A-Tiger-awakens-Ecommerce-in-Vietnam.pdf

A TIGER AWAKENS:
E-COMMERCE IN VIETNAM
A GUIDE FOR AUSTRALIAN BUSINESS

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02 E-COMMERCE IN VIETNAM E-COMMERCE IN VIETNAM 03
CONTENTS
A tiger awakens: Vietnam’s internet economy landscape
Rapid Growth
Low revenue per capita
Key drivers
The rise of a connected, mobile-first population
A dramatic increase in licensed e-commerce platforms
Proactive participation of SMEs in e-commerce
Future potential
The golden population structure and an emerging middle class
Consistent inflow of foreign direct investment (FDI)
Government policy and regulation frameworks
Improving logistics
Challenges
Key players in Vietnam’s e-commerce industry
Vietnam’s biggest e-commerce platforms
Vietnam’s online consumers
Purchasing on mobile
High-value items
Instant gratification market
High social media usage and video consumption
Cash on delivery preferred
Popular e-commerce product categories
Entry points for Australian businesses
Existing relationships
No existing relationships
Cross-border online exporting
Conclusion
How Austrade can help
References
05
05
08
10
10
11
12
14
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20
21
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25
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27
30
35
35
35
35
36
37
39

A TIGER AWAKENS:
VIETNAM’S INTERNET ECONOMY LANDSCAPE
E-commerce has taken off in Vietnam thanks to soaring internet connectivity and smartphone adoption, a young
tech-savvy population, and rising disposable incomes. The appetite for online shopping is growing and the number of
licensed e-commerce platforms is expanding rapidly.
The development of Vietnam’s online industry can be broken down into three distinct periods:
1998 to 2005: the establishment of the first ever internet infrastructure
2006 to 2015: mass proliferation of the internet. Almost 50 per cent of the population goes online for the first time,
allowing Vietnamese to engage in e-commerce every day
2017 to 2020: further expansion, with e-commerce crossing into new areas of the economy.1
›
›
›
1. Vietnam E-commerce Association
2. Vietnam E-commerce Association
Figure 1 - B2C E-commerce revenue and average annual value per customer (US$)
Source: Vietnam E-Commerce And Digital Economy Agency, Vietnam E-Commerce Association
Total B2C revenue Average annual value per customer
0B 100
2B 150
4B 200
6B
250
8B
300
10B
350
Value
per
customer
Revenue
(US$
Billion)
2014 2015 2016 2017 2020f
2.97B
4.07B
5.00B
6.25B
145
160
170
350
10B
37%
23%
25%
CAGR - 20%
RAPID GROWTH
Vietnam’s internet economy has experienced rapid growth since 2014. Starting from a total business-to-consumer
(B2C) revenue of US$2.97 billion, the sector doubled its value in three years to reach US$6.25 billion by the end of
2017.2
Since 2017, the internet economy in Vietnam has been well established with four key active sectors: e-commerce
(first-hand goods); online travel (online flights, hotels and vacation rentals); online media (advertising, gaming,
subscription music and video on demand); ride hailing (transport, food delivery).

Having tripled in value from 2015 to the end of 2018, Vietnam’s online market is now the fourth largest in Southeast
Asia. Amongst the region’s major economies, Vietnam’s online market is also the fastest growing, with a compound
annual growth rate of 35 per cent over the same period.3
According to recent industry reports, Vietnam’s online economy will continue to grow strongly, and be worth US$10
billion by 2020.4 If trend rates continue, Vietnam’s online economy will be worth US$33 billion by 20253, making it
the third-largest digital market in Southeast Asia.
Indonesia Malaysia Philippines Singapore Thailand Vietnam
8B
27B
100B
28%
49%
5B
8B
21B
16%
19%
2B
5B
21B
25%
30%
7B
10B
22B
13%
16%
6B
12B
43B
22%
27%
3B
9B
33B
25%
35%
3. e-Conomy SEA 2018, by Google and Temasek
4. Vietnam E-Commerce and Digital Economy Agency, Vietnam E-Commerce Association
The value of Vietnam’s internet economy is also the highest of the major regional economies, with a gross merchandise
value equivalent to 4 per cent of gross domestic product.
SEA
2.9% 2.7%
1.6%
3.2%
2.7% 4.0%
2.8%
The most dynamic part of Vietnam’s online economy is sales of durable goods. This sector grew by 22 per cent in
20175, and almost doubled in 20186. Sales reached nearly US$3 billion in 2018 and are forecast to reach US$15
billion by 2025. This means durable goods will constitute almost half of all online sales in Vietnam.7
1.7B
12.2B
53B
41%
94%
1.0B 2.0B
7.0B
21%
27%
0.5B 1.5B
10B
34%
42%
1.0B 1.8B
5.0B
18%
22%
0.9B 3.0B
13B
30%
49%
0.4B 2.8B
15B
43%
87%
5. Statistica
6. e-Conomy SEA 2018, by Google and Temasek
7. Statistica
Figure 2 - SEA internet economy market size (GMV, US$ Billion)
Figure 3 - Internet economy GMV as a percentage of GDP (2018)
Figure 4 - SEA e-commerce market size (GMV, US$ Billion)
2015 2018 2025 CAGR
2015 2018 2025 CAGR

3k 4k
7k
90
3k
11k
LOW REVENUE PER CAPITA
Source: E-Commerce shopping cart value recorded by iPrice, July 2016 - Jun 2017,
GDP per capita by International Monetary Fund 2017
K
10K
20K
30K
40K
50K
GDP
per
capita
60K
-
40
60
80
100
Average
shopping
cart
value
20
Vietnam Philippines Indonesia Thailand Malaysia Singapore
Vietnam’s online shopping cart value per capita is still low in comparison with other markets. This can be attributed in part to Vietnam’s
low GDP per capita. In 2017, online shopping cart values averaged US$23 per shop in Vietnam, compared to US$42 in Thailand and
US$36 in Indonesia.8
Even after a decade of rapid economic development and huge improvements in the country’s overall quality of life, Vietnam’s GDP remains
signiﬁcantly lower than most other Southeast Asian nations.
8. Statistica
3K 3K 4K
7K
11K
56
36
42
54
62K
23
90
Figure 5 - Average e-commerce shopping cart value & GDP per capita of Southeast Asian countries (US$)

