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EXECUTIVE SUMMARY
In a blue-sky scenario, we estimate Vietnam’s ecommerce sector to achieve 10x growth to reach
US$50bn GMV during 2019-26. The country has deftly handled the COVID-19 crisis and mitigated
potential risks to its economy. At the same time, the mobility constraints introduced during the
short phase of the pandemic have triggered faster digital and eCommerce adoption.
The formal eCommerce leaders are rightly stepping up to cater to this emerging opportunity.
Hence, we expect the sector to go past a narrow base of buyers/ sellers, selected locations,
categories, and way beyond the confines of popular social media platforms like Facebook and
Instagram. A more secular and broad-based growth awaits ahead.
 Strong macroeconomic growth, as COVID-19 comes under control.
COVID curve has remained flat, 0 deaths reported. Vietnam is the
fastest growing economy with size >100 Bn in 2020 as per IMF.
Sustained 6% GDP growth is expected over next 5 years - one
of the fastest growth outlooks in SEA / Globally.
 COVID-19 provides impetus to faster Internet and eCommerce adoption.
Digital funnel is expanding rapidly thanks to COVID with high levels of
user stickiness on digital platforms. This coupled with better variety
and reach of online products is driving up online eCommerce penetration.
 EdTech and HealthTech seen as structural beneficiaries.
COVID has given significant boost to online learning - EdTech
sector is turning focus towards more lucrative K-12 segment,
business models becoming more scalable with focus on content
creation, SaaS offerings etc. Adoption of skill-based courses,
language learning also has picked up strongly among middle
aged adults.
COVID has also instilled more legitimacy to digital health solutions
thanks to government’s NCOVI app. ePharmacy & eConsultation
services are picking up in a big way. Supply crunch for healthcare
services coupled with increasing spend per capita on healthcare
point towards a strong untapped opportunity. Both these sectors
seem set up for fast paced growth over next 3-5 years.
 Formal players gaining share from social media platforms.
The formal eCommerce players have stepped up on their product
& service offerings for buyers and sellers alike. After the initial phase
of getting familiarized with online transactions, buyers and sellers are
now graduating to the formal platforms to get a more seamless
experience and ensure authenticity of products.
 FMCG, electronics purchases surge online.
COVID has served as a strong tailwind to adoption of electronics
which has been a late bloomer in Vietnam (owing to strong offline
supply). FMCG growth has also surged online with GMV expected
to grow 2-3x in 2020. Growth in FMCG & Electronics also expected
to accelerate the shift towards B2C in a predominantly C2C market.
 Buyers maturing with propensity to spend more.
We expect buyers to spend substantially more as the current
pain-points around delivery times, delivery costs, SKU variety
etc. are sorted over the next few years. Higher online spend is
likely to be led by the more mature buyers in top cities like Hanoi
and Ho Chi Minh. Meanwhile newer buyers are expected to join
from the regional areas, where the formal players are expected
to improve their service and network coverage levels going forward.
 Sellers see benefit from online channels, starting to adopt VAS.
Better logistics/payment options, value-added services, and large
transacting customer base leading to better revenue and profit in
absolute terms are expected to be the key pull factors for
transacting on the formal platforms. Accordingly, we expect a
meaningful increase in the number of sellers and the SKUs in the
predominantly C2C platforms in the country. COVID has accelerated
VAS adoption giving seller monetization also a strong push.
 Payments and logistics bottlenecks getting sorted.
Growth of in-house logistics at the leading players - Shopee, Lazada
and Tiki as well as emergence of several 3PL players like NJV,
GHN, GHTK should help in deepening the offline reach of the online
platforms and in reducing the delivery costs and time. Meanwhile,
wider adoption of wallets should reduce any payments-related friction.
 Path to profitability could come sooner.
Lower appetite for high cash burns is likely to incentivize a more
disciplined eCommerce growth in Vietnam, unlike what has been
witnessed in markets like India and Indonesia. Also, Tiki-Sendo
merger brings together a lot of complimentary capabilities resulting
in wider geographic reach, diversified customer base and more
balanced portfolio of offerings across categories, for the merged
entity. This will augur well for sector growth and profitability in the long run.
