Vietnam’s e-commerce growing rapidly

Hanoi (VNA) - Vietnam e-commerce, although small, is among the fastest growing globally, according to a report released by Kantar Worldpanel, a global expert in shoppers’ behaviour.

The report “The Future of E-commerce in FMCG” (fast moving consumer goods) is based on tracking the purchase of more than 500,000 shoppers in key countries spanning three continents.

In terms of absolute value growth, the top six contributors are all leading power economies, led by China and the United States.

The other top performing countries are the Republic of Korea, the UK, Japan and France.

However, the online grocery sector is also expanding into new markets. There has been significant value growth, for example, in Thailand (104 percent), Malaysia (88 percent), and Vietnam (69 percent), where e-commerce is in its early stages.

In Vietnam, the e-commerce channel has evolved thanks to booming internet usage and smartphone ownership, together with massive investment of key retail players. It now takes 0.5 percent of the fast-moving consumer goods (FMCG) market in four key urban cities of Vietnam, which are HCM City, Hanoi, Da Nang, and Can Tho.

The percentage of e-commerce shoppers grew from 5.4 percent to 8.8 percent in four cities in the last year alone.

“Although the size of Vietnam e-commerce market is still small compared to other formats, it holds a strong potential because the value growth of e-commerce within FMCG is up to 69 percent,” said David Anjoubault, manager of Kantar Worldpanel Vietnam. "This makes Vietnam one of the countries with the highest e-commerce growth rate in the world,”

“It’s now the critical time for investors to enter this promising market. Current retail giants should gradually move their offers online and take advantage of their brand equity with omni-channel strategy to defend their current position.

On the whole, consumer trust and high logistics cost for delivery model are major challenges that need to be addressed by businesses to move Vietnam e-commerce forward,” he added.

The study showed that e-commerce now accounts for 4.6 percent of all FMCG sales globally. While the e-commerce channel is growing, the FMCG market as a whole is sluggish, increasing just 1.3 percent during the same period.

E-commerce now contributes to a record 36 percent of global FMCG growth and will continue to outpace growth in offline FMCG retail.

“Our projections show that in 2025, online FMCG will become a 170 billion- US-dollar business and hold a 10 percent market share” says Stéphane Roger, global shopper and retail director at Kantar Worldpanel.

The big global uplift will come from the US, predicted to rise from a 1.5 percent e-commerce share this year to 8 percent in 2025.

The Republic of Korea and China will continue to lead the way and Asia in general remains at the cutting edge of online adoption.

Vietnam e-commerce specifically, is expected to expand from 0.5 percent to 2.2 percent share in 2025 coupled with the rise of digitisation.- VNA