector, with beauty, home goods, and women’s fashion leading in sales. Notably, the food and grocery segment has exhibited an extraordinary growth rate of 76%, the highest among various categories. This reflects a shift in consumer behavior, as more individuals opt for the convenience of online shopping over traditional markets or supermarkets.
The Competitive Landscape
Despite the overall growth in sales, challenges persist. The number of stores generating orders fell by 20% to 650,000, indicating heightened competition among sellers. This decrease suggests that smaller sellers without effective strategies are struggling or exiting the market. In contrast, larger, well-managed stores continue to flourish, emphasizing the importance of strategic planning and execution for success.
A Surge in Cross-border Trade
Vietnam’s e-commerce landscape in 2024 also saw a notable increase in cross-border trade, with the country welcoming over 324.1 million imported products, generating sales of VND14.2 trillion ($564.5 million). Both figures reflect annual growth of nearly 38% and 43%, respectively.
Consumers in Vietnam are becoming increasingly comfortable making purchases from international sellers. Improvements in logistics, including faster shipping times and enhanced tracking systems, contribute to this comfort level. Additionally, platforms are offering robust return policies and improved customer protection, making international shopping more appealing.
Need for a Competitive Edge
The presence of approximately 31,500 foreign sellers intensifies the competition for local retailers in the online marketplace. This influx signals a pressing need for domestic businesses to adapt by optimizing their product offerings and pricing strategies. To thrive, sellers must stay agile, continually adjusting to evolving consumer demands and competitive pressures.
In conclusion, sellers in Vietnam’s e-commerce landscape must remain vigilant and proactive, keeping abreast of economic shifts and consumer trends. By embracing these insights, they can position themselves effectively for sustained growth in this dynamic environment.