In this episode (MMC.003): The booming E-Commerce scence in Vietnam.
Below is a transcript of the episode, edited for readability.
Listen to the full episode at links below.
How big is the E-commerce scene in Vietnam?
Granger: We’re talking today about E-commerce, right? That’s on the agenda. And E-commerce is a big thing here in Vietnam. Fast growing business. There are about 40 million users of E-commerce. I guess that’s going to grow to about 47 million by 2021, which is about half the population, about 60% of the population. Although the population is growing as we know. The average user spends about $53 a month online. That’s a big number. And that’s supposed to double by 2021. So E-commerce has definitely taken off here. It is something to pay attention to and whether you’re an investor or if you’re just a user. Speaking of users, the age groups, 96% are 16 and 24. That makes sense, right? The younger kids are comfortable with it.
Cameron: I’m in that one.
Granger: You are in that one. And you’re on the top of that. Just think about that. You’re on the top of a statistic.
Cameron: Next year, I’m going to be gone. If you’re not in the top of the statistic, you’re over and you’re out.
Granger: And then, 90% are 25 and 34 year olds. That makes sense. 80% of 35 to 44 year olds are comfortable using E-commerce in Vietnam. And about the same for the older generation. So people are getting comfortable with it now. Actually, I was in a 500 startups event last night at the Intercontinental, and Shark Linh was talking about this exact thing. She was talking about how people are now comfortable using E-commerce when even three years ago, they weren’t. And I think this is a big transition for the country. It just shows how fast things are evolving, right? Now, people actually trust buying something on their smartphones. So, that is a big difference from years ago.
What is the revenue of E-commerce in Vietnam?
Granger: What is the revenue here? Revenue is about 2.2 billion USD, projected to go to 4 billion by 2021. That’s a double! That’s a big jump!
Cameron: The average purchases per month are increasing as well. The average user will spend 96 USD by 2021.
Granger: Yeah, I would just say it was going double, right?
Cameron: It’s amazing! It’s crazy!
What are the leading product categories?
Granger: Electronics is currently the leading product category, which makes a lot of sense, about 840 million USD on electronics. Then toys and hobbies are a second, around 400 million. I guess that makes sense. Electronics is leading, and fashion is another big thing. Did you know Youtube just started a fashion channel?
Cameron: Like Youtube TV?
Granger: Youtube is now starting a fashion channel. It just announced it yesterday. Besides the big like Gucci and Louis Vuitton and stuff, they have a number of really famous, hot designers from around the world who are gonna do the channel. They’re going to consolidate into Youtube Fashion. So, I think that’s another sign of the times, right? How do you really focus on your industry?
Cameron: Le Flair is also a really big E-commerce platform, and they just specialize in fashion. I think they also have home decor as well, but they opened as a fashion E-commerce platform. It’s crazy to see that fashion here is growing exponentially.
Granger: It’s huge.
Cameron: But there’s also a really good trend back in the US, it’s called Rent The Runway. It’s a subscription-based E-commerce platform. So, you can rent a dress for a certain period of time.
Granger: Right. You can rent it for a night or two nights. What a great idea that was! And it really took off. You can rent this $2,000, Herrera dress or DVF dress or whoever beautiful designers. What are the shoes?
Cameron: Prada? Jimmy Choo? I don’t know. I’ve seen images and they are nice.
Granger: I’ve seen you wear them. Come on! Anyways, trying to focus on a market segment is really a smart idea. And Le Flair obviously has done that.
What are the prominent players?
Granger: Shopee, Tiki, Lazada, The Gioi Di Dong and Sendo, these are the big ones here. Have you used E-commerce? Why do I ask? I know you have.
Cameron: Extensively, actually. So, a recent experience was with Sendo. They just changed some rules. So I tried to get a refund and they were like: “We can no longer refund this to your bank account.” I have two options. Either they give me Sendo credits, and after my experience using Sendo, I’ll never use them again. So that was obviously off the list. My other option was to top up my mobile phone. So, that’s acceptable. I’m happy having a couple more hundred k on my mobile phone bill. That was fine. But I still wasn’t pleased.
Granger: That’s not a good experience.
Cameron: They’re changing their foreigner policies. It’s only strictly for for foreigners.
Granger: Is it just Sendo? Does Tiki do that?
Cameron: I think Tiki only does refunds in store credit. I’m pretty sure.
Granger: Okay. So Tiki only does store credits. But Lazada, how do they refund?