3k 4k
7k
90
3k
11k
Figure 8 - Licensed e-commerce direct sales
websites & trade platforms in Vietnam
Source: Vietnam E-Commerce And Digital Economy Agency
Direct e-commerce
sales websites
E-commerce trade
platforms
2014 2015 2016
2013
0
4,000
6,000
8,000
10000
2,000
12,000
14,000
674
4,653
9,429
13,510
90 283 492 682
Figure 9 - Licensed online promotion & auction
websites in Vietnam
Online promotion
websites
Online auction
websites
2014 2015 2016
2013
13
60
75
93
13 14
19 20
0
30
40
60
70
10
90
100
80
50
20
A DRAMATIC INCREASE IN LICENSED E-COMMERCE PLATFORMS
As the number of online shoppers continues to climb, so too has the number of licensed e-commerce platforms. Direct sales websites hosted
by individual brands have been the fastest growing, and currently represent the highest number of e-commerce operators.
Source: Vietnam E-Commerce And Digital Eonomy Agency Nationwide Survery for Licensed e-Commerce platform Owners, 2016 n=2593
6%
13%
23% 23%
35%
0%
10%
25%
30%
35%
5%
15%
20%
40%
>50% re-purchase 30-50% re-purchase 10-30% re-purchase <10% re-purchase Don’t know
As e-commerce platforms have become more established in Vietnam, many have started to offer alternative payment options, including
cash on delivery. This has made buying online more convenient than ever and, coupled with appropriate consumer-protection policies, has
resulted in a high ratio of return customers for e-commerce sites. The results of a 2016 survey by the Vietnam E-commerce and Digital
Economy Agency confirmed this, with 42 per cent of 2,593 e-commerce platform owners reporting that at least 10 per cent of their
customers would re-purchase.
THE RISE OF A CONNECTED, MOBILE-FIRST POPULATION
Vietnam’s e-commerce sector has developed as a result of three key factors: a rapidly growing online population; the establishment
of user-friendly e-commerce platforms; and the uptake of online business transactions by small and medium-sized enterprises (SMEs).
The expansion of e-commerce in Vietnam has been fuelled by a growing online population, which reached 52 million
in 2017. An impressive 65 per cent of the online population has participated in an e-commerce activity, and this
number is predicted to increase steadily until 2020.9
Figure 7 - Percentage of internet users who
participated in e-commerce in Vietnam
Source: Vietnam E-Commerce And Digital
Economy Agency
52%
56%
58%
60%
62%
54%
64%
66%
68%
2014 2015 2016 2020f
58%
62%
65%
67%
Figure 6 - Total Population vs. Total Internet users in Vietnam
(million)
Source: World Bank, Ministry of Information & Communication
Total Population Total Internet users
0M
20M
40M
60M
80M
100M
120M
27M 31M
33M 35M 38M
41M 44M
52M
88M 89M 90M 91M 93M 94M 95M 96M
2010 2011 2012 2013 2014 2015 2016 2017
Vietnamese consumers have become increasingly mobile, with smartphone usage exploding in the past few years. In
2017, the total number of smartphone users in Vietnam was estimated at 28.8 million and is forecast to reach 38.4
million by 2020.10 This level of penetration means one in five Vietnamese can make online purchases via a smart
device.
Mobile phones are effective facilitators: according to a study by Criteo11, 82 per cent of Vietnamese say it is more
convenient to buy goods via mobile apps than websites. The study highlighted that more than 90 per cent of
people who install e-commerce apps on their smartphones end up buying goods at least once a month, while 60 per
cent do so three times or more a month.
9. Vietnam E-Commerce Association
10. Vietnam E-Commerce Association
11. Criteo
KEY DRIVERS
Figure 10 - Customer return rates for e-commerce websites as a proportion of all websites

3k 4k
7k
90
3k
11k
Figure 12 - Proportion of enterprises doing
business on social networks
Source: VECOM’s Vietnam E-business Index 2018 Report
0%
10%
20%
30%
40%
2015 2016 2017
28%
34%
32%
Figure 13 - Proportion of enterprises doing
businesson e-commerce marketplaces
Source: VECOM’s Vietnam E-business Index 2018 Report
0%
10%
20%
30%
40%
2015 2016 2017
13% 13%
11%
PROACTIVE PARTICIPATION OF SMEs IN E-COMMERCE
Social networks, especially Facebook, have become increasingly popular among SMEs as online business tools. In 2017, the proportion of
all enterprises transacting business via social networks reached 32 per cent, according to the Vietnam E-commerce Association’s Vietnam
E-business Index 2018 Report.
0%
40%
20%
60%
80%
100%
88%
94%
81%
65%
50%
38%
82%
43%
52%
80%
17% 18%
60%
84%
90%
95%
100% 100%
49%
41%
25%
15% 13% 15%
47%
8%
46%
20%
10%
4%
Offline POS
Bank Transfer Cash On Delivery Credit Card Installment
Vietnam Philippines
Indonesia Thailand Malaysia Singapore
Figure 11 - Payment solutions offered by merchants in Southeast Asia contries (%)
Source: iPrice e-Commerce merchant database, 2017 n= 1000
Credit card payments for online purchase are less popular in Vietnam than in other countries in Southeast Asia. However, Vietnam’s
e-commerce platforms do offer a range of alternative payment options.

