Growing Impact of E-commerce in Vietnam’s Retail Sector

The Vietnamese Ministry of Industry and Trade has reported that the retail e-commerce market in the country is set to grow to US$16.4 billion by 2022, accounting for 7.5% of the total retail revenue in Vietnam.

E-commerce: Increasing Experience, Creating Momentum for Vietnam's Retail Industry
The rapid development of e-commerce supported the retail industry. Photo: VNP

Shopping for goods on e-commerce platforms and social networks, such as Zalo and Facebook, is now a common practice among consumers. The application of technology has completely transformed the retail industry, leading to a decrease in physical stores and a rise in online marketplaces.

Increasing convenience

Tran Phi Long, the owner of a retail chain in Hanoi, previously had four physical stores. However, since switching to online business and expanding to e-commerce platforms, his sales have significantly increased due to cost reductions.

“By moving online, I have been able to cut down on rent and focus more on promoting and taking care of customers, resulting in a more efficient and faster operation,” said Long.

The Covid-19 pandemic has further accelerated the shift towards e-commerce. Instead of visiting physical stores and supermarkets, consumers prefer the convenience of online platforms and social networks for their shopping needs.

Vu Thi Hau, former president of the Vietnam Retailers Association, noted that e-commerce sales witnessed a strong surge during the Covid-19 pandemic. To meet the demands of consumers, retailers have heavily invested in technology and human resources.

Manufacturers are also leveraging their own websites, e-commerce platforms, and social networks to boost sales. This trend is particularly evident in the retail industry, especially for agricultural products.

E-commerce: Increasing Experience, Creating Momentum for Vietnam's Retail Industry
With just a simple touch on a smartphone screen, consumers can make purchases from anywhere. Photo: VNP

Promoting connection to the supply chain

In recent years, Vietnam’s e-commerce sector has experienced rapid and strong growth. Over 73% of the population in Vietnam uses the Internet, with approximately 78% of users engaging in online shopping.

According to the Vietnam E-commerce Report, the retail e-commerce market is projected to reach a size of US$16.4 billion by 2022, accounting for 7.5% of total retail sales of consumer goods and services in the country. The average online shopping value is estimated to be US$288 per person per year.

Cross-border programs with major international e-commerce platforms such as Amazon and Alibaba have been implemented to support small and medium-sized enterprises in boosting exports.

Through these programs, Vietnam can directly export its strong products (such as agricultural products, processed foods, handicrafts, and industrial goods) to markets around the world via e-commerce.

E-commerce: Increasing Experience, Creating Momentum for Vietnam's Retail Industry
The e-commerce channel is rapidly growing in Vietnam. Photo: VNP

Dang Thanh Tung, head of the Market Development Department at Vietnam’s e-Commerce and Digital Economy Agency, revealed that a regional e-commerce connection program is in the works. This program aims to develop online Vietnamese stores by establishing a network of manufacturers, distributors, transporters, and other stakeholders in the agricultural, local, and industrial goods sectors.

This network will help improve market access, meet consumer needs, and enhance regional cooperation. It will also create a collaboration model between different agricultural production regions to consolidate their power and increase competitiveness in the market.

The establishment of this network through e-commerce will enable local producers to access the market more effectively and meet consumer demands. Thanks to this partner network, agricultural products and local specialties can be promoted and reach a larger number of consumers through online channels.

Rosie Nguyen