MINISTRY OF EDUCATION AND TRAINING

FOREIGN TRADE UNIVERSITY

ECONOMICS AND LAW DEPARTMENT

----------o0o----------

ESSAY SUBJECT: MICROECONOMICS

THEME:

E-COMMERCE MARKET ANALYSIS IN VIETNAM

Group : 3

Class : K60MF2

Major : International Business and Trade

Teacher : Ph.D Phạm Văn Quỳnh

Ho Chi Minh City, March 31, 2022

TABLE OF Contents
A. Analysis of E-commerce market size and Competitors........................................5
1. The situation of E-commerce development in Vietnam and the world:.................5
1.1. E-commerce development in the world:..........................................................5
1.2. Current status of e-commerce development in Vietnam:................................7
2. Scale of Vietnam's e-commerce in 2025................................................................9
3. Competitors.......................................................................................................... 10
3.1 Rookies" massively entered the market:........................................................10
3.2 "Veterans" strengthened to dominate the playing field:.................................10
3.3. Fierce competition between Vietnam e-commerce and foreign e-commerce:
............................................................................................................................. 11
B. The growth of the e-commerce market in Vietnam............................................11
1. Reasons for the development of e-commerce:.....................................................11
1.1. The advent of new technology makes internet access faster:........................12
1.2. Market approach of e-commerce:.................................................................13
1.3. B2B platforms and e-commerce influences:.................................................13
1.4. Progressive improvements and changes in the e-commerce platform:..........14
2. Regional Perspectives..........................................................................................14
2.1. Growth potential in Asia:..............................................................................14
2.2. Growth potential in Vietnam:........................................................................14
3. THE E-COMMERCE MARKET IN VIETNAM................................................15
4. Reasons to Invest in the E-Commerce Industry in Vietnam:................................15
C_ E-COMMERCE MARKET TRENDS...............................................................17
1. ECommerce Concept:..........................................................................................17
2. Overview of Vietnam's e-commerce market today:.............................................17
3. E-commerce Market Trends:...............................................................................18
3.1. The trend of turning social networks into sales channels:.............................18
 3.2. Trends in the variety of payment methods:...................................................19
3.3. Trends in the use of domestic brands and retail retailers:..............................20
3.4. Visual trade trends:....................................................................................21
D. Demographics and Market Segmentation:.........................................................22
1. Definition:............................................................................................................ 22
1.1. Demographics...............................................................................................22
1.2. Market Segmentation....................................................................................22
2. Segmentation by geographic location:.................................................................22
3. Market segmentation by demographic:................................................................23
3.1. Age:..............................................................................................................23
3.2. Income:.........................................................................................................24
4. Market segmentation according to psychology and preferences:.........................25
5. Market segmentation by behavior:.......................................................................26
5.1. Reasons for purchase:...................................................................................26
5.2. Benefits:.......................................................................................................27
E. PROFITABILITY OF THE E-COMMERCE MARKET.................................27
1. E-commerce "crowned" in covid-19 pandemic:...................................................27
2. Changing traditional buying habits:.....................................................................29
3. Outstanding development trends:.........................................................................30
4. How are businesses adapting to the new normal?................................................31
F. Success factors of the e-commerce market in Vietnam......................................32
1. Social commerce - take advantage of social networking as a potential commercial
channel:.................................................................................................................... 33
2. "Playground" of content creators:........................................................................35
3. Personalization to provide the optimal user experience:......................................35
4. Electronics and consumer goods industry quickly ascends to the throne:............36
5. Foreign investment:.............................................................................................37
6. Logistics services:................................................................................................38
G. Resources and equipment needed for an E-Commerce startup:.......................38
 1. Hiring a team and finding vendors:......................................................................38
2. Obtaining insurance and permits for an eCommerce startup:...............................39
3. Choosing an integrated payment solution:...........................................................39
4. Marketing:...........................................................................................................39
IN CONCLUSION:...................................................................................................40
PRESENTATION/ REPORT REQUIREMENT

REQUIRE:
 Group of 5-10 students
 The last two weeks of school.
 Content of requirements: use the supply and demand model to analyze a market
of products and services in Vietnam, for example, the gold market.
 Write, print, and submit a report (to GV) and submit online to the link: at least
25 pages A4 before 17:00 on April 12th, 2022.
 Class presentations

THE NECESSARY CONTENT:

 Present the topic and generalize the basic theories of the problem
 Conclusions or lessons learned
 The names of the team members and each person's work.
 State facts and use theories to analyze reality.

EVALUATION CRITERIA:

 Presentation
 Teamwork
 How to present/present a report
 Answer your questions and those of your teachers.

CONTACT INFORMATION:

About lecturer:
 Ful Name: Ph.D Pham Van Quynh.
 Email: phamvanquynh.cs2@ftu.edu.vn

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GROUP 3
 MARKET RESEARCH – TEAM 3

The number of members: 10

1) Phạm Gia Bảo
Student’s ID: 2115027133
2) Nguyễn Phạm Minh Thư
Student’s ID: 2115027077
3) Phan Nguyễn Khánh Linh
Student’s ID: 2115027030
4) Phan Thị Minh Tâm
Student’s ID: 2115027073
5) Lê Thành Đạt
Student’s ID: 2115027098
6) Hoàng Gia Phúc
Student’s ID: 2115027116
7) Trịnh Hải Tùng
Student’s ID: 2115027087
8) Trần Thị Phương Trinh
Student’s ID:2115027125
9) Trần Thị Mai Anh
Student’s ID: 2115027030
10) Trịnh Thị Minh Ngọc
Student’s ID: 2115027

3
GROUP 3
 A few opening words
The impact of the COVID-19 pandemic has changed a lot in the traditional economy.
Entering the 4.0 era has made the number of smart mobile devices increasing, which sets
the stage for the e-commerce industry to be born. Group 3, who are part of Gen Z, young
people today must be the ones who know and also through this essay on the e-commerce
market will help students understand more about this market in the most objective way.
According to the statistical report, Vietnam is on the list as the country with the most
developed e-commerce market in Asia and the world in the future with the presence of
major exchanges in the country. This is also a bright spot for Vietnamese citizens in
particular and Vietnamese students, in general, to discuss this issue more closely.

----------------------------------------------OoOoO-------------------------------------------------

Thank you!
Before entering the main content of the essay, group 3 would like to express their
sincere thanks to Ph.D. Phan Van Quynh has guided us on the extremely useful
knowledge about microeconomics recently. Although this is a very new and strange
subject for us, the teachings and instructors have made it easier for us to understand
and imagine this specialty. Once again, we would like to thank you and wish you
much success on the next teaching journey.

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GROUP 3
A. Analysis of E-commerce market size and Competitors

1. The situation of E-commerce development in Vietnam and the

world:
1.1. E-commerce development in the world:

E-commerce continues to grow strongly across the globe, especially in developing

countries where e-commerce originated. Development accounts for more than 90% of
the total value of global e-commerce transactions, of which North America and Europe
alone have reached over 80%. E-commerce growth is fastest in North America,
followed by Asia-Pacific and Western Europe. In Asia, Singapore and China have two
countries with rapid e-commerce development and keep up with North American
countries. In the rest of Asia, e-commerce has developed but is still very slow.

