PwC Vietnam’s deputy general director Stephen Gaskill, associate
director Bjoern Maack and manager Le Nguyen Khoi write that Vietnam’s economy
can benefit from taking the e-commerce road.
How do you reach 87 million
aspiring consumers with strongly growing incomes when the retail market is
highly fragmented and quality retail space is rare and expensive? More people
believe that e-commerce could be the answer. PwC has conducted extensive
research to find out how big the Vietnamese e-commerce market will be, what the
most popular business models are and which specific challenges and
opportunities companies need to understand when they build their e-commerce
strategy.
Our research suggests that
Vietnam’s e-commerce market value (gross merchandised value) was approximately
of $300 million in 2011 and is expected to grow at an average 75 per cent per
annum during 2011-2015 to reach $2.8 billion by 2015. While this increase
appears huge, there are several factors on the demand and supply side which
make us optimistic about the market’s growth potential.
On the demand side the average
disposable income is expected to grow from $570 to more than $820 per annum.
While we are aware that a large part of the population will still have very
limited funds for discretionary spending, it also entails that discretionary
spending becomes possible for a growing number of people.
Moreover the projected growth of
internet users from 30 million in 2011 to 37 million in 2016 (BMI) and the
expansion of broadband services will increase consumers’ ability to shop
online. Not only will there be more people online, but they will also spend
more time on the internet. According to Cimigo’s recent study time spent on
internet tripled from 43 to 130 minutes per day between 2008 and 2011.
On the supply side the right
online shopping business models are crucial to create awareness and transform
potential demand into sales. In late 2010, the introduction of group-buying
websites radically changed the pace of e-commerce in Vietnam. Our consumer
survey of 1,200 people shows that monetary benefits offered by group-buying
websites have strongly encouraged customers to engage in e-commerce. We expect
that the launch of more online businesses and the emergence of new business
models will further stimulate online sales.
Vietnam’s e-commerce sector is
very fragmented and there are no clear market leaders in both the Consumer-to-
Consumer (C2C) and Business-to- Consumer (B2C) e-commerce markets.
The most popular business model
in the Vietnamese e-commerce industry is e-marketplaces.
Notable players in this segment
are local companies such as vatgia.com, enbac.vn, 5giay.vn, chodientu.vn.
Prominent e-tailers include solo.vn, yes24.vn and zalada.vn. Thegioididong.com,
dienmay.com and nguyenkim.com, the online channel of Vietnam’s leading
specialist retailers are also very popular. However, none of the players
appears to either reach or be close to the leading position that Amazon and
Taobao currently have in the US and China respectively. Newcomers who act
quickly thus still have a fair chance to establish themselves as strong players
in a relatively untapped market.
To achieve lasting success,
companies need to understand the specific opportunities and challenges of the
Vietnamese e-commerce market. A low credit card penetration rate and the
limited popularity of bank transfers for instance mean that cash-on-delivery is
still by the preferred payment method.
This also raises challenges for
organising an effective logistics infrastructure for e-commerce in Vietnam. To
adapt to these and other market conditions companies must tailor their offering
and infrastructure accordingly. Based on our recent project experience PwC can
support you to successfully tap into Vietnam’s promising e-commerce market.
vir.com.vn
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