CONTINUED GROWTH SET FOR E-COMMERCE

The rapid growth of the digital economy has propelled Vietnam’s retail e-commerce market to surpass $25 billion in 2024, marking a 20 per cent increase from the previous year.

The country’s e-commerce sector continues to sustain impressive growth rates, ranging from 18 to 25 per cent annually. Additionally, the retail e-commerce market now constitutes approximately 9 per cent of Vietnam’s total retail sales and consumer service revenue.

Continued growth set for e-commerce

“This achievement not only drives the nation’s economic development but also leads the digital transformation of businesses across sectors,” said Lai Viet Anh, deputy director of the Vietnam E-commerce and Digital Economy Agency under the Ministry of Industry and Trade, during a conference on digital economy development held on December 25 in Hanoi.

The conference, which focused on promoting digital transformation in wholesale and retail, underscored the role of e-commerce in Vietnam’s economic growth.

It was reported at the event that Vietnam’s e-commerce sector has solidified its position as a pioneering force in the digital economy. In 2023, e-commerce reached $20.5 billion, contributing to the broader digital economy valued at $30 billion, placing the country among the top three Southeast Asian nations by digital market size. In 2024, e-commerce continued to expand, with business-to-consumer revenues exceeding $20.5 billion, cementing its place as a key driver of economic progress.

“E-commerce remains a critical distribution channel, enabling businesses and consumers to access a wide variety of goods, particularly agricultural products. Many businesses have seen breakthrough growth through this sales channel. Additionally, cross-border retail revenue has risen, with small and medium-sized enterprises playing an increasing role,” Anh explained.

The e-Conomy SEA 2024 report, released in early November, echoed these findings, noting that Vietnam’s digital economy has grown significantly, with major strides in e-commerce, digital finance, and cashless payments.

The report projected that Vietnam’s e-commerce market would grow to around $63 billion by 2030, which would place it ahead of Thailand, ranking second in the region after Indonesia. “By accelerating digital transformation, seizing emerging trends, and leveraging the advantages of e-commerce, Vietnamese enterprises are poised for significant opportunities,” the report stated.

Local entrepreneurs are already reaping the benefits of this boom. Hoang Duong, who operates an online cosmetics business in Hanoi’s Hoan Kiem district, projects his 2024 revenue to have reached approximately $125,000. With demand for beauty products soaring, Duong is expanding his operations to meet customer expectations.

“We’re expanding our operations to meet customer expectations, and the shift to e-commerce has been pivotal for our growth,” he told VIR. “I foresee continued growth throughout the year and plan to rent additional space for inventory.”

Similarly, Le Thu Thao, who runs an online clothing business, has seen her order volumes double compared to the previous year, prompting her to hire additional staff. “On a typical day, I now process 100-200 orders, compared to 30-40 last year. This growth has pushed my revenue towards an estimated $84,000,” Thao said.

As e-commerce rapidly becomes an indispensable driver of innovation in Vietnam, offering unprecedented growth opportunities, particularly in cross-border trade, local enterprises are at a crossroads. Yet, as this burgeoning sector gains momentum, local enterprises are finding themselves at a crossroads, facing both promise and peril.

Nguyen Minh Duc, deputy secretary general of the Vietnam E-commerce Association, highlighted the sector’s transformative potential during a seminar in Ho Chi Minh City in November. “E-commerce is a platform that businesses must seize upon to expand cross-border exports,” he said. “Despite the pandemic’s disruption, many companies engaged in cross-border e-commerce have managed to sustain annual growth rates of 15-20 per cent.”

However, Duc cautioned that domestic companies are locked in fierce competition with international giants. “These global players benefit from advantages in operating costs, logistics, pricing strategies, and warehouse investments, placing immense pressure on local businesses,” he noted.

The competitive landscape has become increasingly fraught. The arrival of cross-border platforms like Temu and Shein, alongside moves by low-cost Chinese players such as 1688 and Taobao, has further complicated matters. These entrants join a market already dominated by foreign platforms such as Shopee, Lazada, and others.

For Vietnamese brands, standing out in this crowded field requires ingenuity. Nguyen Ngoc Luan, director of Meet More, which exports deeply processed agricultural products, said it has adapted to the digital retail environment. “We embraced livestreaming and collaborated with Gen Z creators to craft a strategy that aligns with our brand,” Luan said.

Meet More has also hosted its own livestream sessions, showcasing One Commune, One Product (OCOP) goods from Can Gio to Ben Thanh Market. “These efforts aim to help Vietnamese businesses adapt to evolving e-commerce trends. Using the OCOP brand is a vital step to elevate Vietnamese products, creating momentum to compete on both e-commerce platforms and global markets,” Luan added.

Source: VIR