GLOBAL E-COMMERCE GROWTH

8

6
TRILLION US DOLLARS

0
2000 2001 2002 2003 2004

North America Asia Pacific West Europe Latin America

Source: US Census Bureau, 2005.

The US is the country with the most developed level of e-commerce in the world.
Currently, US e-commerce activities account for over 70% of global e-commerce. The
country's retail sales from online sales increased year-over-year, and year after year
was higher than the previous year. 

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B2C is the oldest and fastest-growing e-commerce model. However, in recent years,
the B2B e-commerce model has developed faster.  

Source: US Census Bureau, 2004.

E-commerce in Latin American countries has developed very rapidly in recent years.
Venezuela is the country with the fastest growth rate of e-commerce in the region,
increasing by 224% in the two years from 2005 to 2007. After Venezuela are Chile,
Mexico, and Brazil with similar e-commerce development rates. respectively 183%,
143%, 116%. The country's most popular form of online payment is a credit card. B2B
e-commerce accounts for 80% of e-commerce transaction value in Latin America.
Brazil is the fastest-growing country in the region, followed by Mexico and Argentina.
Currently, 88% of B2B e-commerce websites in the region are Brazilian.

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GROUP 3
 1.2. Current status of e-commerce development in Vietnam:

E-commerce has appeared in Vietnam for the past 10 years since the Internet was
launched in 1997. However, e-commerce applications have only been really
popular in the past 4 years since the Law on Electronic Transactions was
promulgated in December 2005 and took effect in March 2006. The promulgation
of the Law on Electronic Transactions is considered a turning point for the
development of e-commerce in our country. This shows that the Vietnamese
government has seen the role of e-commerce in economic and social
development. 
In addition to promulgating the law, the government also issued the "Master Plan for
E-commerce Development for the period 2006-2010". The objectives of the plan are:

 60% of large-scale enterprises conduct business-to-business e-commerce

transactions (B2B);
 80% of small and medium enterprises know the utility of e-commerce and
conduct e-commerce transactions in the form of business-to-consumer (B2C) or
business-to-business (B2B);
 10% of households conduct e-commerce transactions in the form of business-
to-consumer (B2C) or consumer-to-consumer (C2C);
 Government procurement offers are published on websites of government
agencies and e-commerce transactions in government procurement (B2G).

After 4 years of promulgation of the law as well as a master plan for e-commerce
development, in our country e-commerce has been applied in many fields such as: 

 In the field of production and services, businesses have deployed e-commerce

software in business administration such as accounting management software,
enterprise resource management software, sourcing software, and customer
database management software. 
 In the field of online buying and selling, the number of exchanges, or virtual
markets, has increased rapidly. According to a study by the Department of E-
commerce and Information Technology - Ministry of Industry and Trade, by the
end of 2007 the number of B2B e-commerce platforms in our country was 40,
and B2C was 100. The C2C e-commerce platform is also growing fast.
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GROUP 3
 Although the number of B2B e-commerce platforms is less than B2C, the
revenue growth rate from B2B exchanges is higher.  
 In the field of financial services and banking, our country has implemented
banking activities. electronic goods, electronic securities. Consumers can access
e-banking services through the internet (internet banking) or mobile networks
(SMSbanking).
 In the field of electronic securities, consumers can query market information
and account information, register to open an account, manage investment
portfolios, place trading orders as well as receive information about results.
transaction results. 
 In the field of passenger transport, passenger transport companies, especially
railway and air transport, have launched online ticket sales. The implementation
of electronic ticketing activities in the aviation sector is an indispensable
requirement when participating in the International Air Transport Association
(IATA). Jetstar Pacific, formerly known as Pacific Airlines, was the first
Vietnamese airline that started selling e-tickets in March 2006. 
 By the end of 2008, Vietnam had deployed several online public services.
online such as electronic customs declaration, electronic certificate of origin,
electronic tax declaration, online public procurement, business registration
certificate, investment certificate, establishment license Electronic
representative office, online seal registration. The implementation of online
public services helps the government implement the "one-stop" plan quickly. It
also creates a transparent and open environment for all public services. In
addition to the implementation of the above-mentioned online public services,
since 2009 Vietnam has also implemented e-government procurement (e-
procurement) - online bidding on 3 large units VNPT, EVN, and EVN. Hanoi
People's Committee.      
 By the end of 2007, more than 30 provinces have approved programs and plan
to develop local e-commerce in the period up to 2010. Many plans have been
developed with good quality and high feasibility, for example. such as the Ho
Chi Minh City E-commerce Development Program for the 2008-2010 period or

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 the Bac Ninh Province's Ecommerce Development Plan for the 2007-2010
period.

Besides the development of e-commerce in scale. Across the country, Vietnam is also
very interested in e-commerce cooperation with the world. Our country has actively
participated in multilateral forums on e-commerce with APEC, UNCITRAL,
UN/CEFACT, UNCTAD... Bilateral cooperation on e-commerce with several
countries like China aims to promote strengthened trade activities between the two
countries, cooperation with the United States to improve the capacity of protecting
personal data, etc., and several other countries.

Currently, many large US corporations in the field of information technology and e-

commerce such as Microsoft, IBM, Intel, IDG, Yahoo!, Google, and eBay... are
officially present and active in Vietnam. market in Vietnam.  

2. Scale of Vietnam's e-commerce in 2025

According to the annual report SYNC Southeast Asia by Facebook and consulting firm
Bain & Company published on November 25, Vietnam is at the forefront of driving
change and seizing development opportunities based on digital transformation. in the
post-pandemic period of COVID-19.

Despite the negative impacts in 2020 due to the COVID-19 pandemic, Vietnam's e-
commerce still has strong acceleration steps, becoming one of the fastest-growing e-
commerce markets in the region. According to the Vietnam E-commerce White Paper,
in 2020, the growth rate of e-commerce will reach 18%, the scale will reach 11.8
billion USD, and it is the only country in Southeast Asia with double-digit e-
commerce growth. According to representatives of large corporations of Google,
Temasek, Bain & Company, Vietnam's e-commerce market has a lot of potentials,
increasing by 16% and reaching a scale of over 14 billion USD. This report also
predicts that the average growth rate in the period 2020 - 2025 is 29% and by 2025,
Vietnam's e-commerce may surpass the threshold of 52 billion USD and hold the 3rd
position in the ASEAN region 2025. in 2025, the growth of 34%, the highest rate in
the region. 
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GROUP 3
3. Competitors
Vietnam's e-commerce sector is witnessing a new wave of competition, as more
businesses enter the market, old businesses deploy more services.

3.1 Rookies" massively entered the market:

Since the beginning of 2020, the e-commerce market has witnessed the massive
entry of a series of new businesses. The first "big hand" is Nagakawa Group to join the
"game 4.0" by shaking hands with major e-commerce platforms and launching the
online sales website shop.nagakawa.com.vn. The recruit's ambition will be to "pioneer
the development of e-commerce in the refrigeration and home industries". This will
most likely be a formidable opponent of Green Electricity, MediaSmart ...
In April 2020, Elise fashion also launched its e-commerce site www. elise. vn, with
more than 1,500 fashion items ranging from clothing, handbags, and shoes to fashion
accessories. Greg Fleming, CEO of fashion brand Elise, hopes the focus on multi-
channel sales development will lift the company's share of online sales from about 1%
today to 10% in the near term.
Similarly, Pacific E-Commerce and Advertising Media Joint Stock Company have
also launched an application to provide e-commerce exchange services for brand
believers. In particular, this floor uses machine technology to inspect real and fake
goods.

