E-commerce in upward trend

Vietnam’s e-commerce market continued its stellar growth in the first half of 2024, confirming its emergence as a bright spot in the country’s economic landscape. The latest report from e-commerce data platform Metric shows that the top 5 e-commerce platforms in Vietnam - Shopee, Lazada, Tiki, Sendo, and TikTok Shop - posted total sales revenue of VND143.9 trillion ($5.6 billion) in the period, selling 1.53 million products, year-on-year increases of 54.91 per cent and 65.55 per cent, respectively. Total sales in the first quarter amounted to VND71.2 trillion ($2.79 billion) and then VND71.7 trillion ($2.81 billion) in the second quarter.

Vibrant market

This growth was largely driven by the strong performance of Shopee and TikTok Shop, which have both demonstrated a thorough understanding of the market and the needs of Vietnamese consumers. Shopee’s sales grew 65.97 per cent year-on-year, while TikTok Shop recorded a substantial 150.54 per cent increase. In terms of product volume, TikTok Shop experienced a remarkable 242 per cent increase and Shopee 65.55 per cent. In contrast, the three other platforms saw declines in both sales and product volume: Lazada by 43.81 per cent and 37.12 per cent, Tiki by 48.55 per cent and 51.37 per cent, and Sendo by 70.56 per cent and 62.74 per cent.

The top 3 categories in terms of sales and volume on these five e-commerce platforms in the first half were beauty care, women’s fashion, and home and living. Another prominent trend was the increasing market share of e-commerce shopping malls, or virtual marketplaces, which grew 12.29 per cent in number year-on-year in the period, indicating that consumers are increasingly prioritizing products from official brands or reputable sellers.

The strong performance of Vietnam’s e-commerce market in the first half builds on the success seen in 2023 as a whole. The “E-commerce in Southeast Asia 2024” report from information providers Momentum Works puts Vietnam and Thailand as the two fastest-growing e-commerce markets in Southeast Asia last year. Vietnam’s total gross merchandise value (GMV) reached $13.8 billion, marking a 52.9 per cent increase against 2022 and surpassing the Philippines to become the third-largest e-commerce market in the region.

The growth in e-commerce has also been driven significantly by the Vietnamese Government’s proactive efforts to promote the market. Such efforts not only furthered progress but also established many specific goals for the sector in the years to come. The National Master Plan for E-commerce Development for 2021-2025 sets goals to make e-commerce one of the leading sectors in the digital economy by 2025, with advanced technologies from Industry 4.0 being widely applied to enhance business cycle efficiency, contribute to modernizing distribution networks, improve business competitiveness, and boost both domestic and export markets. The plan’s specific targets for 2025 include 55 per cent of the population being engaged in online shopping, with average annual spending on goods and services online reaching $600 per person and the e-commerce market growing 25 per cent annually to reach $35 billion by 2025.

Livestreaming booms

There were certain movements in Vietnam’s e-commerce market in the first half, with livestreaming activities maintaining their momentum of recent times. Both TikTok Shop and major platforms like Shopee have invested heavily in video content. According to market researchers NielsenIQ, the rise of livestreaming on e-commerce platforms has expanded the influence of content creators and social media influencers. Sellers can leverage these resources to build real connections with consumers. Approximately 50 per cent of consumers are influenced by KOLs and KOCs (Key Opinion Leaders and Key Opinion Consumers) when making purchasing decisions on e-commerce platforms, with the personal care industry being the most impacted, as 60 per cent of buyers in this category have changed their consumption habits.

Over the past year, integrating livestreaming with e-commerce platforms has significantly shifted the shopping behavior of many Vietnamese consumers. Livestream sessions have become a powerful tool, facilitating direct and dynamic interactions between sellers and buyers. The format not only boosts engagement but also drives impressive revenue for businesses, with sales ranging from hundreds of millions to even billions of VND per session.

Among the five e-commerce platforms, TikTok Shop and Shopee have effectively capitalized on new trends in consumer purchasing via livestreams, which contributed significantly to their impressive sales growth in the first quarter of the year. The success of livestream events underscores a broader trend towards more interactive and immersive online shopping experiences, reflecting a growing consumer preference for engaging and diverse ways to shop online. As a result, businesses are increasingly leveraging the format through e-commerce platforms to connect with their audience and capitalize on its potential for substantial sales growth.

Livestreaming activities remain a prominent sales channel in Vietnam, with major sessions from KOLs and KOCs continuously attracting consumer interest. Activities have evolved from mere entertainment to a powerful tool for businesses on e-commerce platforms to more easily reach customers. Both businesses / sellers and customers benefit, with customers gaining advantages such as access to promotions and discounts.

Maintaining momentum

Given these impressive growth figures, Metric forecasts that total sales on these five platforms will surpass VND88 trillion ($3.45 billion) in the third quarter of 2024, with 944 million products sold, representing increases of 23.2 per cent and 23.1 per cent, respectively, compared to the second quarter.

Similarly, figures from data portal Statista indicate that revenue in Vietnam’s e-commerce market is projected to reach $13.90 billion this year and will demonstrate a compound annual growth rate (CAGR) of 11.21 per cent from 2024 to 2029, resulting in a projected market volume of $23.65 billion by 2029. The development of the country’s e-commerce market, including the performance of e-commerce platforms during the first half of 2024, reflects the sustainable growth of the country’s e-commerce sector. It also highlights the opportunities for businesses as the shift from offline to online shopping continues apace.

Given the ongoing emergence of new consumer trends, experts at Metric suggest that businesses enhance their market research and perform thorough data analysis to identify trending products and discover new business opportunities. They need to assess the effectiveness of each e-commerce platform for their products or product categories and decide whether to expand their sales channels. Investments should be prioritized for platforms with consistent customer growth that align with their products.

Meanwhile, businesses operating e-commerce platforms need to identify regions with high demand that have not yet been fully tapped. Investing in expanding warehouses and logistics in these areas can help reduce delivery times and transportation costs.

Experts indicate that the third quarter of 2024 is a key growth period for most industries. To drive e-commerce market development, businesses should therefore carefully analyze the overall growth rate of their products or categories to set realistic key performance indicators (KPIs). They should also capitalize on peak shopping periods to boost marketing efforts, enhance visibility, and increase sales.

Additionally, consumer preferences are anticipated to keep favoring livestreaming purchases and bundled deals. Therefore, businesses should enhance their collaboration with KOLs and KOCs who align with their brand, organize livestream sessions to promote products directly to consumers, and consider offering bundles to boost order values. These strategies will further contribute to the ongoing growth and development of the e-commerce market.