Vietnam’s booming e-commerce sector sparks feeding frenzy among online shopping giants

The government is aiming for online shopping to account for 10 per cent of Vietnam’s retail sales – and as much as 50 per cent in major cities – by 2025

Home-grown retailers are competing for customers with start-ups backed by Shopee, JD.com, Goldman Sachs, Warburg Pincus and Amazon.com, to name a few

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A customer pays after receiving an order from a Tiki.vn delivery rider in Vietnam’s Ho Chi Minh City. Photo: Bloomberg

Published: 7:00pm, 2 Jun 2021Updated: 7:00pm, 2 Jun 2021

Weaving through congested Ho Chi Minh City on his Honda motorbike, Ho Duc Quang zips past a statue of the city’s namesake revolutionary leader and the warren-like Ben Thanh Market to drop off toys, books and other packages to customers of online retailer Tiki.vn.

The 25-year-old needs to be quick, since Tiki guarantees two-hour delivery to its express service customers in Vietnam’s metropolis. He uses wireless earbuds to let customers know he is about to arrive, but there is one thing slowing him down: Quang has to wait for customers to open packages and confirm everything is correct before speeding off on his next delivery. It is a must for many Vietnamese still unsure if they can trust e-commerce merchants.

Quang’s race through the city of 9 million people is part of a campaign to win over reluctant Vietnamese, many of whom are trying online shopping for the first time during the pandemic. It is not an easy sell in a cash-based society where only about one-third of adults have bank accounts, less than 5 per cent own credit cards and most shop at family-run stores and traditional wet markets.

A bread seller cycles past motorists waiting at a traffic light in Hanoi. Many Vietnamese still shop at family-run stores and traditional wet markets. Photo: AFP

Though Euromonitor International estimates e-commerce accounted for just 3 per cent of the nation’s retail market last year – the smallest amount in Southeast Asia – the potential for growth is alluring. Vietnam’s digital economy is forecast to grow to US$52 billion by 2025, an annual 29 per cent increase from 2020, according to a study by Google, Temasek Holdings Pte and Bain & Co.

Start-ups backed by Warburg Pincus LLC, Goldman Sachs Inc. and JD.com Inc., regional players including Singapore’s Sea Ltd.’ s Shopee and even Amazon.com Inc. are also targeting the country’s growing middle class. Between 2016 and the first half of 2020, investors funnelled US$1.9 billion into Vietnam’s online sector, the study by Google, Temasek and Bain showed.