3k 4k
7k
90
3k
11k
CONSISTENT INFLOW OF FOREIGN DIRECT
INVESTMENT (FDI)
As growth continues in Vietnam’s e-commerce industry, global
and regional conglomerates have been investing in the country. In
January 2018, JD.com – Alibaba’s direct competitor in China –
announced a US$44 million investment in Vietnam’s leading B2C
platform Tiki.vn. In February 2018, an affiliate of private equity firm
Creador approved an investment of US$43.8 million in
Thegioididong.com – Vietnam’s largest mobile and electronic
device retailer. In March 2018, Alibaba – the Chinese e-com-
merce giant – raised its total investment in Lazada Group to
US$4 billion and brought in its own executives to lead Lazada’s
regional office in Ho Chi Minh City.
The outlook for e-commence in Vietnam is positive. The country is experiencing a ‘golden population’ period, meaning more than half of the
population are of working age, with rising incomes. In addition, there is a consistent flow of foreign direct investment and a high level
of government support to create legal frameworks and infrastructure to ensure a robust online economy.
THE GOLDEN POPULATION STRUCTURE AND
AN EMERGING MIDDLE CLASS
Since 2007, Vietnam has been in a period known as the ‘golden
population structure’, a state in which more than half of its
population are of working age. The United Nations Population Fund
says that with a total dependency ratio of below 50 – meaning
only one dependent for every two or more working people aged
15–64 years – Vietnam has a unique opportunity to ‘increase its
savings and boost its socio-economic development from now
until 2041.’
It is expected that Vietnam’s middle and affluent class will
increase from 12 million to 33 million between 2012 and 2020, a
rate much faster than any other ASEAN country over the same
period.12 It is this tech-savvy, convenience-driven segment of the
population that will be the most likely to drive e-commerce
forward in Vietnam.
FUTURE POTENTIAL GOVERNMENT POLICY AND REGULATION
FRAMEWORKS
Recognising e-commerce’s potential to attract investment and
drive Vietnam’s economy, the government has made clear its
commitment to the sector. The approval of the ‘Masterplan To
Develop E-Commerce From 2016–2020’ signifies the government’s
support of e-commerce as a crucial economic pillar. Further
investment in improving regulatory frameworks, tax rules and data
security policies is also scheduled.
In November 2017, the Ministry of Finance drafted a proposal to
develop the tax administration law. The proposal, which is
expected to be approved in 2019, is designed to improve and
centralise the country’s online tax system.13 Once it comes into
effect, e-commerce platforms can expect significantly faster, more
convenient tax procedures. The proposal sets out a framework for
taxing merchants operating on social media platforms such as
Facebook, Instagram and Zalo. Merchants will be required to
register when their revenue exceeds a certain amount, and submit
e-receipts and a record of all transactions every quarter.
A streamlined tax procedure for e-commerce platforms combined
with appropriate tax regulations for individual merchants may see
more merchants transitioning to e-commerce once the plan is
approved, resulting in a more centralised e-commerce environment.
The government is looking to increase cashless payments in
urban areas to 50 per cent by 2020. The government and the
State Bank of Vietnam have issued instructional documents on
digital payment methods as well as a list of 25 non-bank
organisations licensed to provide payment services.
12. The Boston Consulting Group
13. PwC Vietnam News Brief, 29 November 2017
14. Customs News of The General Department of Vietnam Customs,
28 June 2017
IMPROVING LOGISTICS
In an attempt to address some of the biggest obstacles facing
e-commerce in Vietnam, the government has lifted some
restrictions on foreign investment and announced a commitment
to developing Vietnam’s logistics capabilities. A new legal
framework means local logistics companies can expect more
financial and resources support.
From 2018, investors can establish 100 per cent foreign-owned
logistics companies or joint ventures in Vietnam with unlimited
foreign participation. In a meeting with the Deputy Prime
Minister in June 2017, the World Bank committed to providing
human resources and expertise to improve Vietnam’s logistics
industry.14

0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30
1.22
1.08
1.05
1.02
0.91
1.01
0.87
0.65
Unhealthy competition
High logistics cost
Incompetent human resources
Unguaranteed online security
Difficulty in intergrating digital payment
Customers’ concern about security when making online payment
Customers lack trust in the quality of products
Customers’ concern that personal data is disclosed or traded
About
the
business
About
customers
Question: How do you rank these barriers and difficulties in operating an e-Commerce platform, from 0 to 2 with 0 being “Not an obstacle”,
1 being “Somewhat an obstacle” and 2 being “A great obstacle” n=2593
Source: Vietnam E-Commerce And Digital Economy Agency Nationwide Survey for Licensed e-Commerce platform Owners, 2016
Logistics infrastructure is another impediment facing almost every e-commerce operator in Vietnam on a daily basis. Despite huge
investment, online shoppers still complain about faulty products or non-delivery of goods. Poor management of e-logistics data has
exacerbated the problem. Most e-commerce sites in Vietnam work with third-party providers in the hope of achieving a smooth ordering
and delivery process for consumers. It hasn’t, however, always worked.
Logistic costs currently account for 30 per cent of e-commerce revenue in Vietnam – more than in other ASEAN countries.15 High logistics
costs translate into higher shipping fees for consumers, which ultimately influences their willingness to buy online more frequently.
15. Vietnam Briefing, E-commerce Logistics: Emerging Opportunities in Veitnam, 6 June 2017
While the government and local e-commerce players have taken measures to create and maintain a healthy environment for growth,
challenges remain for the market’s long-term development.
From the perspective of an e-commerce platform owner, the first challenge is ‘unhealthy competition,’ which stems from the lack of a
consistent set of regulations, particularly regarding dispute resolution.
CHALLENGES
Figure 14 - Barriers and challenges according to e-commerce platform owners (mean score)

Figure 15 - Barriers perceived by current
e-commerce users (%) in 2016
False advertising
Incompetent customer
service
More expensive than
offline purchase
Incompetent logistics
Privacy concerns
Incompetent web
design
Complicated order
process
Complicated payment
process
0% 20% 40% 60% 80%
80%
44%
43%
40%
36%
23%
19%
15%
Figure 16 - Barriers perceived by non
e-commerce users (%) in 2016
0% 25% 50%
50%
48%
48%
21%
17%
12%
11%
10%
21%
17%
Difficult to check quality
Lack of trust for the
merchants
Easier to shop at stores
Privacy concern
Few product choices
No digital payment
solution
No need for shopping
online
Complicated order
process
No prior experience in
shopping online
Lack of information to
decide
Compounding the problem in Vietnam is the lack of investment in high-tech logistics infrastructure. With the excep-
tion of a few e-commerce players, such as Tiki and Lazada, most do not operate their own central distribution centres.
This results in longer order processing times and a greater chance of incomplete or non-deliveries.
A 2016 survey of consumers by the Vietnam E-commerce and Digital Economy Agency identified the major barriers
to online purchasing as a lack of trust in how products are advertised, a lack of trust in merchants themselves and the
inability to check product quality.

