E-commerce Growth In Vietnam Accounts For The Country’s Economic Success In 2022

Vietnam has seen a significant growth in e-commerce in recent years. With a rapidly growing middle class and an increase in internet and smartphone penetration, more and more Vietnamese consumers are turning to online shopping. According to a recent report, the e-commerce market in Vietnam is expected to reach $57 billion by 2025, driven by the convenience and variety of products available online.

As e-commerce continues to grow in Vietnam, businesses are looking for ways to tap into this market. The e-commerce growth in Vietnam can be seen through the continuous expansion into rural areas, investment in logistics and delivery infrastructure, and partnership with local e-commerce platforms. Additionally, with the increasing popularity of social media, businesses can also leverage platforms like Facebook and Zalo to reach potential customers. However, despite the growth potential, businesses also need to be aware of the challenges in the Vietnam e-commerce market, such as intense competition and regulatory hurdles. This article discusses  e-commerce growth in Vietnam: current landscape with proven statistics, opportunities, challenges and forecasts.

Vietnam e-commerce landscape

According to the Vietnam E-commerce Association (Vecom), e-commerce income in Vietnam rose by roughly 15% in 2022 compared to last year. Accorqding to the organization, income increased by 16% year on year to 13.7 billion USD last year. The e-commerce sector in Vietnam is expected to develop rapidly and steadily in the double digits between 2016 and 25. Despite the fact that the COVID-19 pandemic had a significant influence on Vietnam’s economy in 2020, e-commerce sales increased by nearly 15% to 13.2 billion USD in comparison to 2019. According to the Vietnam E-commerce White Paper 2022, Vietnam’s economic growth in 2021 was just 2.58%, the lowest in the previous 30 years. In that context, the country’s e-commerce income increased by 6% to 13.7 billion USD. 

The growth in the current Vietnam e-commerce landscapeis credited to the rising use of smartphones and internet access among Vietnamese consumers, as well as the government’s initiatives to promote digital transformation and e-commerce within the country. The e-commerce market in Vietnam is forecasted to keep growing in the upcoming years.

Opportunities in Vietnam E-commerce

Vietnam’s e-commerce market is experiencing significant growth and presents various opportunities for businesses looking to enter the market. Some of these opportunities in Vietnam E-commerceinclude:

• Growing consumer demand: With increasing access to the internet and smartphones, Vietnamese consumers are becoming more comfortable with online shopping. This presents a significant opportunity for businesses to tap into the growing consumer demand for e-commerce products and services.
• Government support: The Vietnamese government is actively promoting digital transformation and e-commerce in the country. This includes measures such as tax incentives and infrastructure development, which can make it easier for businesses to enter the market.
• Untapped market: Despite the recent growth in e-commerce, the market in Vietnam is still relatively untapped compared to more developed markets. This presents an opportunity for businesses to be among the first to enter the market and establish a strong presence.
• Diversified products: The market of e-commerce in Vietnam is diversified, from fashion, electronic products to services. This presents an opportunity for businesses to cater to a wide range of consumer needs and preferences.
• Low competition: The e-commerce market in Vietnam is still relatively new, with fewer established players than in more developed markets. This presents an opportunity for new businesses to enter the market and compete effectively.

Variety of opportunities in Vietnam E-commerce are waiting for businesses looking to enter the market, with a growing consumer demand, government support, untapped market, diversified products and low competition.

Challenges in Vietnam E-commerce 

Along with the rising opportunities, Vietnam’s e-commerce market is facing several challenges and threats coming from different factors:

• Logistics and infrastructure: Vietnam’s logistics and infrastructure are not fully developed, which can make it difficult for businesses to efficiently and cost-effectively deliver goods to consumers. 
• Payment systems: Online payment systems in Vietnam are not yet fully developed, which can be a barrier for consumers who are not comfortable using traditional payment methods such as cash or bank transfers. 
• Limited consumer trust: Vietnamese consumers may be hesitant to shop online due to concerns about product quality, privacy, and security. Building consumer trust will be an important challenge for businesses looking to enter the market.
• Language barriers: A significant proportion of the Vietnamese population speaks limited English, which can be a barrier for foreign businesses trying to enter the market. Having multilingual customer service can help in this case.
• Cybersecurity: As with any online platform, security concerns are important to address. Cybersecurity issues such as hacking, data breaches, and fraud can cause significant damage to a business’s reputation, which can be difficult to recover from.
• Legal framework: The legal framework for e-commerce in Vietnam is still underdeveloped and may not provide sufficient protection for businesses or consumers. This is an ongoing challenge that the government is trying to address.

These challenges in Vietnam E-commerce are not easy to overcome. However, thanks to continuous e-commerce growth in Vietnam, businesses can be confident that putting effort in practical action can help to get over these difficulties. They should be proactive in investing in logistics and infrastructure, payment systems, building consumer trust, language barriers, cybersecurity and complying with legal framework. Additionally, they should also be prepared to adapt to the evolving market conditions and be open to new opportunities and trends in the market.

E-commerce in Vietnam forecast

The e-commerce market in Vietnam is expected to soar in the coming years, driven by a number of factors such as increasing internet and smartphone penetration, growing consumer demand, and government support. According to many reports on the subject, Vietnam’s e-commerce market is expected to reach $57 billion by 2025, with a compound annual growth rate of over 30%. The growth in e-commerce is also expected to be driven by an increase in the number of online shoppers in Vietnam. Currently, the number of online shoppers is around 20 million, and it is expected to grow to 40 million by 2025.

Fashion, beauty and personal care, and electronics are the top three categories for e-commerce sales in Vietnam and are expected to continue to grow in the coming years. Other categories such as home and living, groceries, and travel are also expected to see strong growth. The government’s ongoing efforts to improve logistics, infrastructure, and the legal framework for e-commerce are also expected to further boost the market’s growth.