Vietnam's E-commerce Potential: Opportunities for Foreign Investors

E-commerce is one of the fastest expanding sectors in Vietnam, even though its growth has been halted in other world markets. The growth in the Vietnamese e-commerce market, despite a global slowdown, is attracting foreign investment for this sector.

According to estimates, Vietnam's e-commerce landscape is expected to generate USD 39 billion by 2025, which is the highest growth projection among Asian countries. Vietnam's online economy is valued at around $10 billion, and the trend of online business activities has accelerated during the COVID-19 pandemic.

Not to mention, the Vietnamese government has been taking active steps to promote e-commerce activities in the country. All these factors have further accelerated the development of new e-commerce platforms and trends in the country. Overall, the e-commerce landscape of Vietnam looks promising, and despite rapid growth, there are still a lot of opportunities for newcomers in this field.

At Zora Consulting, we have also noticed an influx of foreign investors looking to establish their operations in the e-commerce realm. We understand the intricacies of launching an e-commerce business in Vietnam and can help foreigners with company registration and related administrative matters. With that said, if you want to learn more about the e-commerce landscape in Vietnam and its opportunities, then keep reading this article until the end.

Global recession vs Vietnam's e-commerce boom

Many foreign investors wonder how Vietnam's e-commerce sector has been able to withstand the economic conditions while the sector has been badly impacted globally. There are quite a few reasons for the steady growth of the Vietnamese e-commerce industry. The country's e-commerce is still in its early stages, so it has yet to reach its peak. But that is not the only reason for a stable growth rate of the sector. Here are some additional factors you should be aware about:

Lower layoff numbers in Vietnam's e-commerce sector: Vietnam is known for its affordable labour and lower operational costs. This is why e-commerce companies in Vietnam have been able to retain their workforce while we have seen large-scale layoffs in the international markets.

Amazon has recently laid off 18,000 employees globally in order to bring down costs. The decision came after the company rapidly added new workers to its workforce that were no longer needed once the pandemic stopped.

Even if we take the example of an e-commerce company called Shopee from Asia, it has fired close to 7000 employees in Singapore and China alone. On the other hand, the layoffs were not as severe in Vietnam due to a high demand in the tech industry. As a result, Vietnamese e-commerce companies continue to enjoy an upward trajectory despite declining global statistics.

Vietnam has a tech-savvy population. Another reason why Vietnam has been able to maintain its e-commerce growth is because of its young and tech-savvy population. Vietnam's young population has a 40 per cent share of the country's overall consumption.

The tech savvy consumers are constantly looking for digital platforms for shopping and entertainment. Companies that have been providing e-commerce solutions to consumers in Vietnam have managed to gain a large market share, with Shopee being the most popular platform in the country.

A reliable digital banking system: E-commerce relies heavily on digital banking networks, and the Vietnamese government has put a special focus on promoting digital banking. Digital banking platforms in Vietnam are offering instantaneous fund transfers free of cost.

Combine the quick transactions and low-cost nature of digital banking in Vietnam, and you get the perfect catalyst for e-commerce development. Vietnamese businesses are increasingly using Facebook pages to find new customers and utilize robust digital marketing facilities to receive payments. Thanks to the Vietnamese government's steps in promoting digital banking, social e-commerce made up around 65% of e-commerce sales in Vietnam came from social commerce (social media platforms).

Vietnam has seen a significant shift from retail to e-commerce: One of the biggest reasons Vietnam's e-commerce sector has not been severely affected by the global recession is that the population has rapidly shifted from retail to online shopping.

Businesses quickly realized that retail businesses come with additional costs of running and maintaining retail stores. Not to mention, the lack of space in Vietnamese cities and a rise in population have made retail stores redundant.

As per estimates, the Vietnamese e-commerce market will be equal to its retail market by 2025. Compared to other parts of the world, this is a significant shift, and it will only skyrocket the country's e-commerce growth.

What are some e-commerce opportunities for foreign investors in Vietnam?

Now that we have established that Vietnam's e-commerce industry has been able to defy the odds and remain stable in terms of growth. However, foreign investors are mostly interested in what opportunities the Vietnamese e-commerce sector has to offer. As a foreign investor, you have the following opportunities in the e-commerce industry:

1. Blockchain-based solutions
2. Fintech products and services
3. Robotics
4. Digital payment gateways
5. Infrastructure and logistics
6. Cash backs and loans

Conclusion

By now, it is easy to understand that the e-commerce boom in Vietnam is only starting. There is a long way to go for the industry until it reaches its peak potential. Foreign investment in the sector can speed up the sector's development while offering new opportunities for investors.

Zora Consulting can help foreign investors in removing barriers to entry into the Vietnamese e-commerce market. We can make sure you have local expertise by your side to help you overcome the hurdles of setting up and running a business in Vietnam. So, if you want to establish an e-commerce business in Vietnam, feel free to contact us for assistance.