VIETNAM’S BIGGEST E-COMMERCE PLATFORMS
Lazada.vn
Lazada is the leading e-commerce website in Vietnam
and has the highest number of average visits per
month.
Lazada, founded in 2011 by Germany’s Rocket Internet,
entered Vietnam in 2012 as Lazada.vn. The original
business model was to sell goods to customers from its
own warehouse. In 2013, Lazada introduced the
marketplace model, allowing third-party merchants to
sell via its platform. This became popular quickly,
accounting for 65 per cent of total regional sales by the
end of 2014.16
Operating throughout Southeast Asia, Lazada raised
around US$700 million in investment up to 2014.
Alibaba now owns 83 per cent of Lazada Group and
recently invested a further US$2 billion. The move has
helped Alibaba expand its business in Southeast Asia
and allows more Alibaba merchants to sell on this
platform.
16. Lazada’s Marketplace platform accounts for 65% of its sales revenue,
7 November 2014
17. Mobile World Investment Corporation, CEO Report For First Two Months
2018
Thegioididong.com
Thegioididong.com is the leading mobile phone and
electronics retailer in Vietnam and part of Mobile World
Investment Corporation (MWG). Following Mekong
Capital’s first investment in 2007, Mobile World has
quickly scaled up its retail network from seven to
thousands of stores in just 11 years.
Mobile World owns the largest retail chain store in
Vietnam. Originally an electronic device retailer, the
company expanded its product mix to include household
appliances through dienmayxanh.com, which has 719
storefronts; groceries via bachhoaxanh.com, which has
approximately 360 storefronts; and pharmaceutical
products through seven storefronts. Thegioididong.com
itself owns 1,745 storefronts.
All of Mobile World’s brands have established e-com-
merce websites. In the first two months of 2018, online
revenue reached a record high of approximately US$87
million, contributing nearly 12 per cent of total group
revenue.17
Tiki.vn
Tiki.vn has morphed from a local online bookstore into
an e-commerce giant in eight years.
Tiki is Vietnam’s version of Amazon, entering the market
in 2010 selling books online. In 2013, Tiki expanded its
product range to include electronic devices, lifestyle
products and miscellaneous products such as airline
tickets. In 2017, Tiki introduced a marketplace feature,
allowing merchants to sell goods on its platform.
Tiki has an advantage over its competitors with its
third-party logistics. By retaining total control of its
supply chain, Tiki has established a reputation for high
customer satisfaction, which includes a two-hour
delivery policy.
JD.com – the direct competitor of Alibaba in China –
has made a further US$44 million investment in Tiki,
committing to help the brand improve its payment
integration, warehousing and delivery systems. The
investment makes JD.com the largest partner in Tiki,
along with VNG, Vietnam’s top provider of internet
content.
Shopee.vn
Shopee.vn, a newcomer to Vietnam’s e-commerce
landscape, has adopted a promising and different
business model.
Shopee is managed by Sea, a Singapore-based
company that made its debut in Vietnam in August
2016. In just two years, Shopee has risen to fifth place in
terms of average monthly traffic, according to the
company’s 2018 first quarter data.
Unlike other e-commerce operators in Vietnam, Shopee
established a C2C marketplace model from day one,
meaning its merchants are usually individuals or small
businesses. The company assists in delivery and
payment, and takes a commission for each successful
order made via the platform. To protect customers,
Shopee only makes payments to merchants once
buyers have verified the product’s quality.
In the past financial year, Shopee reached annualised
gross merchandise volume of over US$3 billion.
There are four main types of e-commerce platforms in Vietnam: direct sales websites, trade platforms, online
promotional websites and online auction websites. Of these, direct sales websites and trade platforms are the leading
players.
Direct sales websites are those set up by brand owners to sell their own goods and services. The original business
model is B2C, but several direct sales websites, such as thegioididong.com, fptshop.com.vn and vietnamairlines.com,
have recently incorporated a new customer-to-customer (C2C) model.
Trade platforms provide a marketplace for merchants, individuals and companies. The business model can be B2C or
C2C, with well-known platforms including tiki.vn, foody.vn, vatgia.com and shopee.vn.
Business
model
Type of
seller
Product
Categories
Payment
method for
sellers
Quarterly
Traffic
Ownership
Australia -
based
procurement
Annual fee
for C2C
partners
Logistics
B2C
C2C
Individuals
Registered
enterprises
General
retail
Processed
weekly
42 .4 million
Majority
owned by
Alibaba
No
None
In-house
(LELExpress)
Partner with
3rd
party for
delivery
B2C
Physical
shop
Electronic
devices
-
39.1 million
Mobile World
Group
No
-
In-house
-
B2C
Registered
enterprises
only
General retail
Tourism/
Transportation
Processed
monthly
22.6 million
JD.com
No
-
In-house
B2C
Physical shop
(VinPro,
VinMart, etc...)
Registered
enterprises
only
General
retail
grocery
-
5.3 million
VinGroup
No
-
In-house
B2C
C2C
Individuals
and
Registered
enterprises
General
retail
Processed
instantly into
partner’s
account
Partner can
withdraw
money
anytime
24.6 million
Sea
No
None
Partner with
3rd
party
B2C
C2C
Individuals
and
Registered
enterprises
General
retail
Processed
instantly into
partner’s e-
wallet SenPay
Partner can
withdraw
money
anytime
20.8 million
FPT
No
None
Partner with
3rd
party
B2C
Registered
enterprises
only
High-end
retail
-
694 thousand
Leflair
No
-
Partner
with
3rd
party
Lazda Thegioididong Tiki Shopee Sendo Adayroi Lefair
Online promotional websites sell vouchers and display promotions from companies other than the website owner.
Well-known sites include nhommua.com, hotdeal.vn and muachung.vn.
Online auction websites host auctions for goods and services owned by individuals and companies other than the website
owner. While the business model can be B2C or C2C, it is mostly C2C. Well-known sites include weshop.com.vn (part of
eBay) and chilindo.com.
KEY PLAYERS IN VIETNAM’S
E-COMMERCE INDUSTRY

