Why Does Vietnam Love e-Commerce?
Luxury consumers prefer shopping on social networks like Instagram over physical stores – and the trend only grew during COVID-19
With a developing economy and a population of over 97 million in 2020, Vietnam is a promising market for e-commerce and that promise has only grown over the last year despite – or even in part as a result of – the coronavirus pandemic.
According to a January 2021 report by the country’s Ministry of Industry and Trade’s Department of E-commerce and Digital Economy, 53 per cent of the population has already took part in online retail. Meanwhile, the “E-conomy SEA 2020” report from Google, Temasek and Bain & Company pointed out that e-commerce in Vietnam grew 46 per cent year on year, alongside strong growth across most sectors except for travel. Looking towards 2025, they suggest the E-conomy will reach US$52 billion in value, ranking third in Southeast Asia.
The fast-growing middle class is the sector driving increasing expenditure, with its number reaching 33 million in 2020, up from 12 million in 2012. As the middle class expands, there’s also a growing interest in top luxury brands.
The new demographic are HENRYs (High Earners Not Rich Yet), who have an annual income of about US$75,000-100,000, according to Robert Tran, CEO at RBNC, a global business advisory firm.
Despite the presence of physical stores, the second most popular channel for shopping for luxury brands is through social networks. This makes sense when you consider that Vietnamese spend about seven hours per day on average on the internet, mostly on Facebook and YouTube but also on Zalo (a local chat app) and Instagram.
Facebook was by far the preferred platform for e-commerce, chosen by 89 per cent of respondents to a 2019 survey by Asia Plus Inc. And with over 66.7 million Facebook users in 2020, Vietnam ranks seventh in the world, as reported by worldpopulationreview.com.
This all suggests Vietnam can be a gold mine for individual small sellers with private online shops. Fashion and beauty are the two most common searches and purchases online too, accounting for 55 per cent and 30 per cent respectively, according to the Asia Plus survey.
Source: South China Morning Post