Due to increased foreign investments, a favorable regulatory environment, and improved internet connectivity, Vietnam’s E-Commerce Industry is rising rapidly in 2021 with no signs of slowing down. By 2025, online sales are expected to account for roughly a tenth of all goods and services sales in the country. This article discusses how Vietnam’s thriving digital economy and booming e-commerce market make it an ideal location for tapping into new business prospects.
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An Outlook of Vietnam’s E-Commerce Growth
To begin with, the demand for online commerce and entertainment in Vietnam has increased considerably in 2021 as a result of the country’s digital revolution. Throughout 2020, online shopping increased penetration, and transaction volumes, resulting in a whopping 54% gain in e-commerce sales in Vietnam, which is predicted to surpass the contemporary trade share of sales in 2028.
Moreover, working from home has expedited delivery and ride-sharing, as well as the desire to avoid contact with shops and food and beverage outlets. This, combined with the meteoric rise of e-commerce, has also boosted demand for delivery and ride-sharing services, as well as the expansion of established companies and the arrival of new ones.
Furthermore, e-wallets have benefited since the use of cash-on-delivery has decreased marginally, allowing mobile payments to take their place. While still in their outset, online education platforms have also been handed a boost in their efforts to reach consumer homes.
Consequently, Vietnam’s e-commerce business grew by 18% to $11.8 billion in 2020, making it the only country in Southeast Asia to see double-digit growth during the Covid-19 pandemic, presenting itself to be an opportune sector to invest in.
Reasons to Invest in Vietnam’s E-Commerce Industry
In Vietnam, e-commerce is on the rise, increasing from roughly 28% in 2017 to nearly half of the population by 2020. Over 70% of Vietnam’s 100 million people are predicted to use e-commerce transactions by 2025. According to Statista, the country’s e-commerce sales will be nearing US$9 billion by 2025.
Vietnam’s e-commerce is drawing near to its ASEAN rivals, with the country ranked 86th in the United Nations E-Government Survey for 2020. Its 40 million online shoppers spend an average of US$210 each per year, making it the second-largest e-commerce market in the area. With increased internet access, smartphone use, and more trust in online buying, Vietnam’s e-commerce business is predicted to keep rising, with no sign of stopping anywhere in the future.
The success of various Vietnamese-originated e-commerce platforms, like Tiki, Sendo, and Thegioididong, demonstrates Vietnam’s ability to nurture e-commerce. Moreover, Sendo.vn received a US$51 million investment from Japan’s SBI Holdings. Grab and Gojek, the region’s two most valued companies, are also weighing the pros and cons of a possible merger. This merger has the potential to develop market dynamics in Southeast Asia’s e-commerce sector.
Vietnam provides one of the most favorable regulatory conditions in the ASEAN area for starting e-commerce. As of 2021, Vietnam is a signatory to thirteen free trade agreements (FTAs), which allow the import and export of commodities with reduced or zero customs tariffs.
Vietnam’s digital economy might reach $52 billion by 2025, garnering the attention of major brand names such as Goldman Sachs and JD.com. By 2025, eCommerce might account for 10% of Vietnam’s retail sales. Online purchasing in Ho Chi Minh City and Hanoi might reach 50%.
The Vietnamese government’s dedication to the digital transformation of the economy has actively fueled the development of the country’s e-commerce. Foreign investment in this sector is a profitable opportunity that also has the potential to support the sector’s growth.
How Can Cekindo Help?
Setting up an e-commerce business in Vietnam can be a time-consuming process. Cekindo’s comprehensive business solution services will not only assist you with registering your company but will also ensure that you stay on top of all legal compliances. Following incorporation, we also provide HR and accounting services.