Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
Last Published: 7/20/2017
Overvierw
E-commerce in Vietnam has made great progress in recent years. Vietnamese businesses are making an effort to reduce transaction risks and expand into larger markets while Vietnamese consumers will benefit from more options and convenience.


According to a 2015 survey in Vietnam E-Commerce and Information Technology Agency (VECITA), online sales in 2015 were $4.1 billion, a 20% increase from 2014. However, traditional retail still drives overall sales growth.  eCommerce is expected to continue to grow thanks to the explosion of smartphone usage to an estimated 17.6 million units in 2016, an annual growth of 17.3% from the prior year. There are also an estimated 50 million internet users in Vietnam, a 7.5% increase between 2014 to 2015. VECITA expects the number of online shoppers will increase 52% by 2020.

The most popular categories purchased by consumers were: clothing, footwear, and cosmetics, followed by technology and electronic equipment, household appliances, books, stationery, flower, and gifts. Most online shoppers prefer cash on delivery, with 91% of survey respondents choosing this payment method; 48% chose bank transfer and 20% used credit cards.
Internet usage over population (2015)Estimated expense online per capita (2015)Internet users shop onlineEstimated B2C e-commerce revenue (2015)
49%$16062%$4.07 billion
 Internet penetration: The number of internet users in Vietnam has grown from 23.2 million in 2009 to nearly 54 million at the in 2016.  The broadband penetration rate, however, is relatively low, with an estimated 9.3 million subscribers at the end of 2016.

Current Market Trends
The Vietnamese government is committed to modernizing Vietnam’s IT infrastructure and encouraging investment in the sector through lower taxes. Online payments have recently been adopted by more services, including public utilities. As an example, in 2007, Vietnam Electricity (EVN) Ho Chi Minh City began working with local banks to collect payments electronically. It currently receives nearly half its revenue through this service.

As part of the commitments that Vietnam made to accede to the WTO, Vietnam is opening its internet and telecommunication services sectors to greater foreign investment. This is one area of opportunity for new entrants that can partner effectively with local firms. In addition, the government is developing the supporting infrastructure and providing the legal framework for e-commerce through plans for more tenders to be submitted online and providing online public services.
Prominent local players, namely Mobile World JSC and Lazada.vn, continue to dominate the online shopping market in terms of revenue, with competition from Tiki.vn and Vatgia.com. International sites like Amazon, Alibaba and eBay are also among the top ten most visited websites.

Price is the top concern for Vietnamese consumers when it comes to the online shopping behavior, followed by the reputation of the seller/website and brand of products/services. Major issues, however, remain unchanged including customers’ low trust in online shopping, unpopular online payment platforms, and quality of delivery and fulfillment services.

Domestic eCommerce (B2C)
In 2016, only 45% of businesses in Vietnam had websites that allow consumers to purchase online, which is unchanged from 2015. However, online retailers that updated their inventory daily improved slightly in 2016 from 54% compared to 50% in 2015. eCommerce in Vietnam has seen a growing trend of selling through social media sites like Facebook, especially for SMEs and private/household businesses. Mobile commerce has also begun to grow rapidly as Vietnam’s mobile infrastructure has improved. Many businesses have invested more in this new platform, from upgrading to mobile-friendly websites to developing applications. Only 13% of Vietnamese retailers have developed their own standalone website instead of using a third party online retailer such as eBay and Alibaba to sell their products.

Cross-Border eCommerce
Vietnam online-shoppers favor U.S products because of the reputation of Amazon, eBay and other larger internet retailers. Most commonly bought products are fashion and electronics. Revenue growth for online retailers in 2016 grew by 140% over 2015 and is expected to double in 2017.

