The Epitome of Vietnam E-Commerce

Vietnam managed to earn positive growth despite the COVID-19 pandemics crisis. Based on the IMF, Vietnam achieved the highest in Asia with 2.9% growth in 2020. Quoted from VietnamCredit (2021), this growth should be credited to Vietnam's Internet market which has been dominated by E-Commerce. The vibrant E-Commerce spaces that Vietnam owns have been acknowledged by several institutions. The Vietnamese Government and the World Bank reviewed that Vietnam has a flourishing digital economy with plenty of business opportunities for both domestic and foreign investors. It is reported to have a revenue amount of US$11.8 billion. This quantity is expected to increase beyond US$12 billion by 2021 and reach US$35 billion by 2025.

Building a Snowball on Vietnam’s E-Commerce

COVID-19 pandemics, on the contrary, help Vietnam grow its E-Commerce sector. While the pandemics prolong, customers’ activities in all sectors are changing to the online platforms. This explains the growth in the percentage of Vietnamese people participating in the online community. Up to 53% of its population join online shopping platforms, and this number is expected to increase to 55% in 2025. It is generating total online revenue of US$35 billion with an annual online purchasing value of US$600 per person (VEN, 2021). Following this golden opportunity, necessary conditions are equipped to support the development. This includes a favorable regulatory framework, governmental support to the segment, various foreign sources of funding, and suitable population demographic characteristics.

#1 Favorable Regulatory Framework

Vietnam is the ASEAN country with the most favorable legal environment for E-Commerce. In particular, the country has developed six laws governing E-Commerce activities. They formulate the law based on the fundamental elements of E-Commerce, focused on improving an advanced ecosystem of transportation infrastructure, delivery, and service delivery. Furthermore, exports and imports activities can be made at low or zero customs duties owing to the thirteen free trade agreements Vietnam has entered so far (Bhatla, 2020).

#2 Government Support

The support from the Vietnamese government allocates funding to the E-Commerce sector. It shows the implementation of the GoOnline program in 2021 by the Ministry of Information and Technology, E-Commerce, and Digital Economic Department (The Star, 2021). The program includes telecommunications, technology, e-commerce systems, manufacturers, traders, and individuals nationwide (The Star, 2021). The newly implemented infrastructures address counterfeit products online and enhance end-to-end delivery and payment methods.

#3 Foreign Investment

The favorable environment and ecological system eventually attract foreign investors. Countries such as Japan, Germany, the United States, South Korea, China, and Singapore put a lot of their funding under Vietnamese E-Commerce. For example, NorthStar Group and China's JD.com invest an extra $130 million in Tiki. On the other side, Japan's SBI Holdings invests $51 million in Sendo.vn. Not to mention, the potential merger of Grab and Gojek, as the two most valuable regional startups, might stir up the SouthEast Asian E-Commerce market.

#4 Suitable Demographic Characteristics

Vietnam’s population provides a great opportunity for E-Commerce to grow. At the end of 2019, 55.5% of 96.5 million Vietnam population are people in the age group under 35 years old. This age range is argued to have the most proficiency in adopting technical advancements such as IoT and E-Commerce. They have excellent standards and high life expectancy, promising an increment in consumption power. These two factors are critical driving forces to the growth of Vietnam's E-Commerce.

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Prospectus of Vietnam’s E-Commerce

The growth of Vietnam's E-Commerce market cannot be separated from its supporting factors. As the challenges arise, a harmonious collaboration between the market and the authority is formed. They go hand in hand to create a beneficial environment to nurture this market. The cooperative parties and the competitive circumstances for E-Commerce are considered important constructing factors.

#1 Cooperative Parties

Predicted to snowball further, the current E-Commerce market has some challenging aspects. Huynh and Nguyen (2020) stated that long-time delivery, low non-cash payment, and risk over electric payment are currently Vietnam’s tremendous obstacles to flourishing. To tackle the issue, both the government and E-Commerce cooperate to improve online payment methods, logistics operational, and service-based selling methods. This collaboration intends to keep Vietnam the number one target for E-Commerce investors.

#2 Increasing Intense Competition

As the market's attractiveness is maintained or even improved, the competition between online sellers in Vietnam is getting more intense. It is strengthened by foreign investors' participation in online platforms such as Shopee, Lazada, Tiki, Sendo, Grab, Beamin, and Gojek. These platforms use technology to allow end-to-end transactions and minimize delivery time and costs. Besides the technology, they are dominating the market with significant customer bases. While Amazon also has the intention to participate, the stiff competition makes it difficult to penetrate the market.

The Savior in A Doom Days

In the doom days due to COVID-19, Vietnam’s economy is blooming instead. While all the countries are struggling with their economic condition, Vietnam is comforted by its E-Commerce sector. Soars up with positive growth and significant untapped potential. Viewed as essential factors for further development, Vietnam’s E-Commerce market is predicted to skyrocket in the future.