Online consumer goods spending grows fastest of all shopping channels

By Dat Nguyen   September 30, 2019 | 07:46 pm PT
Online consumer goods spending grows fastest of all shopping channels
A woman uses a credit card to shop online. Photo by Shutterstock/LDprod.
Fast-moving consumer goods (FMCG) spending is recording fastest growth in Vietnamese cities while that of street shops decline amidst e-commerce boom.

From June last year to June this year, online spending of FMCG (non-durable goods that sell quickly such as such as beverages, cosmetics and fresh food), grew highest at 91 percent compared to a year earlier, according to a report by market research firm Kantar Worldpanel.

Growth in convenience stores followed at 36.3 percent, and specialty stores 14.3 percent, said the report, which uses data from Hanoi, Ho Chi Minh City, Da Nang City and the southern Can Tho City.

Spending in street shops, although accounting for over half of spending in all channels, declined by 1.1 percent in the period.

Average spending per trip online outnumber that of street shops. Although about 99 percent of shoppers go to street shops against 25 percent online, average spending per trip at street shops is lowest among all channels at VND92,000 ($4), while that of online is highest at VND356,000 ($15).

About 82 percent of spending growth in cosmetics come from online channel alone, while 45 percent of that in soft drinks came from convenience stores.

Street shops account for 55 percent of FMCG spending this year, but will fall to 51 percent in 2025. However, online will rise from current 2 percent to 6 percent, and convenience stores from 5 percent to 8 percent, in the same period, Kantar Worldpanel said.

"Online, convenience stores and specialty stores will continue leading the future growth. 60 percent of Vietnamese urban households will shop FMCG online by 2025."

This means that brands should not only focus on key shopping channels such as street shops and supermarkets but also need to pay attention to growing channels (online and convenience stores) that bring incrementality to the business, it added.

Vietnam has seen increasing expansion of e-commerce players in recent years with the majority of the population are internet users.

E-commerce websites’ traffic growth in Vietnam in the first half of the year was the second highest in Southeast Asia at 11 percent year-on-year, behind Indonesia at 14 percent, said a recent report by Malaysia-based market research firm iPrice.

Five of the top ten most visited e-commerce sites in Southeast Asia are Vietnam-based, showing the potential of Vietnamese e-commerce companies in competing with international players, the report said.

Online sales rose by 30 percent from 2017 to $8 billion last year, according to the Ministry of Industry and Trade.

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