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Vietnam holds strong e-commerce growth potential - report

Minh Tam
Friday,  Sep 8,2017,16:26 (GMT+7)
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Vietnam holds strong e-commerce growth potential - report

Minh Tam

HCMC – E-commerce in Vietnam has much room for growth but local companies have yet to tap its potential, according to a market research report.

The next source of growth is Connected Spenders, who have the ability to access the Internet and are willing to spend their discretionary income, according to the report by Nielsen Vietnam and the Demand Institute.

The report predicts these consumers will account for nearly 40% of the global population, thereby contributing more than 50% to annual spending.

Thanks to growing access to the digital economy and all that comes with it, the East Asia and Pacific region will witness the greatest increase in the number of Connected Spenders, especially in emerging markets like Indonesia, the Philippines, Thailand and Vietnam.

The report says there were 23 million Connected Spenders in Vietnam in 2015 and the figure is expected to nearly double to 40 million by 2025. Their spending will rise from US$50 billion annually to US$99 billion over the same time period and by 2025, they are expected to account for half of the total consumer spending.

Around one-third of Vietnamese Connected Spenders are between 21 and 34 years old (34%). By definition, the report says, over three-quarters of the consumers within the higher income bracket are Connected Spenders (76%) and nearly two-thirds of those have middle income, and 43% falls into the lower income group.

“Vietnamese Connected Spenders will spend US$0.8 trillion over the next decade. Therefore, for consumer-facing businesses seeking to grow in Vietnam, these are the consumers whose needs will need to be addressed,” said Rakesh Dayal, executive director of Consumer Insights at Nielsen Vietnam.

The report stresses Connected Spenders are much more adept at omnichannel shopping. Around 80% of them think shopping online is more fun and convenient. Before buying, regardless of searching online or offline, they gather information from both sources.

Around four in five read online reviews (83%) and refer to social media comments (74%) prior to purchasing a product whereas two out of three (66%) check out products in the physical store before purchasing them online.

Especially, Connected Spenders are price-conscious, constantly on the lookout for special deals and promotions: more than half of them use price saving apps to search for the best deals even when they plan a shopping trip online or in store.

Therefore, Nielsen Vietnam urges local firms to pay attention to Connected Spenders as a new emerging type of consumer.

Vietnam has great potential for e-commerce as more than half of the population has access to the Internet, and 44.3% of households own smartphones or mobile devices. Notably, online consumers rocketed 129% in 2011-2015, according to a survey of Vietnamese consumers conducted by Singapore-based market technology company Criteo.

However, data of market research firm Kantar Worldpanel Vietnam shows e-commerce, despite exponential growth, accounted for a mere 0.4% of the domestic retail market last year. Of this tiny market share, 43% of goods were sold by traders on Facebook while the remainder were consumed through e-commerce websites.

Kantar Worldpanel forecasts e-commerce will amount to 2.2% and online buyers will make up 25% of the total by 2025.

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