3.2 "Veterans" strengthened to dominate the playing field:

If the emergence of recruits entering the market in niche segments, or expanding the
ecosystem as new winds make the market more lively and attractive, the participation
of some giants rich in financial potential, modern technology is a potential threat to e-
commerce platforms such as Lazada,  Tiki, Sendo, Shopee…
For example, Grab, in March 2020, launched GrabMart in Ho Chi Minh City. Grab
Mart has become a familiar service, well received by users, driver-partners, and
business partners with a stable weekly growth rate of double digits. The average
number of daily orders and the number of business partners on the platform increased
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GROUP 3
10 times, as of the end of July 2020 compared to the end of April 2020. Grub Mart is
actively expanding its network of partners and bringing services to many provinces
and cities, to meet the online shopping needs of customers.
Most recently, on the Appstore app store, CH Play appeared Vipshop app and website
VinShop.vn. Most likely, Vingroup will return to the e-commerce industry with an
evashop application connecting retail grocery owners and suppliers of goods.

These movements show that e-commerce continues to be an attractive field for

businesses, despite fierce competition.

3.3. Fierce competition between Vietnam e-commerce and foreign e-commerce:

Recently, many Vietnamese enterprises have had to withdraw from the e-commerce
market in the process of competing with foreign enterprises.
In December 2019, Vingroup officially announced its withdrawal from direct retail to
focus resources on industry and technology, in which Adayroi’s e-commerce site also
merged into VinID. Earlier in Late March 2019, Robin Online, formerly known as
Zalora, also announced the suspension of all sales activities despite the highest number
of visits to 965,000 visits per month in Vietnam at the time.
Similarly, The Vuivui e-commerce site of the Mobile World also said goodbye after 2
years of operation. Explaining the reasons why some pure Vietnamese e-commerce
platforms had to stop operations, Chairman of the Board of Directors of Mobile World
Nguyen Duc Tai stated that operating the e-commerce floor requires businesses to
have a large capital source, while the revenue is not as expected. "For example, the
annual revenue of the online sales channel Vuivui.com only stopped at VND73 billion,
which is enough to maintain," Mr. Nguyen Duc Tai cited.

B. The growth of the e-commerce market in Vietnam

1. Reasons for the development of e-commerce:

According to Reputa's analysis of the e-commerce market in 2021, the Covid-19
epidemic has contributed significantly to promoting the strong growth of the e-
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commerce market in 2021 and as a springboard for many breakthroughs in the future.
future.

The Covid-19 pandemic has reshaped users' shopping habits in 2021. Complicated
developments have seriously affected traditional activities in business and the
distribution of goods. E-commerce has helped remove all barriers of space and time in
business. At the same time, promote the consumption of "Consumer Goods and Food"
during the epidemic period, typically essential commodities and agricultural products.
Therefore, E-Commerce is expected to propel Southeast Asia's Internet economy
forward in the next decade with rapid growth.

1.1. The advent of new technology makes internet access faster:

Along with the advent of more and more smart mobile devices, the speed of
entering industry 4.0 has also made the demand for internet access increase rapidly.
Besides, the long time living with the covid 19 pandemic has partly changed people's
thinking, shopping, and business habits from the traditional form of shopping at
markets, supermarkets, .. to. online shopping, household shopping services, etc.

The worldwide e-commerce market was valued at USD 9.09 trillion in 2019, with a
compound annual growth rate (CAGR) of 14.7 percent predicted from 2020 to 2027.
Increased internet penetration is increasing the number of people who use smartphones
around the world. Digital content, travel and leisure, financial services, and e-tailing
are just a few of the e-commerce possibilities available to internet users, and they're
growing in popularity as the number of people using the internet grows. As a result,
customers' technical knowledge is projected to have a favorable impact on market
growth. The increasing need for speedier surfing has prompted advancements in
connectivity, resulting in 4G and 5G technology.

The usage of 4G and 5G technology for connection is projected to have a favorable

impact on market growth because it offers the user an uninterrupted, seamless
experience. Furthermore, the usage of smartphones is accelerating at a rapid pace,
boosting the customer's exposure to online buying.

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 1.2. Market approach of e-commerce:
E-commerce allows the organization to reach out to more clients, resulting in
essential exposure to the firm. The increasing importance of online marketing tools
such as Google advertisements and Facebook ads is also driving e-commerce. Due to
the prominence of social media applications, marketing alternatives are aplenty these
days, which aids in propelling the e-commerce market along growth paths.

Using images of famous people on popular platforms such as Tiktok, and Youtube
with attractive words and attractive incentives has made it easier to reach users and
fans.

Furthermore, customers' preference for online purchasing is increasing as a result of

the ongoing COVID-19 pandemic, which has forced brick-and-mortar stores to close.
The epidemic has had a significant impact on major economies like the United States,
China, India, and Italy.

1.3. B2B platforms and e-commerce influences:

Business to Business (B2B) dominated the e-commerce industry in terms of revenue
in 2019, with a share of 63.1 percent, and is predicted to grow at the quickest rate from
2020 to 2027. This can be due to businesses' increasing preference for online selling
and the purchase of goods and services. Furthermore, the B2B e-commerce segment is
expected to be driven by increased smartphone adoption and internet usage over the
projection period.

The purchasing and selling of goods and services between businesses is referred to
as business-to-business e-commerce. Furthermore, B2B e-commerce platforms
provide businesses with new ways to buy and sell products, lowering both operational
and inventory expenses. Over the projection period, this is expected to help the
segment grow. In B2B e-commerce, the rise of specialized or vertical marketplaces is
creating new opportunities. Vertical markets provide a diverse selection of products
within a particular category. Similarly, specialist marketplaces offer value-added
services such as volume discounts and a variety of payment choices.

The trend of businesses selling and purchasing goods and services through a B2B e-
commerce platform can be seen all over the world. Businesses that prefer B2B e-
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commerce platforms conduct business using either the marketplace model or the direct
model. Corporations offer their products on a shared platform alongside their
competitors in the marketplace model, whereas companies set up their own private
B2B platforms and sell directly to buyers in the direct model.

1.4. Progressive improvements and changes in the e-commerce platform:

The e-commerce business is becoming more efficient and accessible as technology
becomes more widely accepted.

The way individuals sell and buy goods and services has changed dramatically
thanks to the internet. Customers' purchasing experiences are altering as a result of e-
commerce or internet retail.

Banks and other e-commerce businesses are providing a safe and secure online
platform for customers to pay with a payment gateway. To enable sellers and
customers to trade online, market players are focusing on making unique
improvements to their business structures.

2. Regional Perspectives

2.1. Growth potential in Asia:

With a 55.3 percent share of the e-commerce market in 2019, Asia Pacific is
predicted to develop at the quickest rate from 2020 to 2027. This is due to a growing
propensity among firms to conduct their operations through a B2B e-commerce
platform. In addition, expanding infrastructure and an increase in the number of
internet users are predicted to drive regional market growth.