Sendo.vn
Fast-growing Sendo.vn is backed by Vietnamese tech
giant FPT Corporation, and is one of the country’s
largest e-commerce companies.
Sendo is a subsidiary of FPT Corporation, which
inherited the technology platform of 123Mua – previous-
ly one of the most popular e-commerce platforms – in a
deal with Vietnamese internet content provider VNG in
2014.
Rather than investing in central distribution centres,
Sendo focused on connecting consumers with micro,
small and medium-sized enterprises (MSMEs). The
company also partnered with Google to create Shop
Ads – a service allowing all Sendo merchants to
advertise on Google at a reduced rate.
As of 2017, Sendo was Vietnam’s most prolific e-com-
merce platform, with over 120,000 online shops. Sendo
ranks in the top five in website traffic, according to the
iPrice Map of E-Commerce.
Foody.vn
Foody.vn is one of Vietnam’s most successful startups,
growing from a simple food and dining review forum
into an online restaurant directory, reservations and
delivery service.
Foody launched in 2012 as an online review forum of
food outlets throughout Vietnam. It then added a
restaurant table-booking service, TableNow, and a
delivery platform called NOW to its ecosystem.
Singapore-based company Sea first invested in Foody
in 2015, buying 6 per cent of the platform. When
Cyberagent Ventures divested its 17 per cent ownership
stake in September 2017, Sea bought a further 82 per
cent (a deal presumed to be worth US$64 million18) and
became Foody’s largest stakeholder.
NOW is Foody’s most profitable platform. It includes
food delivery, table reservations, housekeeping, grocery
shopping and even flower delivery. In 2017, NOW
deliveries reached a capacity of 10,000 orders per day.
18. Vietnam Investment Review: Sea seizes 82 per cent of Foody, 3 October
2017
19. Leflair.vn
Adayroi.com
Adayroi is the e-commerce arm of Vingroup, one of
Vietnam’s largest real estate companies. Launched in
2015 as a subsidiary of Vingroup, Adayroi attracted an
initial investment of around US$50 million.
Adayroi is a valuable addition to the Vingroup ecosys-
tem as it is capable of managing a large number of
stock-keeping units (SKUs) on its pages. Adayroi
effectively acts as a distribution channel for all of
Vingroup’s products and services, with offerings ranging
from groceries and other fast-moving consumer goods
to cars and houses.
While there have been no official statements about
Vingroup’s plans for Adayroi, it is reasonable to assume
the company will continue to use the platform to
distribute its trademarked products and services,
including Vinfast cars and Vsmart phones.
Leflair.vn
Leflair is a niche player in the market focusing on mid-
to high-end products. Founded in 2015, Leflair focuses
on providing products to Vietnam’s growing middle
class using a flash-sales model. It presents itself as a
stylish e-commerce platform, servicing high-end
shoppers with premium on-trend fashion and beauty at
a discount.
After only two years in operation, Leflair has built up a
membership of more than 700,000, with 1,000 new
subscribers daily. This high-potential startup has raised
US$4 million and intends to invest in more mid- to
high-end brands while establishing itself in Singapore.
Brands currently working with Leflair include Abercrom-
bie & Fitch, Balenciaga and local Vietnamese designers
such as Võ Công Khanh and Trương Thanh Hải.

The profile of Vietnam’s online shoppers reflects the country’s total online population – mostly young, urban and
predominantly single. They have grown up with the internet and largely consider themselves to be digital natives. They
are undoubtedly e-commerce’s ‘early adopters’ – willing to try, spend and set trends.
49%
45%
5% 1%
Q: In your most recent online purchase, which device did you use to buy the product?
Source: Decision Lab Device Study, 2017 n=2854
Mobile phone
Laptop/Computer
Tablet
Others
PURCHASING ON MOBILE
A study of Vietnamese consumers’ online behaviour in 2017 by Decision Lab confirmed that almost half of all online
purchases had been made using mobile phones in the last six months.
23%
21%
13%
13%
16%
Under VND 200K
VND 200K - VND 500K
VND 500K - VND 1M
VND 1M - VND 5M
Over VND 5M
Source: Vietnam E-commerce And Digital Economy Agency Nationwide Survey for Licensed e-Commerce
platform Owners, 2016 n=2593
HIGH-VALUE ITEMS
Contrary to speculation that a lot of online purchases made in Vietnam are of low value, official statistics from the
E-Commerce and Digital Economy Agency indicate that Vietnamese consumers have shown a willingness to buy a
diverse set of products at a wide range of price points.
The agency’s 2016 survey revealed that over one-quarter of the most frequently purchased products in Vietnam had a
value range from around VND1 million (US$45). The agency also reported in the same year that approximately 50 per
cent of Vietnam’s online shoppers spent more than VND3 million (US$130) per year. As the economy continues to
grow and GDP per capita improves, this amount is expected to rise.
VIETNAM’S ONLINE CONSUMERS
Figure 17 - The devices that consumers used to make online transactions in the past 6 months (%)
Figure 18 - Most often purchased product’s value range recorded by e-commerce platforms (%
platforms)

