E-commerce currently accounts for 0.5% of the fast-moving consumer goods (FMCG) market in the four key cities, according to "The Future of E-commerce in FMCG" report released by market research firm Kantar Worldpanel.
Foreign E-commerce companies are vying for Vietnam's market shares.
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"Although the size of Vietnam's e-commerce market is still small compared to other formats, it holds a strong potential because the value growth of e-commerce within FMCG is up to 69%, which makes Vietnam become one of the countries with the highest E-commerce growth rate in the world," said David Anjoubault, General Manager of Kantar Worldpanel Vietnam.
Research and Consulting firm Frost & Sullivan forecasted Vietnam's E-commerce market to grow from US$1.7 billion in 2016 to US$3.7 billion in 2020, equivalent to a growth rate of 45% per year.
In the beginning of the year, China's second largest E-commerce firm JD.com has become one of the largest shareholders at Tiki, a Vietnamese online retail service.
In the Series C investment round, JD.com decided to invest in Tiki for a reported amount of VND1 trillion (US$44 million) to become its main shareholder alongside VNG Corp, a Vietnamese entertainment and social media firm, announced JD.com.
Alibaba, China's largest E-commerce firm has set foot in Vietnam's market since April 2016 through the acquisition of Lazada in Southeast Asian market.
Meanwhile, the Singapore online shopping platform Shopee has grown rapidly in the Vietnam's market after its launch a year ago. The popularity rating of Shopee Vietnam application has surpassed that of Lazada Vietnam in Quarter III and IV of 2017, according to a market survey conducted by the iPrice Group.
Consequently, all three giant E-commerce firms have infiltrated Vietnam's market through mergers & acquisition (M&A), which is considered as the fastest way to set a foothold in a new market without being left behind by other competitors.
Statistics provided by Google pointed out that Lazada, Shopee and Tiki are among the top four of most searched E-commerce sites in Vietnam, indicating a market dominated by Chinese enterprises.
However, the presences of large investors from the US and Japan are expected to redefine the E-commerce market.
Japanese Scroll Corporation has acquired a 26.9% stake in Cat Dong Trade and Service JSC, which owns e-commerce sites Cungmua.com, Nhommua.com and Shipto.vn for an undisclosed sum since April 2.
In 2015, Cat Dong has received investment from ACA Investments, which has managed funds worth US$1.4 billion to date. ACA Investments is the largest investor in Cat Dong with a 37% stake.
Cat Dong CEO Ho Quang Khanh said the strategic cooperation with Scroll came about after two years of the Vietnamese company talking to various Japanese investors. The partnership, he said, will help Cat Dong recover its leading position in the Vietnamese market.
Amazon has also expressed interest in Vietnam's E-commerce market through the cooperation with Vietnam E-commerce Association (VECOM). Under this cooperation, Amazon expected to support Vietnamese enterprises exporting products in its platform.
The move is seen as positive, as Vietnam's E-commerce market currently lacks an efficient delivery and transaction system.
It is expected that the cooperation between two sides will lay the foundation for Vietnamese companies for better integration into the global value chain, as well as taking advantages from the spillover effect. In return, foreign companies will be able to gain market shares from one of the fastest-growing E-commerce markets globally.
As a result, it will rebalance the E-commerce market with customers will be the ultimate beneficiaries.