2.2. Growth potential in Vietnam:

The two major market observers stated in the annual SYNC Southeast Asia report,
which looks at the region's digital economy, that "located in a vibrant part of the
world, Vietnam is at the forefront of driving change and seizing opportunities to thrive
based on digital transformation in a post-pandemic future," that "Vietnam is at the
forefront of driving change and seizing opportunities to thrive based on digital
transformation in a post-pandemic future."

Southeast Asia is described as a pioneer in digital transformation in Asia-Pacific, with

Vietnam as one of the best performers, according to the research.

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 According to the survey, seven out of ten Vietnamese consumers have access to the
internet, and the country will have 53 million digital users by the end of 2021.

In comparison to 2020, the number of goods categories purchased by Vietnamese

online consumers increased by 50%, while the number of online retailers in Vietnam
increased by 40%, resulting in a 1.5-fold rise in total online retail sales nationwide.

Within the last three months, 49% of Vietnamese consumers migrated to a new
online marketplace, citing price incentives (45%), product quality (34%), and
availability of goods as reasons (33 percent).

3. THE E-COMMERCE MARKET IN VIETNAM

Thegioididong.com is the most important player in the Vietnamese eCommerce
business. The shop achieved $335 million in revenue in 2021. Fptshop.com.vn comes
in second with a revenue of $254 million, followed by the shop. vn with a revenue of
$234 million. In all, the top three stores in Vietnam contribute 10% of all online
revenue.

Vietnam is the 25th largest eCommerce market, ahead of Norway and behind the
United Arab Emirates, with sales of US$8 billion in 2021.

In 2021, the Vietnamese eCommerce market expanded by 24%, contributing to a

global growth rate of 29%. The number of people shopping on the internet is
increasing. New markets are emerging, and existing markets can expand further.
Global growth will continue in the next years. With their increasing middle classes and
sluggish offline purchasing infrastructure, East and Southeast Asia will lead this
movement.

The E-Commerce market includes online sales of tangible commodities to private

end-users (B2C). This definition includes purchases done on a computer, as well as
transactions made on smartphones and tablets.

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4. Reasons to Invest in the E-Commerce Industry in Vietnam:
In Vietnam, e-commerce is growing, with nearly half of the population utilizing it
by 2020, up from roughly 28% in 2017. Vietnam is expected to become a significant
e-commerce hubby 2025.

In the ASEAN region, Vietnam has some of the most favorable regulatory conditions
for beginning an e-commerce business. Vietnam has signed thirteen free trade
agreements (FTAs) as of 2021, allowing for the import and export of goods with lower
or zero tariffs.

Other Vietnamese-based e-commerce platforms, such as Tiki, Shopee, Lazada, and

Thegioididong, demonstrate Vietnam's ability to cultivate e-commerce. SBI Holdings
of Japan has also invested US$51 million in Sendo. vn. Grab and Gojek, the region's
two most valuable enterprises, are likewise weighing the advantages and
disadvantages of a prospective merger.

Vietnam's digital economy might be valued at $220 billion by 2030, attracting major
corporations such as Goldman Sachs and JD.com. By 2025, eCommerce might
account for 10% of all retail sales in Vietnam. In Ho Chi Minh City and Hanoi, online
shopping may exceed 50% of total sales.

Number of recognized and registered e-commerce sites in

Vietnam from 2018 to 2020
40

35

30

25

20

15

10

0
2018 2019 2020

Recognized Registered

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 Number of people accessing shopping platforms in 2021.
60%

50%

40%

30%

20%

10%

0%
E-commerce Via mobile app The company's website Social media

High medium short

According to the chart above, the online business before the pandemic was small
and quite limited with the percentage of online businesses decreasing.

C_ E-COMMERCE MARKET TRENDS

1. ECommerce Concept:
E-commerce or e-commerce refers to the form of business transactions conducted
online. The most common e-commerce is the purchase and sale of products or services
through the Internet or on any device. These transactions will include purchase,
payment, order, advertising, delivery, ...

2. Overview of Vietnam's e-commerce market today:

Since the Covid-19 pandemic, the e-commerce market in Vietnam is growing
rapidly and expanding in many fields and becoming a popular business form known to
many businesses and people. A variety of activities, participants, operational
processes, and supply chains of goods and services with the support of Internet
infrastructure and the application of modern technology has made e-commerce become
an important pillar in the process of developing the country's digital economy.

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 It is estimated that since 2015, the e-commerce market has tripled in recent years
with total spending of about VND90.1 trillion (2015) to VND315 trillion (2021).
According to another statistic from the Ministry of Industry and Trade, by 2025,
Vietnam's e-commerce market will reach nearly VND 400 trillion, potentially
surpassing Thailand shortly.

Scale of Vietnam E-commerce market (unit: tril-

lion DONG)
450
400
350
300
250
200
150
100
50
0
2015 2016 2017 2018 2019 2020 2021 2022 2023

3. E-commerce Market Trends:

The 2020 outbreak marks many major changes in customer behavior. Sales
increased by up to 30% due to unprecedented consumer demand during the pandemic.
Besides the increase in the field, the market trend is also worth paying attention to
below are some market-setting trends in the period 2020-2022

3.1. The trend of turning social networks into sales channels:

In Vietnam, Facebook, YouTube, Instagram, and more recently Tiktok are the four
fierce battlegrounds in the social commerce era. Each social network has different
benefits and ways of implementing sales, suitable for each different type of item. The
integration of online commerce features in social networking platforms creates
opportunities for businesses to sell. At the same time, their users can also shop for
products from their partner retailers without leaving the app.

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 Facebook, the most popular social networking site right now, encourages retailers to
use the built-in Facebook Shop feature. The platform also simplifies the process of
uploading products. In 2020, Instagram launched a Shopping tab feature, which allows
users to discover new personalized products. 

Some reports indicate that 95% of stores in the E-Commerce Agency's 2019 survey
use social media to promote their sales. 38% use Twitter and 48% use Instagram.
100% of online stores that provide food and personal health use Instagram and
Facebook. 

Vietnamese stores use social network sales

2019 Activity Level Assessment

95% 2.2
Facebook

38% 1.6

2.5
Twitter

48% Instagram

3.2. Trends in the variety of payment methods:

COVID-19 has made Vietnamese consumers wary of cash payments. It's no surprise
that e-wallets and digital banking have seen a surge in popularity. Most online and

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offline stores now accept digital payments through the mobile app. The top players in
this rapidly emerging landscape include VNPay, Momo, and ShopeePay.

According to predictions from experts in the field, in the future, the proportion of
payment methods will change. The replacement with plummeting cash was replaced
by two main forms of e-wallet and wire transfer. It shows that the electronics market is
increasingly accepted to develop strongly in Vietnam.

Payment Methods For Online Shopping

2023

2019

0 20 40 60 80 100 120
Card Transfer Cash E-wallet Other

3.3. Trends in the use of domestic brands and retail retailers:

Experiencing severe bouts of economic impact from the epidemic, a group of
consumers tends to turn to domestic SMEs, helping them increase sales and maintain
business. Another survey found that 65% of users want to buy products from
environmentally sustainable brands.

The focus on "green consumption" and sustainable development shows that those
brands prioritize the environmentally friendly element. In parallel with the new
consumer habits, Mr. Brad Houldsworth predicts this will be the trend that dominates
the market in the coming years.

