On an e-commerce site (Photo: VNA) Hanoi (VNA) – Though Euromonitor International estimates e-commerce accounted for just3 percent of Vietnam’s retail market last year, the smallest among SoutheastAsia’s major economies, the potential for growth is alluring, the newswirebnnbloomberg.ca said on June 2.
According to a study by Google,Vietnam’s digital economy is forecast to grow to 52 billion USD by 2025, anannual 29 percent increase from 2020, it said.
Startups backed by WarburgPincus LLC and JD.comInc., and regional players including Singapore’s Sea Ltd.’s Shopee and even Amazon.comInc. are also targeting the country’s growingmiddle class. Between 2016 and the first half of 2020, investors funneled 1.9billion USD into Vietnam’s online sector, a study by Google, Temasek and Bain showed.
“Vietnam is at the beginning ofbecoming a digitalised society with a young population that loves technology,”said Ralf Matthaes, Managing Director of Ho Chi Minh City-based Infocus MekongResearch. “So all these companies are tripping over themselves to offer theseservices.”
The Vietnamese government targeted that onlineshopping will account for 10 percent of Vietnam’s retail sales, and as muchas 50 percent in Hanoi and Ho Chi Minh City by 2025. To create a moretransparent modern economy, authorities want to increase cashless payment forpublic services and improve the regulatory framework for e-payment.
A consortium led by AlibabaGroup Holding Ltd. and Baring Private Equity Asia is investing 400 millionUSD for a 5.5 percent stake in Vietnamese conglomerate MasanGroup Corp.’s retail arm. As part of the deal announced May 18, Masan will team up withLazada, Alibaba’s Southeast Asia e-commerce unit. “The combination of Alibaba’sonline retail expertise, Lazada’s e-commerce platform in Vietnam, and Masan’sleading offline network will be a strong catalyst to modernise Vietnam’s retaillandscape,” Kenny Ho, Alibaba’s head of investment for Southeast Asia, said ina statement.
M-ServiceJSC, a Vietnamese startup that operates the MoMo payment app, in January raised more than 100 million USD from a group ofinvestors including Warburg Pincus.
Forthe first time in their shopping lives, Vietnamese are being wooed withcustomer-first retail common in developed economies as dozens of e-commercecompanies build loyalty among the nation’s growing middle class.
Matthaes said the pandemic gave digital retail a boost with 30percent more Vietnamese buying everything from food to electronics online lastyear.
Meanwhile, Managing Director of WarburgPincus in Singapore Jeffrey Perlmansaid Vietnam’s retail landscape is shifting fasterthan mature markets did. Its move to modern retail skipped catalogshopping and stand-alone department stores as malls began sprouting largelyover the past decade.
Tiki is the nation’s largesthomegrown e-commerce site among dozens of local online shopping platforms,including some operated by retailers that have set up their own websites.
According to Crunchbase, investors including Sumitomo Corp. and JD.com have backed the startup with 192.5million USD.
Henry Low, a former Amazon and CoupangCorp. executive, expressed his hope that therewill be more funding rounds and plan for an eventual initial public offering.
With about two million orders amonth, Tiki is deploying artificial intelligence and robots capable ofmoving 800kg of products to speed things along./.
