Vietnam among fastest growing e-commerce markets globally: report

E-commerce has been taking off in Vietnam thanks to booming internet usage and smartphone ownership, along with massive investments from key retail players.

The percentage of e-commerce shoppers grew from 5.4 percent to 8.8 percent on average in Hanoi, Ho Chi Minh City, Da Nang and Can Tho in 2016 alone, and an online shopping trip was worth triple the value of an offline basket.

The findings were outlined in the “The Future of E-commerce in FMCG” report released by market research firm Kantar Worldpanel.

In Vietnam, e-commerce now accounts for 0.5 percent of the fast-moving consumer goods (FMCG) market in the four key cities.

David Anjoubault, general manager of Kantar Worldpanel Vietnam, said: “Although the size of Vietnam's e-commerce market is still small compared to other formats, it holds a strong potential because the value growth of e-commerce within FMCG is up to 69 percent, which makes Vietnam become one of the countries with the highest e-commerce growth rate in the world.”

It’s now a critical time for investors to enter this promising market, while current retail giants should gradually move their operations online and take advantage of their brands' equity with an omni-channels strategy to be successful and to defend their current position, he said.

“On the whole, consumer trust and high logistics costs for deliveries are major challenges that need to be addressed by businesses in order to move Vietnam's e-commerce forward.”

E-commerce in Vietnam is expected to expand from a 0.5 percent share in the FMCG market to 2.2 percent in 2025, coupled with the rise of digitization, according to Kantar Worldpanel.

“We know that e-commerce is still cannibalizing offline purchases. However, there is growing evidence that online formats, in isolation, are no longer the best option for winning market share," the firm said. "It´s about how online and offline work together to create a better shopper experience.” 

Vietnam’s e-commerce market climbed to about $4 billion in 2016 as one of the fastest-growing markets in the world.

Revenue from online retail in Vietnam is forecast to hit $10 billion by 2020, accounting for 5 percent of the country’s retail market.