E-commerce the driving force behind the digital economy
‘TETastic with TikTok’ event on January 13 in Hanoi hears of the latest moves in Vietnam’s e-commerce sector.
Its digital economy can be considered one of Vietnam’s main growth drivers, of which e-commerce is among the largest sectors, Ms. Le Minh Trang, Associate Director of NielsenIQ Vietnam, told the “TETastic with TikTok” event organized by TikTok on January 13 in Hanoi.
According to the Vietnam E-commerce 2023 report from the Ministry of Industry and Trade, from 2018 to 2023, growth of the e-commerce retail market was continually in the double digits, from 16 to 25 per cent, and reached an estimated $20.5 billion in 2023.
To further clarify the state of online shopping in Vietnam, Nielsen surveyed consumers in the four major cities of Hanoi, Ho Chi Minh City, Da Nang, and Hai Phong in 2023.
The results reveal that online shoppers are mostly young people, at an average age of 31, of which 58 per cent are female and 83 per cent have a university degree or higher.
Notably, 78 per cent of online shoppers are office workers, while only 12 per cent are freelancers and 6 per cent are students.
The survey results also show that the majority of online shoppers are married, with a rate of 71 per cent, and 68 per cent have a monthly household income of over VND15 million ($625).
A major trend in Vietnam identified by Nielsen is Shoppertainment, which means entertainment combined with shopping, typically live streaming on e-commerce platforms.
Mr. Jason Song, Marketing Director of Small and Medium Enterprises Asia Pacific at TikTok, told the event that the trend of shopping combined with entertainment and short videos has an impact on users’ purchasing behavior.
A report conducted by TikTok on the shopping behavior of users in Vietnam during the 2023 holiday season found that 69 per cent of users prioritize watching short-form videos to search for products and services. Of these, 84 per cent of users are convinced to buy the brand’s products and services.
Another analysis by TikTok shows that, compared to TikTok Shop sellers who do not use advertising on TikTok, the TikTok Shop sales communities that use ads achieve 112 per cent higher average gross merchandise volume (GMV).
2023 was also recognized as a year of outstanding prosperity for the small and medium-sized business (SMB) community on online shopping platforms, including TikTok.
On TikTok Shop alone are more than 2.8 million Vietnamese micro, small, and medium-sized enterprises (MSMEs) operating on the platform.
Businesses participate in content creation, advertising, and sales, bringing attractive entertainment and commercial content and a variety of quality and reputable product options to users. The top 5 best-selling categories on TikTok Shop are Fashion, Home & Life, Health & Personal Care, Electronics, and Beauty.
Mr. Song said SMBs are an important pillar helping boost the economies of countries in the region in general and Vietnam in particular.
“However, this group’s potential to invest in online sales and digital marketing has not been fully exploited,” he added. “‘TETastic with TikTok’ will be our first effort in 2024 to continue supporting SMBs to improve their digital transformation capabilities through training programs, consulting, and marketing tools on the platform. We hope TikTok can become a driving force for Vietnamese SMBs to develop sustainably and contribute even more strongly to the national economy.”
While the convenience of shopping and the variety of products are the main factors promoting online purchases, domestic users also have many concerns, especially about product quality.
Eighty-four per cent of people surveyed were concerned about the quality of goods as well as the inability to check the product, while 68 per cent were concerned about delivery factors such as high cost and long waiting times.
Fifty-nine per cent said they do not trust online sellers or have had a bad experience.
According to an analysis on Vietnam’s e-commerce sector, updated by YouNet ECI as of the end of December 2023, Shopee, TikTok Shop, Lazada, and Tiki dominate the market. GMV in November on these four platforms totaled VND31.195 trillion ($1.2 billion) and revenue in November rose 9.3 per cent compared to October.
Shopee continues to monopolize revenue market share, with 72.7 per cent. TikTok Shop holds 17.2 per cent, Lazada has 9 per cent, and Tiki holds the remaining 1.1 per cent.
Though it only entered the market in the fourth quarter of 2022, TikTok Shop had revenue equal to 80 per cent of Lazada Vietnam’s. In the first quarter of 2023, TikTok Shop was only 3.5 per cent behind Lazada in revenue. By the fourth quarter, it has risen to second place, behind only the “giant” Shopee.