HIGH SOCIAL MEDIA USAGE AND VIDEO CONSUMPTION
Source: Decision Lab’s Device Study 2017 Total Respondents: 528
96%
83% 83%
38%
34%
15%
7% 7% 4% 4%
In a bid to reach Vietnam’s online consumers, brands across product categories must incorporate major social media
platforms into their marketing campaigns. Vietnam’s top three platforms currently are Facebook, YouTube and locally
developed Zalo.
Q: For the majority of your online purchases how soon do you expect your goods to arrive? Which of the following
delivery lead time frames are you willing to pay a charge for?
Sourc: PwC, Global Consumer Insights Survery (including Vietnam) 2018 n= 22,480
0%
15%
20%
25%
35%
5%
10%
30%
40%
45%
Specific 1-2
hour time of
my choosing
Less than 3
hours
Same day Next day 2 days 3-5 business
days
1 week More than 1
week
Expect goods to arrive Willing to pay extra charge for
0%
24%
2%
23%
41%
10%
23%
25% 25%
11%
28%
8%
2%
3%
3%
7%
INSTANT GRATIFICATION MARKET
While convenience is a key attraction of e-commerce over traditional brick-and-mortar outlets, instant gratification is
pivotal to boosting the appeal of online shopping worldwide. Vietnamese consumers are no different. They not only
expect immediate delivery, but have expressed a willingness to pay extra for it. This emphasises the need to optimise
logistics and transport infrastructure.
CASH ON DELIVERY PERFERRED
Despite a clear willingness to transition from the traditional shopping experience to online, Vietnamese consumers still
have some concerns, especially when it comes to payment. The overwhelming majority of online shoppers, 90 per
cent, still prefer cash on delivery as the payment method, while only 23 per cent said they used a credit or debit card.
This behaviour is very much related to a lack of trust of both product quality and merchant reputation, amplified by the
absence of a user-friendly return policy at many e-commerce platforms. As a result, consumers are happy to revert to
cash on delivery as insurance, as they can check the product before paying.
Source: Decision Lab online population study 2017 n= 1.945
Gen Z Millennials 35 - 44 y/o 45+
0%
40%
20%
60%
80%
100%
99% 99% 98% 97%
Almost all consumers who have access to the internet watch online videos – regardless of their age group.
Figure 19 - Expectation and willingness to pay extra for delivery
Figure 21 - Preferred payment methods of online shoppers (%)
Cash on delivery
(COD)
ATM Credit/debit card Scratch phone card Digital wallet
2015 2016
91%
89%
48%
41%
23%
20%
7%
6%
11%
5%
0%
30%
40%
50%
70%
10%
20%
60%
80%
90%
100%
Figure 20 - Most popular social media platforms
Figure 22 - The percentage of audiences who have internet access and watch online videos
Facebook Youtube Zalo Zing
Instagram Twitter Pinterest LinkedIn Snapchat

There was a significant lift in the reach of digital campaigns in 2017. This is a consequence of the increasing number
of people watching online videos, and the improved ability of online video platforms to target the right audiences.
While the majority of Generation Z reported watching online videos, more than half of them closed advertisements as
soon as they appeared. Older users, however, were more likely to engage with an advertisement, especially when
they deemed it to be relevant.21 As a result, advertisers need to work much harder to engage younger consumers in
their digital campaigns.
Almost half of all Vietnamese consumers actively research products online before making an offline purchase. This
provides opportunities for online marketers to influence purchasing decisions.22
Google is the most popular search engine in Vietnam, with a reported market share of over 95 per cent in November
2018. Google has led the market since October 2017, when it achieved more than 90 per cent market share. It is
followed by Coc Coc, a search engine integrated into a locally made browser, which accounts for over 3 per cent of
users. Bing and Yahoo are minor players in the market.23
21. Decision Lab: Online population study 2017
22. Think with Google, Be the first and last stop:
Rethinking search strategies for SEA
Consumers, December 2018
23. StatCounter

POPULAR E-COMMERCE PRODUCT CATEGORIES
50%
5%
10%
6%
5%
5%
4%
4%
4%
3%
2%2%
Food & beverages* - 50.2%
Clothing & shoes - 10%
Cosmetics & personal care - 5.9%
Non-prescription medicines or vitamins - 5.2%
Short trip (by bike or taxi) - 5%
Mobile phones - 4.9%
Movie tickets - 4.3%
Household appliances - 4%
Long trip (by plane, coach, train, etc) - 3.7%
Baby products - 2.8%
A stay in hotel (for leisure purposes) - 2.4 %
Insurance/Loan - 1.6%
Figure 23 - Product categories purchased in the past 6 months (%)
Q: Which type of products have you purchased in the past 6 months?
* Food & beverages include: snacks, cooking ingredients, dairy products, vegetables, meat & ﬁsh, non-alcoholic beverages,
alcoholic beverages, takeaway/ delivery food n=2854
Source: Decision Lab Device Study, 2017
Data collected from Decision Lab’s Device Study 2017 indicate that the food and beverages sector is the most popular for online sales in
Vietnam. The next most popular sectors are: clothing and shoes; cosmetics and personal care; and non-prescription medicines or vitamins.
Figure 24 - Product categories purchased online in consumers’ most recent transaction (%)
Source: Decision Lab Device Study, 2017 n=2854
0% 20% 40% 60% 80%
0%
8%
9%
11%
11%
14%
15%
18%
19%
24%
24%
48%
48%
49%
52%
55%
60%
63%
70%
Long trip (by plane, coach, train, etc)
A stay in hotel (for leisure purposes)
Short trip (by bike or taxi)
Cosmetics & Personal care
Clothing & shoes
Movie tickets
Household appliances
Takeaway/Delivery food
Insurance/Loan
Dairy products
Snacks
Cooking ingredients
Non-precription medicine or vitamins
Alcoholic beverages
Non-alcoholic beverages
Vegetables
Meat & Fish
Baby products
Mobile phones
When it comes to online transactions in Vietnam, leisure and transportation lead the market, with ride-hailing apps such as Grab and
Go-Viet, and hotel booking sites such as Booking.com and Agoda proving extremely popular. Cosmetics and personal care products are
the most frequently purchased durable goods. The latter is forecast to reach US$335 million in online sales by 2020.
24. Decision Lab, Device Study 2017