Amazon only sells books directly to Vietnam. Therefore, customers in Vietnam who want to buy goods on Amazon.com use an intermediary service. Through 2016, Vietnamese customers have purchased more than 800 million products on Amazon. Amazon will launch its online shopping service in Indonesia, Malaysia, Singapore, Philippines, Vietnam and Thailand by the end of 2017, per April 2017 media reports. The company is working with iPrice Group Sdn Bhd, a Malaysian retailer, to enter these markets.

In August 2016, the Prime Minister issued Decision no. 1563/QD-TTg approving the master plan for the development of e-commerce from 2016 to 2020. Under this Decision, by 2020 a network of transportation, delivery and fulfillment services will have been built for e-commerce covering all provinces and cities in the country; and will gradually connect to the region to promote cross-border e-commerce activities. However, there are still unclear customs mechanisms, policies, decrees, and circulars guiding cross-border e-commerce transactions that pose an obstacle to growth.

B2B eCommerce
According to VECITA’s 2016 survey, 32% of businesses in Vietnam have established their business relationship with foreign partners through online channels, 11% have joined an e-commerce /platform, and 49% own a website. Even though Vietnamese businesses prefer face-to-face meetings to negotiate and sign contracts, online channels are still acceptable. The usage of E-commerce platforms like Alibaba and Amazon as a source for suppliers has become more popular recently.

In 2016, Alibaba, through its local partner OSB, partnered with VPBank and PTI to form Vietnam Export Support Alliance, which offers a joint package to local exporters in assisting them with seeking financial and banking assurances and export-import insurance.

Since its first launch in April 2014, VNACCS/VCIS (Vietnam Automated Cargo Clearance System) is an integrated Vietnam electronic customs clearance system with one single window policy. The service has encouraged the cross-border trading with 86% local businesses benefit from it.

eCommerce Services
Logistics remains the main burden for the sector, particularly for customers in rural areas or second-tier cities.  Per Vietnam's Ministry of Industry and Trade, small cities accounted for 25% of e-commerce sales in 2015, while Hanoi and Ho Chi Minh accounted for 75%.
 
Logistics services for e-commerce, which includes packaging, shipping and money collection, as well as customer relations, is expensive compared to traditional retail channels, which are still favored by the Vietnamese consumer.

Amongst the major players in the market, Lazada, now partly owned by Alibaba, is best positioned to overcome logistical challenges. Alibaba currently operates in 6 Southeast Asian countries, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, where it has opened 12 warehouses and 92 distribution centers. The company's investments in local delivery and supply chains together with their 14.5% stake in Singapore Post (SingPost), a regional player offering logistics and delivery services in 15 countries, will allow it to overcome logistical hurdles and provide end-delivery support.

On December 9, 2016, in Ho Chi Minh City, Vietnam Logistics Enterprise Association and Vietnam E-Commerce Association signed an agreement to collaborate in communication, counselling on policies, raising awareness, and promoting E-commerce and E-logistics applications.

eCommerce Intellectual Property Rights
Under Decree 52/2013/ND-CP (Law on E-Commerce) effective from July 1, 2013, it is prohibited to take advantage of e-commerce to trade in counterfeit goods or trade in goods or provide services infringing upon intellectual property rights, or trade in goods or provide services in the list of goods and services banned. Domain names are also protected under this law. 

Procedures in handling of administrative violations in e-commerce
Traders, organizations, or individuals that commit the following violations shall, depending on the nature and severity of their violations, be administratively sanctioned in accordance with the law on handling of administrative violations in e-commerce:
  1. Violation of provisions on prohibited acts in e-commerce activities in Article 4 of the decree;
  2. Violation of regulations on conclusion of contracts in e-commerce;
  3. Violation of regulations on responsibilities of subjects in e-commerce;
  4. Violation of regulations on notification of set-up of sales e-commerce websites;
  5. Violation of regulations on registration of e-commerce service provision websites;
  6. Violation of regulations on rating and certification in e-commerce;
  7. Violation of regulations on protection of personal information in e-commerce;
  8. Violation of regulations on payment safety in e-commerce;
  9. Non-compliance with requests of competent state agencies conducting inspection and examination in accordance with law;
  10. Continued operation after having their registrations for provision of e-commerce services terminated, for traders and organizations;
  11. Continued operation after having their registrations terminated or being deregistered or having their licenses for rating, supervision and certification in e-commerce invalidated or revoked;
In addition to the administrative sanctions, management agencies will consider the nature and severity of violations to issue decisions to stop operation, cancel the right to use licenses or deregister e-commerce websites.

