Reasons for Popular E-commerce Sites in Vietnam and Their Strategies

What is an EC site?

First, for those who often hear about EC but don’t understand it, let’s quickly introduce EC. EC is an abbreviation for “Electronic Commerce“.

“EC” refers to the process of making purchase agreements and conducting transactions over the internet network. In Japan, commonly used platforms like Amazon, Yahoo Auctions, and Mercari are considered “EC”, so remember that “EC = online shopping“.

Now, let me move on to the main issue.

 

Trends in Vietnamese EC usage

About Vietnam’s EC Market

Vietnam’s overall GDP growth rate continued to grow at around 5-7% annually from 2014 to 2022, but fell to 1.82% in 2020 when the corona occurred.

In contrast, Vietnam’s EC market achieved further growth, even during the 2020 COVID-19 pandemic when the overall market was declining, by gaining new users thanks to the convenience of easily purchasing products from home using just a smartphone or computer.

▼Vietnam GDP Growth Rate (2011-2021)

 

▼Vietnam Ecommerce Market Revenue (2015-2025)

 

Internet penetration rate

Vietnam has a very high internet penetration rate of 73.2%. According to the February 2022 Digital Statistics, Vietnam is one of the top 20 countries in the world with the highest rate of Internet use among its citizens, with 76.95 million Internet users for a population of approximately 98.56 million.
Moreover, the average age in Vietnam is 33.3 years, while in Japan, where the aging population and low birth rate are progressing, the average age was 49.2 years. The very young average age is also considered one of the factors contributing to the increase in internet penetration rate.

▼Data on Internet usage by Vietnamese

 

▼Data on population and average age in Vietnam

 

Items frequently purchased by Vietnamese on e-commerce sites

Against the backdrop of economic growth, the middle and affluent classes within Vietnam are rapidly increasing, making the domestic consumer market in Vietnam highly promising for many companies. Among these trends, in recent years, Vietnamese people of all ages and genders have become very conscious about beauty, leading to an increase in companies focusing on health foods, cosmetics, healthcare products, apparel, and sporting goods.

In addition, Vietnam, which is considered a “China plus one” country, has seen a lot of investment and expansion of production plants and IT companies from abroad in recent years, and interest in consumer electronics and fashion is also noticeable in the market.

▼EC market category research

 

Popular e-commerce sites and strategies in Vietnam

▼Sales ranking by category

 

Shopee

Shopee is an e-commerce site launched in Singapore in 2015 and is now rapidly expanding its business to Singapore, Taiwan, Malaysia, Indonesia, Thailand, Vietnam, Philippines, Mexico, and Brazil.

Shopee’s marketing strategy is to advertise on TV, Facebook, Instagram, billboards, and other media, as well as to use a number of world-renowned celebrities, such as Cristiano Ronaldo and BLACKPINK, a global girl group. In 2018, the app was ranked “No. 1” in terms of downloads in five countries (Taiwan, Malaysia, Thailand, Vietnam, and Indonesia).

 

Lazada

Lazada was founded in 2011 by German venture Rocket Internet, which was acquired by Alibaba Group, one of China’s largest e-commerce sites, in 2016, becoming Lazada’s parent company. The company now operates in six countries: Singapore, Malaysia, Indonesia, Thailand, Vietnam, and the Philippines.

Lazada’s unique feature is its method of reducing the front end for sellers. Upon listing an item for sale, Lazada delivers it to the warehouse, and once the sale is finalized, Lazada quickly and carefully packages and delivers the item to the buyer. This means that Lazada takes over the entire burden of inventory management and shipping arrangements.

 

Mobile World Group

Mobile World Group was founded in 2004. It has subsidiaries that sell mainly consumer electronics such as “The gioi di dong”, “Dien may xanh”, and “Bach Hoa Xanh”.

Mobile World Group has a strong presence in home appliances such as smartphones, computers, televisions, and refrigerators sold in brick-and-mortar stores, and its strategy is characterized by combining brick-and-mortar stores with EC. Since many home appliances are heavy products, users have a heavy burden to carry them home. This is why the service is so popular: after the user actually checks out the product in the store, the company takes the order from the e-commerce site and uses its own logistics to deliver the large item to the user’s home.

 

TiKi

Tiki is an e-commerce service established in Vietnam in March 2010. At its inception, Tiki was in the business of selling English-language books online, but after CyberAgent Ventures Inc. decided to invest in Tiki in March 2021, Tiki expanded its range of sales categories. Tiki has expanded the range of categories it sells. Today, Tiki has transformed into an e-commerce site offering hundreds of thousands of products.

One of the key features of Tiki is that it guarantees that no counterfeit products are circulated. All sellers are required to obtain a business license from the Vietnamese government, and this strict regulation has earned Tiki a reputation as a reliable e-commerce site among consumers.

Tiki also focuses on large Vietnamese cities such as Hanoi and Ho Chi Minh City. One of the company’s most popular services is “TikiNow,” a service that delivers products to targeted areas within two hours of ordering, thanks to its logistics warehouses in major cities.

 

Access analysis

▼Number of PVs and inflows for each e-commerce site

 

Finally, I analyzed the number of PVs for the advertisements that each e-commerce site focuses on. The blue area on the left shows the number of monthly PVs. The orange area on the right shows the monthly PVs on Youtube, Instagram, and Facebook. (as of December 2021).

From the above graph, it can be expected that Shopee (#1 in PV ranking) spends most of its advertising on Instagram and Facebook, and Lazada (#4) spends most of its advertising on Facebook. Mobile World Group (No. 2 and 3) has less PV and does not advertise much on social networking sites because users visit their stores to check out their products.

 

Comparison of shipping fees for each e-commerce site

Assuming that Shopee and Lazada are spending money on advertising, we investigated where they are recovering their advertising costs at each site and hypothesized that they are recovering their advertising costs through shipping fees.

Shopee

ShopeeExpress (3-7 days nationwide): approx. 17.000-150.000VND (depending on weight)
Same-day delivery (1-4 hours, within city limits): 30.000-100.000VND (depending on weight)

Lazada

Lazada Normal Delivery (3-7 days nationwide): approx. 17.000-150.000VND (depending on weight)
Same-day delivery: Not available

Tiki

Tiki regular delivery (3-7 days nationwide): approx. 17.000-60.000VND (depending on weight)
Tiki 2 hours (within 2 hours, within the city): 30.000-60.000 (depending on weight)

The gioi di dong (Mobile World Group)

(Direct delivery from the nearest store)
500,000VND or more: Free of charge within 10km from the store, 5,000 VND/km for every 1km over 11km
Less than 500,000VND: 20,000 VND for delivery within 10km from the store, 5,000 VND/km for every 1km over 11km.

 

Summary

How was this article?

ALIVE Vietnam also specializes in strategies to increase sales on EC sites, page designs that sell, and branding. We can also provide companion support for customer acquisition in the Vietnamese EC market, so please feel free to consult with us first.

 

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