According to a recent report, the share of environmental activists and eco-conscious

consumers in Vietnam is about 35%. This is lower than the global average of 59%, but
there has been a significant shift in people's attitudes over the past few years. This is
largely due to a series of outreach campaigns aimed at changing consumer behavior in
Vietnam.

20
GROUP 3
 120%

100%

80%

Eco Dismissers
60%
Eco Consideres
Eco Acitves
40%

20%

0%
Global 2020 Vietnam 2020

3.4. Visual trade trends:

We live in a world overloaded with information, which means brands are constantly
competing for consumers' attention. That's why visual communication is more
important than ever. Businesses are using visual tactics such as high-quality
photography, videos, and AR to attract customers. Just like multichannel strategy,
visual commerce can help significantly increase revenue. According to Shopify
research, customers who have viewed a product in AR are 65% more likely to make a
purchase.

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D. Demographics and Market Segmentation:

1. Definition:

1.1. Demographics is a very popular type of market segmentation and requires

market classification based on age, gender, income, race, etc. At a minimum, most
companies have a general idea of getting their product purchased demographics.

1.2. Market Segmentation is the process of dividing the overall market into
different groups of customers according to certain criteria so that each group of
customers has the same characteristics, needs, and buying behaviors.

2. Segmentation by geographic location:

Percentage of new online consumers in the first

half of 2021

New online consumers( suburbs area)

New online consumers(inner city area)
45%
55%

There is a perception that only big and developed cities, where e-commerce thrives
and prospers. But that's a mistake to look at the chart above, while the number of e-
commerce users from major cities such as Hanoi and Ho Chi Minh City is almost
saturated the percentage of users in other provinces and cities shows promising
growth, with nearly 4.5 million new online consumers come from suburban areas,
Accounting for 55% of the country's 8 million new online consumers in the first half
of 2021. This shows that the e-commerce market in Vietnam is expanding, and the gap
between urban, suburban, and even rural areas is gradually narrowing in terms of the
market.
22
GROUP 3
 The e-commerce market in the regions is gradually shrinking but in terms of
distance is still very large, for many reasons:

o The market model is limited, so it has not attracted the attention of companies.
o The Internet system is not developed.
o The difference in the delivery service.
o People still have doubts about the service.

3. Market segmentation by demographic:

3.1. Age:

Online purchase rate of at least one product by

January 2021
86%
84% 85%
84% The
82%
80%
78%
76%
74% 75%

72%
70%
Generation Y(35-> 44) Generation X(45-> 54) Generation Boomers II
(55- 64)

Online purchase rate of at least one product by January 2021

report cited data from DataReportal in 2021 showing that in Vietnam, more than 85%
of digital users are between the ages of 35 and 44 (Generation Y), Nearly 84% of
digital users aged 45-54 (Generation X) and more than 75% of digital users between
the ages of 55 and 64 (Boomers II generation) purchased at least one product online in
January 2021. These statistics show the popularity of e-commerce for every
generation, as opposed to the normal perspective that "only young people shop
online".

23
GROUP 3
 3.2. Income:

Income structure of people in different age

groups in Vietnam
6

0
Adolescence Young people Adults Middle-aged

From 0-1,499,000VND From 1,500,000VND- 2,999,000VND

From 3,000,000VND- 4,999,000VND From 5,000,000VND- 7,499,000VND
Từ 7,500,000VND- 14,999,000VND From 15,000,000VND- 29,999,000VND
Based on the chart, the average income by age is completely different. In adolescence,
due to not having made money and the income mainly comes from their parents, there
is usually a type 6 income with 0 -> 1,499,000 VND. Looking at adolescents, income
is no longer entirely dependent on their parents, they can earn money through part-
time jobs so the common salary is type 5. In the last two age groups, adults and
middle-aged people, due to having a stable source of income, from many sides, the
salaries of adults belong to group 2, besides that the salary of middle-aged people is
quite even between groups with the no. 2 salary group is the highest.
That suggests that at any age it is possible to enter the e-commerce market, with the
value of the goods they buy can increase with the age group. The value of goods
allocated:

24
GROUP 3
 Online shopping value
40%

35%

30%

25%

20%

15%

10%

5%

0%
1,000,000VND-> 3,000,000VND-> 5,000,000VND up
2,999,000VND 4,999,000VND

The value of online shopping of consumers over VND 5 million accounts for the
highest proportion - 35%, from VND 3 million to VND 5 million accounted for 22%,
from VND 1 million to VND 3 million accounting for 26%, moreover, the value of
online shopping per capita reached 202 USD, up 8.6% in 2020.

4. Market segmentation according to psychology and preferences:

Popular items purchased online

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
y e g s cs cs ts rs
ut m in ok ni eti ke ou
ea ga rt a
in
,b
o
tro m ti c , t
,b ic ,
ry ec os s el
s
es us g ,
ne El c bu ot
vic tin tio s, , h
er ,m ul oe ts ok
s eo ns St
a
sh ke
a vi d Co , tic Bo
Sp ng n
D, thi ra
i
DV Cl
o ,t
a re
rf
Ai

Các mặt hàng được mua trực tuyến phổ biến

The items favored by online consumers are spa services, DVDs, videos, and games
leading with the same 45% more than double that of electronics, only 20%, consulting
and training 3rd when accounting for nearly 40%. Office items, airfare, and hotel
bookings are behind at a rate of about 25%. In addition, the buying habits of

25
GROUP 3
Vietnamese consumers have also made positive changes. From just getting used to
traditional business deals, face-to-face, being held, viewed, and being able to try
products, they have now gradually approached and loved the form of online shopping.

5. Market segmentation by behavior:

5.1. Reasons for purchase:

Reasons for choosing Customer factors of in-

wed site/Application. terest

Price
other
Quality of goods/services

Wed/Application registered with the Ministry of Industry and Trade Seller's reputation

Payment method
Wed/ Reputablely labeled app Shipping and delivery

Return and exchange policy

View ads
Customer Service

How to order
View comments, reviews
Information privacy policy

Friends, relatives introduced Wed/App Design

0 0.2 0.40.6 0.8

Percentage of online buyers Percentage of online buyers

It can be seen that the two factors that are most interested in consumers are the
aesthetics of wed and information security policies, which Account for approximately
90% of decisions on customer interest, followed by how to order, Complex or simple,
accounting for nearly 60%. We can see that the price is only a small part of the buyer's
decision. The remaining factors account for only about 30% of the buyer's decision.
Modern consumers increasingly value issues of personal information and convenience
rather than price comparisons.
As for the reasons for choosing to visit any website, it is affected by many factors, e.g.
credibility, referral friends, advertising, … In which the referral friends have the
26
GROUP 3
highest rate with nearly 0.8, it is quite surprising that the ad does not appear in the top
3 factors.

5.2. Benefits:
For consumers: E-commerce helps consumers have more choices about products
and services, minimizes purchase time and travel costs, creates the opportunity to buy
products at lower selling prices, access to more information, ...

E. PROFITABILITY OF THE E-COMMERCE MARKET

1. E-commerce "crowned" in covid-19 pandemic:

In the Vietnam E-commerce Panorama Forum 2021, organized by the Vietnam E-
Commerce Association on April 20, 2021, in Hanoi, experts affirmed, "In 2020, in the
context of most economic sectors being negatively affected by the Covid-19 pandemic,
Vietnam e-commerce goes against the trend, with the highest growth rate in Southeast
Asia."

