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Vietnamese e-tailing sector enjoys 314% boom in 2013

VECITA, the Vietnam government's digital watchdog, announces e-tailing sector worth US$2.2 billion in 2013, up from US$700 million in 2012. Revised figures see sector as valued at US$4 billion by 2015, with per capita spend of US$150.

Photo: Online shopping: e-tailing conquers Vietnam. (Shutterstock)
Online shopping: e-tailing conquers Vietnam.

Online shopping in Vietnam soared in 2013, with revenues shooting up from US$700 million in 2012 to US$2.2 billion last year. According to figures from the Vietnam E-commerce and Information Technology Agency (VECITA), the government's digital watchdog, the sector enjoyed 314% growth last year as internet penetration increased and consumer confidence in online purchasing became more established.

In light of the 2013 figures, VECITA has upgraded its 2015 forecast for the sector from US$1.3 billion to US$4 billion. Currently, some 32.6 million Vietnamese have internet access, around 35.6% of the population. It is anticipated that this will rise to between 40-50% of the total population by the end of 2015, a factor that will inevitably drive online sales.

At present, according to VECITA, around 61% of those with internet access have purchased online at least once. Currently, their average per annum spend per capita is estimated at US$130, although this is expected to rise to US$150 by 2015.

In terms of purchase preference, fashion and beauty-related products accounted for the largest proportion of online orders (62%). This was followed by furniture and electronics (35%), home appliances (32%) and airline tickets (25%).

Overall, cash-on-delivery remains the most popular payment method used by consumers, with 74% utilising this channel. Bank transfers were the second most popular option (41%), followed by card payments (11%), scratch cards, such as those offered by the retail group VNG, accounted for 9%. As a sign of the relative immaturity of the market, only 8% used electronic wallets (e-commerce payment gateways provided by a third party).

In line with other markets, the majority of Vietnamese online shoppers tend to be at the younger end of the consumer spectrum. Some 73% are said to be under 35, with an overall gender split of 59% women and 41% men. Overall usage is, however, reassuringly high, with some 92% of users claiming to go online everyday.

In terms of preferred online shopping options, VECITA interviewed 781 digital purchasers with regard to their spending patterns. The survey showed that the vast majority of them (61%) purchased via established e-commerce websites. This was followed by group-buying websites (51%), social forums (45%), e-marketplace websites (19%) and mobile apps (6%). Of the 781 individuals canvassed, 88% indicated that they expected to continue purchasing online, with only 12% stating a preference to return to conventional sales channels.

Despite the largely optimistic figures for the sector, there remains a number of challenges for Vietnamese e-tailers, with one of the most significant being payment. The Vietnamese banking system still lacks credibility among many consumers, with many citizens still opting to have no bank account. It is believed that recent initiatives to restore consumer confidence in the sector will result in a sharp education in the number of "unbanked" Vietnamese, especially as the need for such facilities to shop online becomes more pressing.

Despite this shortfall in the use of banking facilities, this was not seen as the most pressing problem for the sector. At present, according to VECITA's survey, many Vietnamese shoppers remain cynical about the quality of products bought online, still retaining a preference to touch and sample goods prior to making a purchase commitment.

According to the survey, the greatest obstacle to the increased uptake of online shopping is the widespread belief that the quality of products or services actually on offer was of a lower quality than those advertised (77%). Other concerns included prices not being lower than those in conventional outlets (40%), unsatisfactory/unprofessional logistic services (38%), concerns over personal data security (31%) and prohibitively complicated online ordering procedures (29%).

Photo: VECITA: Vietnam’s government-funded digital watchdog.
VECITA: Vietnam's government-funded digital watchdog.

VECITA also surveyed a number of non-digital purchasers as to their reason for eschewing e-tailing. Overall, some 59% of non-online purchasers indicated that the difficulty in examining product quality was the most off-putting aspect of e-tailing. Other concerns include the fact that buying in stores was seen to be easier and faster (45%), a lack of faith in e-tailer integrity (41%), insufficient information to make informed purchase decisions (38%), and no access to credit cards or other payment cards (37%).

In terms of overall satisfaction for those who had purchased online, the overwhelming majority (96%) were satisfied with their transactions, with only 4% indicating a negative experience.

The survey also identified the 10 most popular sites used by Vietnamese online purchasers – Vatgia.com, Alibaba.com, Ecna.vn, 5giay.vn, 123mua.vn, Enbac.com, Chodientu.vnmuaban.net, Rongbay.com, and Ebay.vn.

Nguyen Quoc Uy, Ho Chi Minh City Office

Content provided by Picture: HKTDC Research
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