Seize New Opportunities in E-commerce

E-commerce in Vietnam has experienced a booming 10-year development phase. From the days when the concept of e-commerce was still unfamiliar to consumers, Vietnam has seen remarkable growth of 16-30% per year in recent years. It is projected that e-commerce will continue to maintain a growth rate of around 18-20% per year in 2024. The forecasted revenue and sales volume on B2C online retail platforms in Vietnam are expected to continue to increase significantly and reach 650 trillion VND in 2024.

HIGHEST GROWTH RATE OF ONLINE SHOPPING IN SOUTHEAST ASIA

E-commerce continues to be the modern trading method chosen by businesses and consumers, and it is also one of the pioneering sectors of the digital economy. According to the Department of E-commerce and Digital Economy, the scale of the Vietnamese retail e-commerce market is expected to reach 20.5 billion USD in 2023, an increase of about 4 billion USD (equivalent to 25%) compared to 2022.

Vietnam’s e-commerce growth rate is ranked among the top 10 countries with the highest e-commerce growth rate in the world (as of December 2023, according to Statista). There are about 61 million people engaged in e-commerce, with an average shopping value of 300 USD per person per year.

According to the Google, Temasek, and Bain & Company’s 8th Southeast Asia Digital Economy Report, e-commerce in Vietnam increased by 11% from 2022 to 2023, and the compound annual growth rate (CAGR) is expected to increase by 22% by 2025, aiming to achieve a total merchandise value of 24 billion USD by 2025.

The comprehensive report on the online retail market in 2023 and the forecast for 2024 by Metric (an e-commerce data platform) shows that the B2C e-commerce revenue reached nearly 500 trillion VND in 2023 and is projected to reach about 650 trillion VND in 2024.

Vietnam has the highest growth rate in online shopping in Southeast Asia. The forecasted revenue and sales volume on online retail platforms are expected to continue to increase significantly and reach over 310 trillion VND in 2024, a 35% growth compared to 2023.

According to statistics, the total revenue of the top 5 e-commerce platforms in Vietnam (Shopee, Lazada, Tiki, Sendo, Tiktok Shop) in 2023 showed that 2.2 billion successful product units were delivered on the 5 platforms, a 52.3% increase compared to the previous year. This is the strongest growth rate in the past 3 years. There are currently 637,273 shops selling on Shopee, Lazada, Tiki, and Sendo. The leading product categories in terms of revenue and sales volume are beauty, home-living, and women’s fashion.

However, 2023 witnessed a decrease in the number of sellers compared to 2022. The total number of shops with order placement on the platforms decreased by 1.3%, equivalent to about 10,000 sellers, despite the strong emergence and development of new e-commerce models and platforms.

The reasons include the unstable economy, political instability, disruptions in the global supply chain, and increasing competition, especially subjective factors from businesses (targeting the wrong markets, following trending products without appropriate production/importing plans, etc.).

TRENDS SHAPING E-COMMERCE IN 2024

In 2023, the rapid development of new shopping methods, such as livestreaming and omnichannel sales, brought massive revenue to professional e-commerce sellers. Recent studies have shown that e-commerce will witness changes in trends in 2024 and the future, with the strong development of mobile commerce.

In addition, the development of social commerce has changed the way people discover, choose, and purchase products online. Social commerce is expected to continue to grow and develop in 2024, bringing new opportunities for businesses to reach and attract customers.

According to a recent study by Meta, 45% of consumers regularly shop on e-commerce platforms after viewing information on Facebook/Instagram, and 20% of consumers make direct purchases on Facebook.

In addition, the application of new technologies such as artificial intelligence (AI), augmented reality (AR), and virtual reality (VR) has increased the online shopping experience, personalized customer experiences, and optimized shopping through voice search…

Video content will dominate the online shopping experience in 2024, as more and more brands interact with shoppers through video. Livestreaming has gained attention as it provides real-time interaction for consumers to explore and purchase products.

In 2024, omnichannel retailing will continue to grow stronger in e-commerce. Multichannel selling platforms will be effective tools for businesses to reach a wider customer base and increase sales online, providing consistent shopping experiences across multiple channels.

A practical study conducted by Sapo suggests that multichannel selling is still prominent, with 55.4% of sellers doing business on at least two channels (brick-and-mortar stores and multiple online channels). E-commerce platforms continue to be the most used online sales channels in the retail sector. Notably, sellers tend to expand their presence on TikTok Shop in 2023 (the proportion of sellers focusing on TikTok channel is 5.9%, slightly increasing compared to 2022).

