Vietnam's E-Commerce Sector Surges Ahead of Traditional Retail

Vietnam's e-commerce sector is witnessing substantial growth, outpacing traditional retail in recent years. According to a report by the e-commerce data analytics platform Metric, major online marketplaces such as Shopee, TikTok Shop, Lazada, and Tiki have seen their gross merchandise value (GMV) increase by 38-52%. Collectively, these platforms hosted 613,900 stores, generating a GMV of VND291.6 trillion (approximately US$11.07 billion) and selling over 2.18 billion products, marking a 41% increase in GMV and a 12% rise in product sales.

On average, consumers in Vietnam are spending VND1.6 trillion (about US$64 million) daily, purchasing around 12 million products. Categories such as beauty, fashion, home and living, groceries, and household appliances dominate the online shopping landscape. JBL Vietnam, a notable audio equipment retailer, reported that its sales on Lazada doubled in the second quarter compared to the previous year, highlighting the benefits of e-commerce for popular brands.

“The market is transitioning to a more regulated environment with standardized products to ensure consumer rights.”Nguyen Lam Thanh, TikTok Vietnam representative

Livestream shopping has emerged as a significant driver of this growth, with a recent survey by Q&Me indicating that 67% of online shoppers prefer this method. Ta Van Thanh, CEO of footwear retailer Nesty, noted that over half of the brand's sales on TikTok Shop come from livestreaming, prompting plans to enhance partnerships with content creators.

Despite the rapid expansion, e-commerce currently represents approximately 15-16% of Vietnam's overall retail sales, which totaled VND2.94 quadrillion (around US$117 billion) in the first half of the year, a 12.5% increase from the previous year, according to the General Statistics Office. This indicates significant room for growth, particularly in rural areas where e-commerce penetration is still low.

“Consumers are increasingly interested in the narratives behind products.”Hà Thị Vinh, Vice Chairwoman of the Vietnam Craft Villages Association

Nguyen Lam Thanh, a representative from TikTok Vietnam, emphasized that while the e-commerce market is evolving, it remains largely concentrated in urban centers. He pointed out that logistical challenges and consumer shopping habits in rural areas pose barriers to growth. Nonetheless, he mentioned that the e-commerce sector is expected to grow approximately 25% by 2025, as the market transitions to a more regulated environment with standardized products to ensure consumer rights.

Hà Thị Vinh, Vice Chairwoman of the Vietnam Craft Villages Association, highlighted the potential for e-commerce to benefit local artisan products, which often carry cultural significance but have yet to reach a wider audience. She stressed the need for artisans and producers to develop storytelling skills about their crafts to attract consumers who are increasingly interested in the narratives behind products.

“Consumer expectations are shifting towards better experiences, which will require significant investment in technology and infrastructure.”Sarah Nguyen, commercial director of Shopee Vietnam

In a bid to enhance e-commerce in rural areas, TikTok recently signed a partnership with the Ministry of Agriculture and Rural Development to promote digital economy initiatives. This collaboration aims to support cooperatives and local artisans in marketing their products online, thereby expanding their market reach and increasing product value.

As the e-commerce landscape continues to evolve, experts suggest that platforms must invest in improving user experience, personalization, and trust. Sarah Nguyen, commercial director of Shopee Vietnam, noted that consumer expectations are shifting towards better experiences, which will require significant investment in technology and infrastructure from e-commerce platforms.