Cameron: I’m not too sure. I haven’t had a bad experience on Lazada yet. I haven’t used Lazada that much, to be honest. My go to is Tiki at the moment.
Granger: Well, I would love to hear what our viewers, our listeners out there think. What have you used? And if you haven’t used one of these platforms, certainly do that. How did you pay for yours? You use your card, they won’t refund. But what happens if you use cash? Because 90% of the people out here still use cash on these E-commerce delivery platforms. And, as we know, cashless is where the government wants to go, but 90% of people use cash. As Shark Linh said, one of the big things that made a difference in E-commerce in Vietnam was when they figure out how to do COD. Because that’s what the country wants. There’s a lot of opposing things going on here with what maybe the government wants and what the business environment and the people wants. But what do you do? How do you get your money back if you pay cash?
Cameron: I think it’s the same method. Now, they’re only doing store credits so it’s a lot easier. But when it comes to COD, which I prefer as well, I think they have to deal with… So, for example, if you use a service that uses the third party delivering systems or third party companies, they will have to go to that specific company that you ordered the product from and ask them to refund the money. And then it’s a bit more of a hassle. That’s what my issue with Sendo was. I had to contact the company that I ordered using Sendo and then it was a two-week process to get refunded.
Granger: So, there’s a long way to go with these E-commerce companies, but they’ve come a long way for sure. And it does make life easier. I think we were talking last Friday when we were talking about Timo, about having everything delivered. You can just Timo this and deliver that, and you can just stay at home and never leave your house.
Cameron: Two hour delivery via Tiki. It’s amazing!
Is Vietnam an investing paradise for E-commerce business?
Granger: From a business standpoint, is Vietnam an investing in paradise for E-commerce? Is it really a true hotspot for investors from around the world? It’s a burgeoning E-commerce market in Vietnam. It’s attracting major investors from Japan, Germany, the United States, Korea, China, and Singapore. The largest investors in Vietnam’s ecommerce market include tech giants and venture capital firms. Alibaba, Tencent, Temasek Holdings, Dragon Capital and IDG Ventures all have major players here. The E-commerce surge might be a great opportunity for many international players as well as affiliate marketers, which we know a lot about. But the E-commerce scene has fierce competition among big firms who are willing to suffer great losses. And this is another really good point. And another point actually that Shark Linh was talking about last night. I’m giving lots of props to Shark Linh. Shark Hung might be mad at me now. “Granger, why don’t you talk about me?” Because you weren’t there, Shark! She was talking about the fact that to dominate in a lot of markets here, you just have to spend a lot of money. So if you come in with a lot of money, you spent $100 million and you want to own a section of the E-commerce, can you do that? Is that really factual? I mean, it certainly gives you an advantage, right?
Cameron: I feel like it’s the same thing for ride hailings. Didn’t Grab just throw money and continues to throw money in Southeast Asia?
Granger: It’s just buying, buying shares, buying people, buying distributions…
Cameron: And advertisements, different loyalties…
Granger: It doesn’t give you a lot of faith if you’re an entrepreneur, right? Starting out, trying to figure out how you can be disruptive; how can you go into the market; how can you make a difference and how can you become the next unicorn, right?
Cameron: Those fields have some insane players. Oh my gosh. So, what are you going to do there?
Granger: Well, we’ll have to see what happens with the country’s digital economy. There’s a lot of limitations. The country prefers cash, but the government wants to go cashless. There’s a low rate of electronic payments. We have return issues and that’s a big thing. Customer services are always what makes a company win or lose, right? Always know your customers!
Cameron: Sendo, all of their email communications are in Vietnamese. So I have to chase down someone in my building when I’m at home or one of my coworkers to find out what is this and how do I get my money back.
Granger: You’re not using the Sendo again, but I’ll try them out. Well, all right guys. Cam, thanks for joining me with this today.
Cameron: Yeah, no worries.
Granger: If you’re out there listening, have you used any E-commerce sites to buy anything in Vietnam? I’d love to hear from you. You can send us at firstname.lastname@example.org. If you did, did you have it delivered? And if not, try it this week and let us know your experience. I’m going to try and buy something from Sendo. I want to try to return to something. And we’ll talk about it this Friday.
Cameron: Sounds great.
Granger: All right, guys. I hope you enjoyed your coffee! And Cam, have a great Monday, have a great week!
The Lotus Talks is produced by The Vietnam Group. This episode was produced by Granger Whitelaw, Cameron Lynch and Toan Tang.