“Multichannel selling is considered a lifeline in a volatile economy, with fluctuating rental prices in major cities, tightening regulations on major e-commerce platforms, and changes in social media algorithms affecting marketing and product selling for retailers,” emphasized Sapo representative.

In 2024, according to Sapo, the most popular trend in retail is the expansion to new channels (29.37%), such as social media platforms like Facebook and Zalo (27.07%); followed by e-commerce platforms (21.96%) and TikTok Shop (20.66%).

EXPLOITING NEW OPPORTUNITIES, INCREASING CUSTOMER ATTRACTIVENESS

According to Sapo, expanding sales channels, being present on multiple business platforms, leveraging the power of online sales channels, and integrating shoppertainment and edutainment – shopping integrated with entertainment experiences, creative educational content associated with product marketing – will lead the retail industry in 2024.

Meanwhile, Metric predicts that cross-border commerce will be an inevitable trend in the market, especially with the increasing interest in authentic sellers from China and Korea on Vietnam’s online retail platforms. Livestreaming and omnichannel sales will continue to focus on increasing revenue for sellers in the coming year…

The increasing popularization and application of AI, Machine Learning, and Big Data technologies are becoming more accessible for resource-limited businesses. Many businesses have transformed in terms of the online store interface, providing customers with more refined, accurate, and secure shopping experiences, as well as operating sales and supply chains based on data rather than subjective evaluations.

2024 is predicted to be a booming year for the market, but it does not mean that all businesses will have growth opportunities.

In the period from 2016 to 2018, any business that switched to online platforms could easily profit. However, in recent years, as online shopping platforms adjusted their rules and players became more sophisticated, the remaining players are those with strategic plans and clear direction.

According to experts, e-commerce is a rapidly developing industry with great potential. To succeed in this industry, businesses need to grasp and apply the latest trends, as well as create unique and differentiated values for customers. Keeping up with trends will be an effective tool to support business activities.

Mr. Trung from Metric emphasized 4 trends that will continue to develop this year: Direct-to-Consumer (DTC); AI, Machine Learning, and Big Data analytics; sustainable consumption; and increased spending on online shopping by the baby boomer generation.

As DTC trends become more popular, price competition will become more fierce. Manufacturers can now deliver products directly to consumers at the most affordable prices without incurring intermediary costs for agents.

Mr. Pham Bao Trung, Business Director at Metric, believes that although expanding the customer base is an opportunity, it is also a challenging task for manufacturers to balance and differentiate their sales policies to maintain traditional distribution channels while expanding online sales channels.

Secondly, technology advancements such as AI, Machine Learning, and Big Data are becoming more accessible for businesses with limited resources. Many businesses have undergone transformations, including refined online store interfaces, refined and accurate shopping experiences for customers, and data-driven sales operations, supply chain management, and R&D.

Thirdly, businesses that demonstrate responsibility to the environment and society will gain favor from consumers. Activities that could be promoted in 2024 include creating more environmentally friendly products, using sustainable packaging materials, sourcing materials or products from ethical suppliers, etc.

Lastly, the most interesting aspect of 2024 is the expansion of the late-blooming baby boomer generation (born between 1956-1964). The time spent on social media by this generation worldwide has increased by 68% to nearly 90 minutes per day. This generation has higher purchasing power and is willing to spend more to own high-quality products.

Regarding the challenges posed by e-commerce, Mr. Trung stated that foreign sellers in the Vietnamese market have been developing rapidly. According to statistics, on the Shopee platform alone, sellers with foreign inventories generated nearly 3 trillion VND in the fourth quarter of 2023, a 30% increase compared to the same period in 2022. Many believe that foreign sellers, especially those from China, pose a significant challenge in the coming time.

However, according to Mr. Trung, whether it is foreign or domestic sellers, they all need to enhance their competitiveness on e-commerce platforms. This means that Vietnamese businesses still need to focus on the value of the products they sell, the core values or unique features that attract customers, such as locally distinctive products, personalized products, or environmentally friendly products sourced from Vietnam…

At the same time, optimizing transportation and supply chain management is essential to minimize operational costs and maximize benefits for consumers. The application of Big Data for market analysis, monitoring, and effective business planning is one of the proactive methods implemented by high-growth e-commerce businesses.

The full content of the article was published in Vietnam Economy Magazine, Issue 10-2024 released on March 4, 2024. Read the complete article here:

https://postenp.phaha.vn/chi-tiet-toa-soan/tap-chi-kinh-te-viet-nam