In August 2021, a report by Lazada, the leading e-commerce platform in Southeast

Asia, showed that up to 52% of sellers in Indonesia, the Philippines, Thailand,
Vietnam, Malaysia, and Singapore achieved high revenue growth in the first half of
2021, while 70% expected that the revenue growth would continue to be increased by
10% in the third quarter of 2021.

By the end of 2020, according to experts, Vietnam is one of the fastest-growing e-

commerce markets in Southeast Asia, second only to Indonesia. Vietnam is also one of
the two countries (along with Indonesia) with strong growth in e-commerce website
traffic in the region.

In Vietnam, according to the E-commerce White Paper 2021, B2C e-commerce

revenue has also continuously increased sharply in the past 5 years. Specifically, in
2016, this figure only reached 5 billion USD, by 2019, the revenue has doubled,
reaching more than 10 billion USD and in 2020 it is 11.8 billion USD, with a growth
of 18 % compared with the last year. According to calculations by world major
corporations such as Google, Temasek, and Bain&Company, it is likely that the scale

27
GROUP 3
of Vietnam's digital economy will surpass the threshold of 52 billion USD and hold
the third position in the ASEAN region by 2025.

In particular, Google's Southeast Asian internet economic report forecasts that

Vietnam's e-commerce will reach about US$29 billion by 2025 with a growth rate of
34% compared to 2020.

In addition, the proportion of new online shoppers, out of the total number of online
shoppers in Vietnam also accounts for the highest proportion (about 41%) in the
region, by 2020. Compare this rate to an average of about 36% in Southeast Asia,
Indonesia, and the Philippines with 37%, Malaysia at 36%, Singapore and Thailand
and 30%.

In the annual report, "SYNC Southeast Asia" (SYNC Southeast Asia) of Facebook
and consulting firm Bain & Company (USA) announced on November 25, 2021,
Vietnam is forecasted to be a developed e-commerce market. fastest in Southeast Asia
by 2026, with total e-commerce merchandise value (GMV) reaching $56 billion, 4.5
times the estimated value in 2021. Vietnam is at the forefront of driving change and
seizing development opportunities based on digital transformation in the post-COVID-
19 pandemic.

The study surveyed about 16,700 digital consumers and more than 20 senior staff in
six Southeast Asian countries, including 3,579 respondents from Vietnam. The study

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GROUP 3
describes Southeast Asia as a leader in digital transformation in Asia-Pacific and
Vietnam as one of the countries with the best performance.

2. Changing traditional buying habits:

In 2021, Vietnam's e-commerce will grow strongly, continue to boom, and play an
important role in promoting socio-economic development, creating new consumption
trends. The number of categories of goods purchased by Vietnamese online shoppers
this year has increased by 50% compared to 2020, while the number of online stores in
Vietnam has also increased by 40% year-on-year, thanks to that total online retail sales
nationwide increased by 1.5 times. About 49% of Vietnamese consumers have
switched to online shopping within the last 3 months based on considerations for price
incentives (45%), product quality (,34%), and availability of products. goods (33%).

The Industrial Revolution 4.0 has promoted e-commerce activities, and forms of
online sales (via e-commerce websites/apps; e-commerce platforms such as Amazon,
Alibaba, Sendo, Shopee...) to flourish more than ever, for the first time. Shopping for
goods via e-commerce has become a major, safe and effective method of distribution,
promoting immediate effectiveness in the context of the epidemic, fully providing
people's necessities.

Lazada Vietnam's report covers e-commerce in Southeast Asia and Vietnam in

2021, where e-commerce has promoted and contributed strongly to economic growth
in the context of the pandemic.

Accordingly, despite challenges from the Covid-19 pandemic, 2021 is considered a

prosperous year for the digital economy across Southeast Asia, in which e-commerce
is the main growth driver. According to Statista, the value of the e-commerce market
in Southeast Asia has increased 24 times in the past 6 years, from 5 billion USD in
2015 to 120 billion USD in 2021; and is expected to reach 234 billion USD by 2025.
Vietnam's retail e-commerce market is forecasted to increase by 300%, from 13 billion
USD in 2021 to 39 billion USD in 2025.

Explaining this growth, the report notes that the driving force comes from the trend
of grocery shopping on the e-commerce floor, the increase in the number of new
sellers (meaning that more and more sellers want to develop their products). business
development on online channels), and people's response to Shoppertainment activities
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GROUP 3
(shopping combined with entertainment). In particular, the strong investment in
internal logistics systems has helped e-commerce platforms to solve the difficult
supply chain disruption problem in the past year.

The COVID-19 pandemic has changed traditional consumer shopping habits to e-

commerce. Consumers are shopping more online, which creates a great opportunity for
businesses to step up their digital media strategy and make a stronger footprint in the
online market. E-commerce has become a commonly used transaction method, the
optimal choice of businesses as well as consumers, the trend of converting from
traditional business to a digital platform is becoming more and more popular and is the
solution to the problem. Effective solutions to help businesses expand their markets,
and find models to optimize flexible export resources.

In 2021, people have changed many consumer habits and behaviors. "Overall, the
age of online consumers on e-commerce platforms has expanded, they spend more
time on e-commerce platforms, and are willing to place orders of greater quantity and
value," the report said.

3. Outstanding development trends:

Specifically, 58% of Vietnamese consumers said that they will continue to shop for
department stores on the e-commerce platform because of the convenience and this
habit will remain with 53% admitting that buying online department stores has become
a part of their lives.
Besides, Vietnamese consumers are also willing to spend more online. The data
shows that the percentage of online consumers shopping over 5 million VND in 2020
has increased significantly compared to 2019. Lazada also recorded the highest value
of an order of up to 300 million VND and 50 million VND per order. LazMall -
genuine store system in 2021.

Analyzing changes in the sales audience, the report found that e-commerce
platforms attracted more sellers, especially from FMCG’s fast-moving consumer
goods.

Two recent reports from Lazada Vietnam show that the number of sellers in the
second quarter of 2021 has doubled compared to the same period last year, and this
number continues to increase by more than 1.5 times in the third quarter of 2021. 2021
30
GROUP 3
compared to the same period last year. The third quarter also saw major food and
beverage (F&B) brands participating in the business on Lazada. This has contributed
to the highest growth in the number of FMCG sellers in 2021.

In addition, the number of new sellers in non-urban areas has also increased
significantly in the past year. According to Lazada's latest statistics for the first 11
months of 2021, up to 40% of new sellers on the platform come from non-urban areas.
While the number of new sellers from Hanoi and Ho Chi Minh City is 29% and 31%,
respectively.

4. How are businesses adapting to the new normal?

Experts also analyze the fundamental difference between online and offline business
as experience and connection. Unlike offline shopping, where buyers can "touch and
see" products firsthand, the online environment needs more effort from sellers to build
"virtual connections" with customers.

Shoppertainment - a shopping strategy that combines entertainment - with a variety

of activities such as live streams, and actual product reviews, is the "key" to helping
help brands and sellers untie this knot, thereby promoting push revenue. The proof is
that even during the peak period of social distancing in 2021, the LazGame "Lizzie
Star" game attracted more than 750,000 players and the revenue from LazLive
increased 22 times. During Lazada's 11.11 Shopping Festival, the SuperShow concert
recorded 26 million views and sales through SuperShow increased 20 times.