X to 10X story in 10 key charts
Chart 1 - eCom evolution: Exponential historical growth is only the beginning of the
story
Formal E-tailing stood at $ 5.3 Bn in 2019 with an online penetration of 3-4%, leaving significant
headroom for growth
Strong macro outlook despite COVID, supportive of the acceleration in E-tailing growth.
Chart 2 - Digitalisation journey is set to take off in Vietnam
The already healthy digital funnel is expected to expand further and faster due to COVID
Chart 3 - Positive outlook for EdTech and HealthTech
EdTech market going through marked evolution and has witnessed significant surge in demand,
owing to COVID
Governments usage of digital platforms to combat COVID has instilled legitimacy and trust in
digital health solutions, resulting in rapid adoption
Chart 4 - Formal platforms to see continued traction
Improved portfolio of products and service levels has been driving up the share of formal
eTailing
Chart 5 - Online buyer sentiment very positive
Online Buyer sentiment is highly positive in Vietnam when compared with other geographies with
high level of willingness to continue using online channel for purchases, post COVID
Chart 6 - Sellers expect a recovery in 4 months
Online sellers while being cautious about trade relationship with China, expect a fast recovery of
supply and demand
There has been increased adoption of VAS services among sellers during COVID, and they
expect to further increase usage going forward
Chart 7 - FMCG segment surges online, Electronics also benefits from COVID
tailwind
There has been increased demand for FMCG as well as electronics due to COVID, FMCG to be
the biggest gainer in 2020
Chart 8 - Logistics and Payments flexibilities are fast evolving
Players strengthening their in-house logistics capabilities to serve strong customer need of fast
& timely delivery
With contactless delivery becoming the status quo, digital payments have also seen a boost in
adoption with significant uptake of E-wallets
Chart 9 - Formal eTailing could grow 10X in 7 years
We estimate the formal etailing to have potential to grow 10X in the next 7 years, driven by 35
mn new shoppers, doubling of transactions/year, 1.5x increase in ATV
Chart 10 - Profitability focus to take a detour in 2020, before recovering strongly
Path to profitability to take a slight detour to sustain GMV momentum in 2H’20 - VAS
monetization to improve, however discounts to increase, diluting CM
VIETNAM ECOMMERCE - Leashing COVID, Unleashing 10X growth
VIETNAM ECOMMERCE - Leashing COVID, Unleashing 10X growth

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VIETNAM ECOMMERCE - Leashing COVID, Unleashing 10X growth

  • 1.
  • 2.
  • 3. EXECUTIVE SUMMARY In a blue-sky scenario, we estimate Vietnam’s ecommerce sector to achieve 10x growth to reach US$50bn GMV during 2019-26. The country has deftly handled the COVID-19 crisis and mitigated potential risks to its economy. At the same time, the mobility constraints introduced during the short phase of the pandemic have triggered faster digital and eCommerce adoption. The formal eCommerce leaders are rightly stepping up to cater to this emerging opportunity. Hence, we expect the sector to go past a narrow base of buyers/ sellers, selected locations, categories, and way beyond the confines of popular social media platforms like Facebook and Instagram. A more secular and broad-based growth awaits ahead.  Strong macroeconomic growth, as COVID-19 comes under control. COVID curve has remained flat, 0 deaths reported. Vietnam is the fastest growing economy with size >100 Bn in 2020 as per IMF. Sustained 6% GDP growth is expected over next 5 years - one of the fastest growth outlooks in SEA / Globally.  COVID-19 provides impetus to faster Internet and eCommerce adoption. Digital funnel is expanding rapidly thanks to COVID with high levels of user stickiness on digital platforms. This coupled with better variety and reach of online products is driving up online eCommerce penetration.  EdTech and HealthTech seen as structural beneficiaries. COVID has given significant boost to online learning - EdTech sector is turning focus towards more lucrative K-12 segment, business models becoming more scalable with focus on content creation, SaaS offerings etc. Adoption of skill-based courses, language learning also has picked up strongly among middle aged adults. COVID has also instilled more legitimacy to digital health solutions thanks to government’s NCOVI app. ePharmacy & eConsultation services are picking up in a big way. Supply crunch for healthcare services coupled with increasing spend per capita on healthcare point towards a strong untapped opportunity. Both these sectors seem set up for fast paced growth over next 3-5 years.  Formal players gaining share from social media platforms. The formal eCommerce players have stepped up on their product & service offerings for buyers and sellers alike. After the initial phase of getting familiarized with online transactions, buyers and sellers are now graduating to the formal platforms to get a more seamless experience and ensure authenticity of products.
