E-commerce market potential remains untapped

The lack of customer confidence, payment solutions and information transparency all have prevented e-commerce from booming, with only 17 percent of the population buying online.



A Nielsen report showed that 45 percent of Vietnam’s population uses the internet, 28 percent of which conduct online shopping with an average spending level of $160 per head per month, accounting for 2.8 percent of total retail sales.

The Vietnamese $4 billion e-commerce market mostly distributes fashion, book/music/film, tourism, cosmetics/personal care, electronics/refrigeration and computer/phone products.

Hanoi and HCMC are the two biggest markets, which both are among the most dynamic cities, thanks to the high growth rates in retail, foreign direct investment (FDI) and real estate projects.

The market expects the 22 percent growth rate in 2017 and 13.2 percent by 2020, according to eMarketer.

Nguyen Huong Quynh, CEO of Nielsen Vietnam, commented at the 2017 Vietnam Online Business Forum (VOBF) that Vietnamese consumers are ‘super-connected’ thanks to the high popularity of smartphones.

Every 100 Vietnamese own a total of 131 mobile phones. Vietnamese spend 24.7 hours on the internet a week, just lower than Singaporeans with 25.9 hours.

The new generation of customers – internet users – with improved income have become the ‘motive’ for e-commerce development.

The number of urbanites is on the rapid increase, 3.2 percent per annum, and they are the major customers that e-commerce target to because of high demand.

The population in cities outside Hanoi and HCM City accounts for 55 percent of total population, which shows that the e-commerce market remains very large.

The behavior of ‘connection’ makes consumers more confident in doing shopping, which is considered an important factor in the development of the digitalized economy.

While the rate of spending idle money on entertainment services is 53 percent for normal consumers, the figure would be higher – 78 percent – for connected consumers.

Though the potential of the e-commerce market is clear, retailers still find it difficult to persuade customers to do online shopping.

According to Quynh, the lack of information about products, the lack of transparency in retailers’ policies and late deliveries all keep potential customers away.

Meanwhile, Pham Trong Le from VNPost thinks the problem lies in the payment method. Since customers still worry about security in online payment, and prefer COD (cash on delivery) mode for online orders.

An MOIT report showed that COD mode still accounts for 91 percent, while the proportion of online payments increased slightly from 5 percent in 2014 to 7 percent in 2015.

Nguyen Huu Tuan from MOIT advised retailers to develop multi-channel retail. “It is difficult to persuade customers to buy online if the products have high value,” he commented.

Ha Nga / vietnamnet