Last year, logistics continued to be a differentiating factor among e-commerce

platforms. This comes from methodical investment in the internal logistics
infrastructure system or initiatives toward social and community purposes. Lazada
Logistics has launched many initiatives to maintain stability and speed up the delivery
process; thereby meeting the basic needs of the people. To adapt to the situation of
social distancing on a large scale and lasting for more than 4 months in Ho Chi Minh
City, Lazada has flexibly opened 5 more satellite goods sorting centers in Tan Phu,
District 4, Thu City. Duc and Hoc Mon district to ensure timely distribution of goods.
AI technology is also applied to the delivery stage to ensure the shortest transportation
route.

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GROUP 3
 During the 2021 Shopping Festival 11.11, Lazada achieved the record for the fastest
delivery order – within 30 minutes of the order being recorded until the delivery was
successful to the customer. More impressively, during the 12.12 Shopping Festival,
Lazada's fastest delivery order took just 8 minutes.

The global e-commerce market is forecasted to continue to see strong growth in

revenue in the coming years. This statement is once again emphasized in the 2021
Vietnam E-commerce White Paper, which has just been published by the Department
of E-commerce and Digital Economy. Citing a statistical report from eMaketer.com,
the white paper compares: if in 2020, global B2C e-commerce revenue reaches $4,280,
in 2021, this figure will be at $4,891 billion, and in 2022 it will to $5.424 billion. In
2023, revenue will reach $ 5,908 billion and in 2024, $ 6,388 billion.

F. Success factors of the e-commerce market in Vietnam.

Social commerce, content creation, variety of payment methods, personalization ...
These are the trends that promise to be crowned in 2022.

Vietnam is considered one of the fastest-growing e-commerce markets in Southeast

Asia, behind only Indonesia. Vietnam is also one of two countries (along with
Indonesia) with strong growth in e-commerce website traffic in the region. With high
and continuous growth from 2015 onwards, it is forecasted that in 2020, the size of
Vietnam's e-commerce market could reach 13 billion USD. This is completely
grounded when there are 68 million internet users out of a total of 97 million people in
Vietnam, which is the driving force behind the strong development of e-commerce.

32
GROUP 3
 Photo source: VietnamCredit

Vietnam is currently one of the leading countries in Southeast Asia when in the first
half of 2021 alone, the country has 74% of people using the internet daily and more
than 8 million new e-commerce users, according to Google data.

With strong growth even as traditional shopping has returned to the new normal,
Vietnam's e-commerce continues to break through with new trends. Experts said that
these will be important factors contributing to shaping the market in this industry in
2022.

At the same time, according to Lazada Vietnam's e-commerce panorama report and
market trends with the theme "E-commerce 2021: Adapting and quickly overcoming
obstacles from Covid-19", the booming industries thanks to the shift in consumer
habits in the past year are also expected to continue to promote the digital
transformation of brands, sellers.

1. Social commerce - take advantage of social networking as a potential

commercial channel:
One of the booming trends from the end of 2021 to the beginning of 2022 in the
form of combining e-commerce with social networks. Taking advantage of large
platforms with a huge number of users every day such as Facebook, Instagram,

33
GROUP 3
Twitter, or most recently TikTok, helps sellers and brands increase engagement with
customers.

According to a survey by Remarkable Commerce, more than 90% of social media

users access their favorite platforms using a mobile device. 54% use social media to
research products and shop.

Through the activities of commenting, live streaming, shopping, and evaluating

products directly on social networking posts with vivid visual images, users can easily
find the right quality item. On the contrary, the sellers and brands have the opportunity
to reach more potential customers, expand customer files, and increase popularity.
Since then, incentive programs and campaigns have also been more effective.

A livestream of shopping on the Lazada app. Photo source: Lazada Vietnam

Besides, making good use of modern technologies and attracting users such as 3D
images, 360-degree videos, AI, or live streaming features on social networks ... can

34
GROUP 3
help sellers and brands make the shopping interface more user-friendly, and closer to
the user.

2. "Playground" of content creators:

According to a Nielsen report, up to 63% of consumers still keep their online
shopping habits in the new normal, even if traditional sales activities return to the
same. Many users said they maintain the habit of buying online because of the
advantages of convenience, time savings, deep incentives, and taking place densely all
year round.

Shopping activities combining entertainment – and shoppertainment are also

increasingly diverse, helping consumers to both shop and relieve stress after working
hours at home. Not only small retailers, but large domestic and international brands are
also gradually grasping this taste. In particular, the Livestream of product introduction
and sharing of consumer experiences in the past year has helped many brands reach
record sales.

In the shopping festival "New Year, sale to" launched from January 5-14, 2022,
Lazada recorded a 2.5-fold increase in the number of users willing to spend on the
Livestream. The number of orders sold on the LazLive channel also quadrupled.
Livestream views increased more than 4 times, indicating that users are very excited
about the entertainment content in The Spring Online Festival such as Tet Gala, Loto
Sale, Slashing Price ... At the same time, LazLive also recorded a nearly 8-fold
increase in sales compared to the same period last year.

The above figures partly show that consumers are increasingly enjoying
entertainment content on e-commerce and live streams. The self-created content series
of live streamers, sellers, and brands have also become a powerful assistant of the e-
commerce business channel.

In addition, apart from the live streams, users can share the experience of using the
product through the form of reviews, short videos, "unboxing", instructions to use new
products, services, technologies on their page ... This becomes a new form of
marketing, which not only helps drive sales and stimulate shopping but also supports
users to make more informed choices in spending.

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GROUP 3
3. Personalization to provide the optimal user experience:
In the e-commerce trends predicted to ascend this year, personalizing user
experience is considered an important key to helping businesses in this industry, as
well as sellers and brand partners, increase customer satisfaction.

Remarkable Commerce's report shows that up to 80% of users prioritize shopping

for products from brands and e-commerce platforms with personalized elements and
attractive incentives. The conversion rate of orders on online purchase platforms that
prioritize personalizing the user experience also increased by 20%.

According to Lazada Vietnam's e-commerce panorama report and market trends

2022, the purpose of personalization is to enhance the customer's shopping experience.
With the permission of customers, the information related to the multi-channel
shopping experience is aggregated and plays a core role, in helping e-commerce
platforms and sellers improve the shopping journey of users.

The application of AI technology also contributes to this journey more complete

when supporting information collection and processing, producing the results closest
to the consumer habits and preferences of each user. Through the results collected, the
e-commerce platform can understand customers better, thereby designing its own
experiences to suit the needs, helping to increase the rate of successful order
conversion.

In addition, personalizing the shopping experience also helps brokers grasp

spending habits. The diversification of payment methods including payment via e-
wallet, bank card, credit card, or cash on delivery (COD) is also rooted in these
personal factors, meeting the needs of all consumers.

4. Electronics and consumer goods industry quickly ascends to the throne:

The epidemic not only changes consumer habits but also affects sales of existing
industries on the e-commerce floor. In the fourth wave of Covid-19 in 2021, the
FMCG industry has shown strong growth. This boom is not only in the number of
orders and sales but also reflected in the number of new sellers on the floor.

