The Emergence of Vietnam’s E-commerce Market

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Feb. 11 – Research has shown that Vietnam’s e-commerce market, which totaled approximately US$300 million in 2011, is expected to grow at an average rate of 75 percent per year between 2011-2015 to reach upwards of US$2.8 billion by 2015. While this may seem largely optimistic, several factors regarding supply and demand influence this huge potential growth.

On the supply side, certain online shopping business models are crucial to creating awareness and transforming potential demand into actual sales. Furthermore, the introduction of group-buying websites radically changed the pace of e-commerce in Vietnam in 2011.

A recent PricewaterhouseCoopers (PwC) consumer survey of 1200 people in Vietnam has shown that monetary benefits offered by group-buying websites (i.e., discounts for bulk consumer purchases) have strongly encouraged customers to engage in e-commerce and shop online. Likewise, the increasing number of online businesses and the emergence of new business models will further stimulate online sales.

On the demand side, there is more than ample opportunity for the growth of online business and shopping thanks to the the average income in Vietnam being expected to grow from US$570 to more than US$820, and the projected number of internet users increasing to 37 million by 2016. Furthermore, a recent study by market research specialist Cimigo concluded that the average Internet user in Vietnam spends about 130 minutes online per day, a number that has tripled from the 43 minutes per day users spent online in 2008.

These rising numbers indicate that the e-commerce sector is poised for growth as an increasing number of consumers have begun to spend a longer time online, which has undoubtedly exposed them to the a growing number of online consumer-to-consumer (C2C) and business-to-consumer (B2C) portals. The most popular business model in the Vietnamese e-commerce industry is the online marketplace, a portal that features C2C and B2C shops.

Vietnam’s e-commerce sector is still very fragmented, and has no clear market leaders in both the C2C and B2C e-commerce markets yet. No e-commerce company has reached a market share of more than 5 percent, which has left Vietnam’s e-commerce market up for grabs to new entrants to the sector.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

For further details or to contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the company brochure.

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Alberto Vettoretti
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