  • 4.  FMCG, electronics purchases surge online. COVID has served as a strong tailwind to adoption of electronics which has been a late bloomer in Vietnam (owing to strong offline supply). FMCG growth has also surged online with GMV expected to grow 2-3x in 2020. Growth in FMCG & Electronics also expected to accelerate the shift towards B2C in a predominantly C2C market.  Buyers maturing with propensity to spend more. We expect buyers to spend substantially more as the current pain-points around delivery times, delivery costs, SKU variety etc. are sorted over the next few years. Higher online spend is likely to be led by the more mature buyers in top cities like Hanoi and Ho Chi Minh. Meanwhile newer buyers are expected to join from the regional areas, where the formal players are expected to improve their service and network coverage levels going forward.  Sellers see benefit from online channels, starting to adopt VAS. Better logistics/payment options, value-added services, and large transacting customer base leading to better revenue and profit in absolute terms are expected to be the key pull factors for transacting on the formal platforms. Accordingly, we expect a meaningful increase in the number of sellers and the SKUs in the predominantly C2C platforms in the country. COVID has accelerated VAS adoption giving seller monetization also a strong push.  Payments and logistics bottlenecks getting sorted. Growth of in-house logistics at the leading players - Shopee, Lazada and Tiki as well as emergence of several 3PL players like NJV, GHN, GHTK should help in deepening the offline reach of the online platforms and in reducing the delivery costs and time. Meanwhile, wider adoption of wallets should reduce any payments-related friction.  Path to profitability could come sooner. Lower appetite for high cash burns is likely to incentivize a more disciplined eCommerce growth in Vietnam, unlike what has been witnessed in markets like India and Indonesia. Also, Tiki-Sendo merger brings together a lot of complimentary capabilities resulting in wider geographic reach, diversified customer base and more balanced portfolio of offerings across categories, for the merged entity. This will augur well for sector growth and profitability in the long run.
  • 5. X to 10X story in 10 key charts Chart 1 - eCom evolution: Exponential historical growth is only the beginning of the story Formal E-tailing stood at $ 5.3 Bn in 2019 with an online penetration of 3-4%, leaving significant headroom for growth Strong macro outlook despite COVID, supportive of the acceleration in E-tailing growth.
  • 6. Chart 2 - Digitalisation journey is set to take off in Vietnam The already healthy digital funnel is expected to expand further and faster due to COVID Chart 3 - Positive outlook for EdTech and HealthTech EdTech market going through marked evolution and has witnessed significant surge in demand, owing to COVID
  • 7. Governments usage of digital platforms to combat COVID has instilled legitimacy and trust in digital health solutions, resulting in rapid adoption Chart 4 - Formal platforms to see continued traction Improved portfolio of products and service levels has been driving up the share of formal eTailing
  • 8. Chart 5 - Online buyer sentiment very positive Online Buyer sentiment is highly positive in Vietnam when compared with other geographies with high level of willingness to continue using online channel for purchases, post COVID Chart 6 - Sellers expect a recovery in 4 months Online sellers while being cautious about trade relationship with China, expect a fast recovery of supply and demand
  • 9. There has been increased adoption of VAS services among sellers during COVID, and they expect to further increase usage going forward Chart 7 - FMCG segment surges online, Electronics also benefits from COVID tailwind There has been increased demand for FMCG as well as electronics due to COVID, FMCG to be the biggest gainer in 2020
  • 10. Chart 8 - Logistics and Payments flexibilities are fast evolving Players strengthening their in-house logistics capabilities to serve strong customer need of fast & timely delivery With contactless delivery becoming the status quo, digital payments have also seen a boost in adoption with significant uptake of E-wallets
  • 11. Chart 9 - Formal eTailing could grow 10X in 7 years We estimate the formal etailing to have potential to grow 10X in the next 7 years, driven by 35 mn new shoppers, doubling of transactions/year, 1.5x increase in ATV
  • 12. Chart 10 - Profitability focus to take a detour in 2020, before recovering strongly Path to profitability to take a slight detour to sustain GMV momentum in 2H’20 - VAS monetization to improve, however discounts to increase, diluting CM