While many food and beverages products are still purchased oﬄine, Vietnamese consumers have taken to researching them online. Online
food and beverages sales are expected to grow at an annual rate of 15.2 per cent up to 2020, contributing US$159 million to Vietnam’s
total e-commerce revenue.
Source: Statista, Figures include the online sale of fresh and packaged foods (excluding baby food), delicacies and beverages. This market segment covers for example the sale of fruit,
vegetables, pasta, snacks, sweets, refrigerated products, frozen food, soft drinks and alcoholic drinks via a digital channel. Not included in this market segment are delivery services of
ready-to-eat meals.
Australian companies hoping to break into personal care or food and beverages in Vietnam need to establish a strong presence on
Facebook or one of the big local e-commerce platforms to attract Vietnamese consumers. Across all devices, these are the top two means
by which consumers shop for these products.25
25. Decision Lab, Device Study 2017
Use penetration growth predic-
tion
Average revenue per user in 2018
US$ 5.99
Revenue growth prediction (in
US$)
CAGR 2018-2020 = 15.2%
0%
4%
8%
12%
16%
20%
24%
15.9%
19.2%
2018 2020
0M
30M
60M
90M
120M
150M
180M
90M
159M
2018 2020
Figure 25

EXISTING RELATIONSHIPS
Companies with distributors or operations in Vietnam should
already have an e-commerce strategy in place.
Companies with existing supply chains in Vietnam can work either
independently or with local partners to leverage current B2C
platforms such as Lazada and Tiki.vn. Both platforms are
continuously working to raise their own brand awareness, attract
traffic to their sites, and make it easier for customers to shop
online.
Bricks-and-mortar retail chains in Vietnam have also moved
online, selling directly to consumers. Vinmart does it via
adayroi.com, AEON has aeonshop.com and Auchan has
Auchan.vn.
As the most frequently purchased online products in Vietnam are
cosmetics and personal care, Australian businesses operating in
this space could link up with key beauty chain stores, such as
Medicare, Guardian and Pharmacity. All include their merchants’
products in their online catalogue, while Pharmacity has instigated
direct online orders on its webpage.
NO EXISTING RELATIONSHIPS
SMEs without relationships or a presence in Vietnam must get their
products into the market via traditional export channels first before
selling on e-commerce platforms.
Vietnamese law stipulates that all consumer goods, including food,
beverages, skincare and healthcare products, must go through a
quality declaration procedure before entering the market. The
importer is responsible for this procedure. New exporters to market
should:
connect with potential partners in market
register products with the relevant local government agencies
arrange for local partners to import the products
list with an e-commerce channel (normally carried out by the
local partner).
Under the ASEAN-Australia-New Zealand Free Trade Agreement
(AANZFTA), many products imported from Australia to Vietnam can
enjoy the 0 per cent tariff from 2018.
CROSS-BORDER ONLINE EXPORTING
Online exporting provides businesses with more options by allowing
varying levels of control and the ability to monitor offshore sales.
Online exporters can also maintain brand reputation more easily
through consistent pricing, marketing and sales. Businesses can
adopt a B2B model by using a distributor, although for products
sold online to consumers this is known as a business-to-busi-
ness-to-consumer (B2B2C) model, which functions similarly to
traditional exporting. In this model, businesses sell products to a
distributor that will then sell products to online consumers.
Products that require government registration prior to entering the
market, such as food, beverages, health and personal care
products, cannot yet be directly exported into Vietnam from
Australia.
At the moment, clothing, sports and outdoors, and electronic
products must comply with local sale and circulation regulations.
International e-commerce companies, such as Lazada, that sells to
multiple Southeast Asian countries, are not currently providing
products directly from Australia to Vietnam, but there is potential for
future international fulfillment services and cross-border exportation.
In terms of logistics, there are many international freight forwarders
like DHL that can help exporters move cargo into the country.
To appeal to increasingly mobile Vietnamese consumers, Australian
businesses must get their products known. This can be done by
linking with an e-commerce channel with a local fulfilment service,
or using a local social media platform, such as Facebook and Zalo
Shop, to conduct a branding, communications and self-managed
direct selling strategy.
Shopping through social media apps such as Facebook is popular
in Vietnam, so businesses should consider how they will use social
media as a promotion and sales tool. See the social media section
of Austrade’s export marketing guide.
Businesses can also set up their own website for direct consumer
sales. Please refer to the ‘Exporting from your own website’ section
in Austrade’s Guide to Online Exporting for more information.
It is important to have an overall strategy to protect your intellectual
property rights (IPR) in Vietnam. Rights must be registered and
enforced in Vietnam, under Vietnam laws, where IPR protection may
be different from Australia. Companies should consider how to
obtain patent and trademark protection before introducing their
products or services to the Vietnam market, because the granting
of patents and registering of trademarks are based on a first-to-file
basis. The National Office of Intellectual Property oversees the IP
registration procedure following Vietnam’s IP laws.
Access to the market varies according to the size of the
company, the products and existing relationships within Vietnam.
ENTRY POINTS FOR AUSTRALIAN BUSINESSES

