The rise of social network retailers in Vietnam

Like many urban Vietnamese women, Nguyen Thu Trang never lets her smartphone out of reach. The first thing she does every morning is checking Facebook on her phone to see what her friends are up to and what items are for sale.

“Social networks help me keep in touch with friends and stay up to date with latest trends. It is also a very effective shopping channel,” said the 32-year old office worker in Hanoi.

Trang prefers Facebook to local e-commerce sites because she can directly inquire sellers for the specific information she needs. For fashion products such as clothing items or shoes, she can decline to buy the items when they are delivered if they don’t fit or their quality doesn’t match what she expects.

Trang is just one of millions of Vietnamese social media savvy users who regularly shop on channels like Facebook, Instagram and homegrown Zalo. They buy everything, from groceries and homemade products, to cosmetics, clothes and household items from informal online family-run businesses.

In a user-friendly interface where sellers and buyers are easily connected, many Vietnamese are choosing social network shopping instead of going to big brands in the e-commerce industry which don’t always offer them the items they need.  

According to experts, since social networks in Vietnam, especially Facebook, have amassed a huge following with their newsfeed algorithms designed to grab user’s attention and boost engagement, these platforms have become the perfect market place. 

Vietnam ranked 7th worldwide for number of Facebook users last year, at 64 million or more than half of the country’s population, according to a report by marketing and advertising agency We Are Social. 

Vietnamese also spend more time on Facebook than users in most other Southeast Asian countries and are much more apt to use it as a platform to start a business, Joe Nguyen, ComScore Inc. senior vice president of Asia Pacific told Bloomberg.

Many people sell their items on Facebook just to make some extra income on top of their day jobs. However, there are those who take Facebook seriously and base their entire business on the social network. 

It is estimated that there are about 50 young Vietnamese from the age of 19 to 20 who have become dollar millionaires for making money online, said Huynh Kim Tuoc, a representative of Facebook in Vietnam in the Vietnam Online Business Forum 2017. 

“We haven’t seen this scale in other places,” Joe Nguyen said. “Vietnamese are very entrepreneurial. Everyone wants to try to sell something.”

Nguyen Thanh Mai, who works at a biotechnology center in Hanoi, is one of them. Customers can order fresh or processed food from her on Facebook and wire her the money or pay cash on delivery.

“Selling products on social networks is the easiest way,” Mai said. “I don’t have to pay monthly rent like a brick and mortar business, which is a huge advantage to new ventures like mine.”

The online shop has turned the 35-year-old office worker into a successful entrepreneur. After two years, her one-woman business now employs eight people. 

“As long as the social network is people’s favorite, I can make a living out of it,” Mai said.

In Hanoi and Ho Chi Minh City alone, there are at least 27,000 Facebook accounts that use the social media network as a retail platform, according to estimates by local authorities, who have yet to figure out how to collect taxes from these shops.

Many, if not most of the Facebook retailers are run by mothers who often start as a way to supplement their income when they are on maternity leave. 

Their customers, fellow mothers, trust the seller as someone who’s been there, done that. Someone, who is using her reputation and experience as a mother to not simply sell but also share parenting experience with her fellow friends, argues Dr. Nguyen Thu Giang who is studying motherhood in the time of Facebook and food scares.

As Vietnamese have a habit of physically “touching” a product, another reflection of trust issues, they often surf the Internet for prices without actually ordering from the online retailers. Facebook retailers, on the other hand, tend to offer a more flexible return policy, allowing customers to physically check out the product first, before paying.  

Online sales in Vietnam have expanded rapidly in recent years, currently accounting for 3.39 percent of the country’s retail market. The total retail market grew 10.9 percent last year to $173.27 billion, as reported by local media.

The World Bank forecasts that Vietnam’s $200 billion economy is likely to grow to a trillion dollars by 2035. More than half of its population, compared with only 11 percent today, is expected to join the ranks of the global middle class with consumption of $15 a day or more. 

According to one estimate, about 30 percent of the population will be buying goods and services over the internet in 2020, with each shopper spending an average of $350 per year.

However, Trang believes there is no reason not to have a favorite cosmetic, fashion or household product delivered at her doorstep with only a small amount of delivery fee after ordering on a social network.

“Social networks will continue to be my favorite shopping channel in the future.”