The advent of COVID-19 in the year 2020 accelerated e-commerce in Vietnam and the trend continues in 2021 & 2022 with no signs of halting for the foreseeable future. Due to the imposition of nationwide lockdown and mandate to adhere to social distancing norms, a large number of consumers started pivoting towards shopping online. This trend is expected to continue in a post-COVID era.
In this article, we’ll talk about the prospects of going online and adopting the e-commerce trend for increased profit and relevancy.
Reasons to Start an Ecommerce Business in Vietnam in 2021
There are several reasons why a business should establish an internet presence as a valuable investment in Vietnam, including:
- Google ranks Vietnam as the second-fastest-growing e-commerce market in Southeast Asia. There are around 69 million internet users. (source)
- Vietnam has more than 61 million smartphone users and its smartphone penetration is around 63%, leading to an increase in online and digital purchases. (source)
- 52.7% of Vietnamese will shop online in 2021, and the figure is predicted to reach 70.1% (70.9 million users) by 2025. (source)
- Data from the e-commerce and Information Technology Agency of the Ministry of Industry and Trade shows that the majority of SMEs in Vietnam spend more than 30% of their budget on technology.
- As far as future projections go, revenue in the Vietnamese e-commerce market is expected to show an annual growth rate (CAGR 2021-2025) of 6.78%, resulting in a projected market volume of US$10.458m by 2025.
Types for E-commerce Business in Vietnam
Before going deeper into how to start selling online in Vietnam, it’s a good idea to familiarize oneself with the most popular forms of e-commerce businesses.
In Vietnam, online sellers purchase the goods they want to offer clients. They can keep the items in storage until they are sold. Online retailers are often the people who operate traditional retail stores and want to increase their earnings by selling online.
A website or a platform is a virtual home to any business occupying the online marketplace. Vendors from all around Vietnam leverage these websites to market their goods. This helps a customer, entering an online marketplace see a variety of items for sale at one location. Customers then make purchases and pay for the same at the same platform.
Tiki, Sendo, Shopee, and Lazada are among the most well-known local online markets in Vietnam, whereas international companies including Amazon, Alibaba, and eBay are also establishing a presence.
Classified online products are the same as online markets. The sole difference lies in the method of payments. This means that payments are not accepted by such online classifieds. As a result, they are done directly by the vendor in case the consumer wishes to purchase a product.
Things to Note for Foreign Investors in the E-Commerce Sector in Vietnam
Please pay attention to the following to fully understand what you need to begin online sales:
- An e-commerce firm must apply for an intermediary payment license if it wishes its customers to make direct payments. An alternative to this is to collaborate with institutions, such as banks, Momo and Zalo Pay, that already have an intermediary payment license.
- To sell products directly to consumers, one must secure a trading license which can be obtained in six weeks.
Registration of a Website for E-commerce Setup
Without the availability of a website, online sales are not feasible. The following paperwork must be prepared if the businesses want to register their websites:
- A notarized copy of the Enterprise Registration Certificate (ERC);
- Plans to provide services;
- Statute of management of the e-commerce service website;
- Forms of a service contract or cooperation agreement between traders and organizations that own e-commerce service websites and traders, organizations as well as individuals participating in the buying and selling on such websites; and;
- General trading conditions.
The following method has to be followed after the preparation of all the documents:
- Prepare and guarantee compliance with Vietnamese Laws on the specified eCommerce Website;
- Consult a company specialist and request that you check your documents and information on the website;
- The incorporation professional will then act on the applicant’s behalf and submit the request to the State Agencies concerned;
- After approval, the applicant will have the registration certificate issued by the Ministry of Industry and Trade.
The following paperwork must be prepared to complete the notification procedure if one wishes to be an online retailer:
- A notarized copy of the Enterprise Registration Certificate (ERC); and,
The website notification procedure is identical to the website registration method once all the paperwork is ready. The only distinction lies in the fact that the Ministry of Industry and Trade notifies the online retailers.
Cekindo Can Guide You Through
You may not know the local rules and regulations in Vietnam as a foreign investor. So when it comes to business formation in Vietnam, Cekindo, an expert of company incorporation, comes into action.
We have a team of experienced consultants, with extensive knowledge and experience of many years in the industry, as one of the leading business consultants in Vietnam.