In the case of traders, organizations, or individuals that commit violations, causing damage to material interests of other traders, organizations or individuals, they will pay compensations in accordance with law.

The Inspectorate of the Ministry of Industry and Trade, the market management office, inspectorates of provincial-level Industry and Trade Departments and other state agencies may sanction administrative violations in e-commerce according to their responsibilities provided in the Law on Handling of Administrative Violations and relevant documents.

Popular eCommerce Sites
B2G E-commerce platforms: Vietnam's Prime Minister Nguyen Xuan Phuc has approved the framework to implement the electronic government procurement system in a bid to enhance transparency and reduce costs in the procurement.

Muasamcong.mpi.gov.vn serves as the e-procurement portal. Via the portal, suppliers can get access to public procurement law and regulations, notices of invitations to tenders, guidelines to participate in a tender, and bidding results. However, most of the portal is not translated into English.

Vietnam expects to start rolling out the national bidding network system in 2018 that can be utilized by any business looking to work with government agencies, mainly at the ministerial level.

B2B E-Commerce platforms: The most popular B2B sites:
Alibaba
Vietnam Business Directory
Vietnam B2B Direct
Bizviet.Net
VietAZ
Vietnam Tradeford

Most popular B2C E-commerce websites include:
  1. Lazada.vn
  2. Chotot.com: A joint venture between Singapore Press Holdings Limited, Schibsted Media Group and Telenor Group. Chotot is also sister of Kaidee Thailand, Mudah Malaysia, Berniaga Indonesia (now merged with OLX)
  3. Tiki.vn: Founded in March 2010, the website initially sold books then expanded to selling more popular products in electronics, accessories, gifts, fashion, beauty, and health.
  4. Thegioididong.com: The largest digital and home appliance product retail chain in Vietnam with more than 1000 stores, recently expanded into daily grocery delivery.
  5. Amazon.com
  6. Sendo.vn: General shopping site with that is well known for selling fashion and cosmetic products. Sendo is the ecommerce arm of FPT – one of the largest telecom companies in Vietnam that specializes in retail, software outsourcing and is an internet service provider. FPT also owns one of the largest online news site VnExpress.net
  7. 5giay.vn: A classified ad website.
  8. Vatgia.com: Once the most popular eCommerce site in Vietnam thanks to its content and SEO strategy, started as a price comparison site.
  9. Adayroi.com: B2C site backed by Vin Group. The group owns some of the largest shopping malls in Hanoi and Ho Chi Minh city, and has diversified into online business.
  10. Foody.vn: Started as a restaurant review website. Currently, Foody also offers travel, online reservations, and a food delivery service. Foody is backed by Garena and Tiger Global.
  11. Fptshop.com.vn: Digital product retail chain of FPT, sister site to Sendo
  12. Yes24.vn: Online retailer from Korea, that sells fashion and cosmetics products.
Online Payment
Cash payments are still the most popular method of payment in Vietnam, especially in the rural areas. Vietnamese consumers are still wary of online payments and credit cards because of product quality and privacy of personal data. Per VTCPay, an electronic payments business in Vietnam that processes 8 million daily electronic transactions, 90% of payment transactions in Vietnam are still conducted by cash.
 
Cash on delivery remains the main form of payment for eCommerce, reflecting the country's underdeveloped systems of online payment. But, online payments are expected to gain in popularity with the growth of domestic online payment start-ups.