Two recent reports by Lazada Vietnam showed that the number of new sellers in the
second quarter of 2021 doubled compared to the same period last year. This figure still

36
GROUP 3
increased more than 1.5 times in the third quarter of 2021 and maintained growth
through the end of the year.

Many foods, beverage, and restaurant brands in the F&B sector also have an
application to guide conversion and business on Lazada in the past year. In addition to
the attributes of partners such as Nestlé, Vinamilk,... new brands such as Star
Kombucha also continuously poured sales and orders records.

The trend of shifting business to e-commerce has led to the highest growth in the
number of sellers in this category last year. In addition, the fashion, home & lifestyle
and electronics industries... also showed their attraction with an impressive number of
sellers and sales.

Prominent among the brands that achieved "huge" sales in the shopping festival
"New Tet, sale " recently on Lazada is the brand Of Co, founded by Mr. Le Duc Duy.
Mr. Duy said that in the last Tet campaign, Ms. Cuong’s brand participated in the
programs "Deal with Loc Phat 68k price, 88k pronoun", Freeship Max ... with the
result of a significant increase in order conversion rate. As a result, sales and orders
tripled.

On the other hand, Mr. Pham Minh Hoang's Inuka Store also recorded a doubling of
sales during the shopping festival "New Tet, big sale". He said the booth growth rate
per month was at 20-30%. In large campaigns, this number can be 3-4 times higher
than usual.

According to the data recorded by Lazada Vietnam in 2021, the e-commerce

industry in 2022 promises to explode with a series of new trends. Lazada
representatives said the platform will continue to support partner brands and sellers to
conquer new challenges, while gradually optimizing the user experience through
promotional campaigns and shopping festivals.

5. Foreign investment:
The participation is deeper and wider with the strong investment of foreign
enterprises in the Vietnamese e-commerce market. Specifically, in 2018, Japan's SBI
Holdings poured an additional USD 51 million into Sendo; Next, Alibaba also
invested another 2 billion USD in Lazada Southeast Asia and SEA increased by 1,200

37
GROUP 3
billion VND, equivalent to 50 million USD in charter capital for Shopee Vietnam. The
fact that large foreign enterprises pour capital into the market shows the attraction and
development potential of Vietnam's e-commerce market. In addition, the fact that large
foreign enterprises invest in the e-commerce market is also creating competition for
market share between domestic enterprises and foreign enterprises.

6. Logistics services:
In the growth of the e-commerce market over the past time, there has been a great
contribution from the strong development of logistics services, last-mile delivery, and
order fulfillment. Leading e-commerce companies in Vietnam are sprinting to improve
the delivery speed with various strategies to enhance customer experience such as
DHL commits to same-day delivery, Lazada opens fire service speed, Tiki with
"declaration" of delivery within 2 hours, Shopee "commits" to delivery in 4 hours with
Shopee Express service. According to a survey by the E-commerce Association, at
present, Vietnam has more than 50 large and small fast delivery units. This number has
increased tenfold over the past five years. Besides, the trend of online payment also
has strong growth. In 2019, the payment method that online shoppers prefer to choose
the highest is the COD (pay for delivery) method, accounting for 86%; Domestic ATM
cards accounted for 39% and debit credit cards accounted for 17%.

G. Resources and equipment needed for an E-Commerce startup:

As an online business, your startup will be relatively low-cost and won't have any
upfront costs; your most important resource will be your website. As a bare minimum,
you’ll also need to pay for hosting, web development, maintenance, and inventory.
The average costs for eCommerce stores include:

• Professionally built E-Commerce website - $5000 - $10000

• Domain name - $2 - $20 per year

• Hosting - $300 per month

1. Hiring a team and finding vendors:

One of the most attractive aspects of starting an eCommerce company is that it

needs very few people to get the business idea off of the ground. Although you can

38
GROUP 3
employ extra staff to help manage the site, pack products, and ship orders, it’s equally
possible to manage these aspects of the business yourself. a

If you decide you want to build an in-house team, you can expect to pay:

• Web developer :7.000.000 10.000.000vnd/month

• Ecommerce manager: 15.000.000 - 30.000.000vnd/month

• Accounting: 7.000.000 – 8.000.000vnd/month

• Marketing: 8.000.000 -15.000.000vnd/month

Another important consideration is the cost of your inventory. Whether you’re

making the products yourself or ordering them from suppliers, you’ll need to find
vendors that offer high-quality products at a reasonable price.

2. Obtaining insurance and permits for an eCommerce startup:

Even though you’re selling your products online and don’t have a physical store,
you’ll still need several licenses and permits before you can begin trading. These can
include:

 Business license
 Employer Identification Number
 Professional licenses specific to your industry

In most cases, you’ll need to pay a fee to obtain the necessary paperwork. Contact
your local authority to find out the rates in your state.

3. Choosing an integrated payment solution:

As a new eCommerce business, you need to select a payment system that’s fast,
secure, and easy to use. The cost of a comprehensive point-of-sale system can vary,
with some companies taking a flat fee for the service they offer and others charging
per transaction.

Shop around to find a payment processor that meets your needs and that gives you
scope to grow in the future.

For more information on how payment processing works, read our Credit Card
Payment Processing 101 Guide.

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4. Marketing:

Very few shoppers are going to discover your store by accident online. Search
engines use algorithms to rank your website, and where to display it on their results
pages, therefore marketing is an incredibly important part of an eCommerce site.
Marketing costs can vary, but on average, eCommerce businesses spend between 7%
and 12% of their total revenue on marketing. This money goes towards ad campaigns,
social media campaigns, and email campaigns that are designed to boost brand
awareness and drive traffic to your online marketplace.

IN CONCLUSION:
E-commerce is currently a global trend, attracting great interest from traditional,
multinational businesses. It is considered a fertile ground for young businesses to
develop, and in Vietnam, e-commerce still occupies most of the spotlight in the
economic and commercial sectors because it possesses a large market, open business
opportunities, and huge potential. Moreover, Vietnam is rated as one of the fastest-
growing e-commerce markets in Southeast Asia, behind only Indonesia, with the
highest proportion of online shoppers in Vietnam (SEA) at 41%. It can be seen that e-
commerce is the main catalyst to help our economy close the gap, and even integrate
with the world economy.

Data collected from sources:

 https://www.globaldata.com/vietnams-e-commerce-market-reach-us13-1bn-
2020-says-globaldata
 https://www.vietdata.vn/thuong-mai-dien-tu-viet-nam-1262137008(Nguồn: Cục
Thương mại điện tử Việt Nam, iprice.vn,)
 Thống kê về Mua sắm trực tuyến, Thương mại điện tử và Internet (2022)
(webhostingsecretrevealed.net)
 Theo Global web Index, 2017.
 Cục Thương mại điện tử và Kinh tế số (2019), Bộ Công Thương, Báo cáo chỉ
số thương mại điện tử 2019.
 Hiệp hội Thương mại điện tử Việt Nam (2019), Báo cáo chỉ số thương mại
điện tử 2019, Sách trắng thương mại điện tử 2019.

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  Bộ Công Thương - Cục Thương mại điện tử và Kinh tế số (2019). Sách trắng
Thương mại điện tử Việt Nam 2019.
 Hiệp hội Thương mại điện tử Việt Nam (2019). Báo cáo chỉ số Thương mại
điện tử 2019.
 Google và Temasek (2018).

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