Vietnam is an emerging e-commerce market that will become
more dynamic as more global players enter the market.
E-commerce companies are spending to gain market share and
competition is intensifying. Developments in the industry are
unlocking new opportunities for foreign businesses.
Increasing internet access, widespread smartphone usage,
improved technological infrastructure and improvements in
regulations are advancing Vietnam’s e-commerce industry. While
challenges remain around consumer confidence in product
quality, data privacy, unfulfilled orders, and logistics infrastructure,
rising disposable incomes mean that consumers are paying for
higher value products online. Additionally, foreign-branded
products are considered to be safe and of high quality so
Australia’s reputation for producing premium quality products is a
strong advantage in market.
Australian businesses with existing operations in Vietnam should
be actively looking at how to make the most of current e-com-
merce opportunities. Alternatively, cross-border online exporting
offers Australian companies with the potential to expand their
reach and sell directly to consumers, without becoming involved
in complicated local supply chains.
CONCLUSION
AUSTRADE IN VIETNAM
Every market is different. But wherever you want to do business,
local knowledge goes a long way. At Austrade, we can offer you
the experience, insights and contacts you need to make your
entry or expansion a success.
We can help you:
Understand the market: Better understand the market you’re
thinking of entering, or discover one you’d never considered. We
provide information on export issues, statistics, trends and
regulations relevant to your product.
Make a connection: We can introduce you to experienced
locals who can help your business with importing, distribution or
support.
Be more efficient: We can help you make the most of your time
overseas by arranging appointments for you in advance.
Get feedback: After your visit, we’ll get honest feedback from
local contacts, giving you an insight into their take on what you
offer, and their poential as business partners.
Promote yourself: When you’re ready to launch overseas, we
can help you with your marketing plan, with access to key trade
shows and ways to reach your target audience.
HOW AUSTRADE CAN HELP
The Australian Trade and Investment Commission (Austrade) is
the Australian Government’s international trade promotion and
investment attraction agency.
We deliver quality trade and investment services to businesses
to grow Australia’s prosperity. We do this by generating and
providing market information and insights, promoting Australian
capability, and facilitating connections through our extensive
global network.
We also provide financial assistance for exporters through
programs such as the Export Market Development Grants
scheme.
To discover how we can help you and your business visit
austrade.gov.au or contact us at info@austrade.gov.au or on 13
28 78 (within Australia).
If you have any questions, please contact the Austrade team either
in Hanoi or Ho Chi Minh City. Our mission is to help Australian
companies connect with potential partners. We look forward to
introducing you to the one of the most creative, dynamic and
fast-growing economies in Asia.
Austrade Hanoi
Australian Embassy
8 Dao Tan Street
Ba Dinh District
Hanoi
Email: vietnam@austrade.gov.au
Tel : +84 24 3774 0300
Fax : +84 24 3831 7757
Austrade Ho Chi Minh City
Australian Consulate-General
20th Floor Vincom Centre
47 Ly Tu Trong Street, District 1
Ho Chi Minh City
Email: vietnam@austrade.gov.au
Tel : +84 28 3827 0600
Fax : +84 28 3829 1656

Decision Lab, Device Study 2017, December 2017, Internal data,
accessed 26 June 2018. Statista, Digital Market Outlook:
eCommerce,
https://www.statista.com/outlook/243/100/ecommerce/worldwide,
accessed 2 July 2018.
World Bank Open Data, Vietnam,
https://data.worldbank.org/country/vietnam, accessed 2 July 2018.
REPORTS:
Vietnam eCommerce and Digital Economy Agency (VECITA),
Vietnam e-Commerce Report, April 2017,
http://idea.gov.vn/?page=document, accessed 26 June 2018.
iPrice, State of eCommerce in Southeast Asia 2017, 2017,
https://iprice.my/insights/stateofecommerce2017/, accessed 26
June 2018.
EU-Vietnam Business Network, Research Report: e-Commerce
Industry in Vietnam, 2018
https://evbn.org/e-commerce-industry-in-vietnam-report-edi-
tion-2018/, accessed 30 June 2018.
We Are Social, Digital In Southeast Asia In 2017, February 2017,
https://wearesocial.com/sg/blog/2017/02/digital-south-
east-asia-2017, accessed 2 July 2018.
We Are Social, Digital In Southeast Asia In 2016, January 2016,
https://wearesocial.com/sg/special-reports/digital-2016, accessed
2 July 2018.
Vietnam E-commerce Association, Vietnam e-Commerce Index
Report, 2018,
http://www.vecom.vn/tai-lieu/tai-lieu-trong-nuoc/-
bao-cao-chi-so-thuong-mai-dien-tu-viet-nam-2018, accessed 2
July 2018.
PwC Global, PwC’s Global Consumer Insights Survey, 2018,
https://www.pwc.com/gx/en/industries/consumer-markets/con-
sumer-insights-survey/delivery-expectation.html, accessed 3 July
2018.
ARTICLES:
Vietnam Ministry of Justice, “Laws related to e-Commerce:
Shortcomings and Suggestions on Improvement”, 9 October 2017,
http://moj.gov.vn/qt/tintuc/Pages/nghien-cuu-trao-doi.aspx-
?ItemID=2222, accessed 30 June 2018.
Nhan Dan, “World Bank helps Vietnam in trade facilitation,
logistics development”, 27 June 2017,
http://en.nhandan.com.vn/business/item/5301302-wb-helps-viet-
nam-in-trade-facilitation-logistics-development.html, accessed 2
July 2018.
Cong Thuong, “Vietnam needs to take down barriers so logistics
for e-commerce can develop”, 27 April 2018,
https://congthuong.vn/viet-nam-can-xoa-bo-nhieu-rao-can-de-lo-
gistics-cho-thuong-mai-dien-tu-phat-trien.html, accessed 2 July
2018.
Vietnam Investment Review, “Sea seizes 82 per cent of Foody”, 3
October 2017,
https://www.vir.com.vn/sea-seizes-82-per-cent-of-foody-52678.
html, accessed 2 July 2018.
Techinasia, “Alibaba injects a further $2b in Lazada as Max Bittner
steps down as CEO”, 19 March 2018,
https://www.techinasia.com/alibaba-injects-2b-lazada-max-bit-
tner-steps-ceo, accessed 2 July 2018.
Techcrunch, “JD.com leads investment in Vietnam-based
e-commerce service Tiki”, February 2018,
https://techcrunch.com/2018/01/18/jd-com-tiki-indonesia/,
accessed 2 July 2018.
StatCounter, Search Engine Market Share in Vietnam,
http://gs.statcounter.com/search-engine-market-share/all/viet-nam,
accessed 3 December 2018.
VIETNAM’S LAWS:
Decision 1563/QD-TTg of the Prime Minister approving the Master
Plan for e-commerce development during the period of
2016-2020, 8 August 2018.
Decision 200/QĐ-TTg of the Prime Minister approving the Action
Plan for the action plan for improvement of competitiveness and
development of Vietnam’s logistics services by 2025, 24 February
2017.
Decree 163/2017/NĐ-CP on provision of Logistics Services, 30
December 2017.
REFERENCES

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