Electric Payment Services
Six non-banking institutions were licensed to provide electronic payment services, including: Banknetvn, VNPay, M_Service, BankPay, Vietnam Online, and VietUnion. 38 commercial banks collaborated with these institutions to provide electronic payment services.
 
Payment Card Switching System
In April 2015, Vietnam National Financial Switching JSC (Banknetvn) and Smartlink Card Services (Smartlink) were officially merged into one company, allowing customers of any bank to execute transactions at most ATM/POS, regardless of the affiliation.

Payment Cards
In 2015, Vietnam had approximately 69 million cards issued, in which 6.25 million were international cards. Basic services of these cards included withdrawal, transfer, account statement services. Commercial banks have also integrated new functions into payment cards such as allowing customers to pay various bills including electricity, telecommunications, insurance, flight tickets, or other online bills of goods and services. Per statistics of the State Bank of Vietnam, the ratio of cash in circulation over the total value of payment methods decreased from 12.3% in 2012 to 11.89% in October 2015.
 
Online Payment Services via Internet or Mobile Phone: 67 commercial banks provided internet banking services and 37 commercial banks provided mobile banking services.

Cross-border Payment Cards: International payment card systems in Vietnam such as VISA, MasterCard, American Express, Diners Club/Discover (US), Union Pay (China) provide debit and credit card services. These cards have functions such as ATM withdrawal, POS, online payment.

Mobile eCommerce
The number of businesses that chose to develop mobile platforms for e-commerce are also increasing. In 2016, 19% of Vietnamese businesses have customized their website to be mobile-friendly and 15% have developed their mobile apps.
 
The Android platform is the most popular platform chosen by businesses for developing their mobile applications (72%), followed by the Windows platform (49%) and iOS (46%). The trend of mobile payments will continue to drive demand for mobile wallets and other Mobile Financial Services (MFS), further stimulating eCommerce.

Digital Marketing
Social networks are the most popular methods used to promote commercial website and apps; 47% of the businesses use this method while 41% are also advertising their website and apps through search engines. Other forms of digital marketing used are direct SMS/email and online news websites.
Most businesses in Vietnam spend VND10 million (approx. US$440) a year for online advertising; only 10% of local businesses spend more than VND50 million (approx. $2,200) for the promotion. Among top digital marketing agencies in Vietnam are:
Saatchi & Saatchi: Established in Vietnam in 1995, is the largest advertising agency in Vietnam with three subsidiaries under Publicis Group: Saatchi & Saatchi, Vivaki and Publicis.
Isobar: Isobar established its office in Vietnam in 2016, and is a subsidiary of Dentsu Aegis Network. Isobar Vietnam is responsible for digital marketing for the Dentsu Aegis Network in Vietnam.
Other local digital advertisers are: Mirum, Adflex, Adtima, Adsota, Firstcom.

Major Buying Holidays
Local holidays like Lunar New Year (Tet) and the Full Moon Festival are popular gift giving occasions. Vietnamese consumers will also give gifts for major international buying holidays like Valentine’s Day, Mother Day, and Christmas.
 
The biggest local eCommerce event of the year in Vietnam is Online Friday organized on the first Friday of December. According to organizers, Online Friday 2016 saw many leading retailers such as The Gioi Di Dong (Mobile Worlds), FPTShop, Viettel Store, Pico, Nguyen Kim, and Lotte participate.
Major brands like Acer, Asus, HP, Oppo, and Nagakawa also advertise special sales to customers and assisted retail businesses during the 2016 event. Customers may use coupons/vouchers to shop at stores and trading centers participating in the Online Friday.

Social Media
In 2016, 35 million Vietnamese people used social networks, accounting for approximately 36% of the population. In 2015, Nielsen’s report showed that over 30% of Vietnamese consumers use online shopping services on a regular basis and used social networks for reference before making purchase decisions. VECITA reports that 34% of the surveyed businesses have their sales channel on social media, an increase of 6% from the previous year.

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



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