The rising and major players in Vietnam’s ecommerce scene

This is the latest version of the article that was published on December 3, 2020.

As Vietnam grapples with its worst Covid-19 outbreak ever, ecommerce is supposed to be a critical lifeline. A recent RedSeer analysis suggests that within ecommerce, the fast-moving consumer goods segment has emerged as the biggest gainer in the country as a result of pandemic-related restrictions. The space has received an unprecedented boost as consumers flock to online platforms for their grocery needs, lured by speedy delivery and a wide assortment of products.

However, these competitive advantages all but disappear in the case of a total lockdown. One of the most affected areas is Ho Chi Minh City: It has a population of 13 million, and residents have been struggling to get their online groceries due to a system overload. The temporary closure of traditional markets in the metropolis has proven deadly, cutting access to essential groceries for a majority of consumers.

Vietnam’s horizontal ecommerce sector has been locked in a four-way tug of war between local heavyweights Tiki and Sendo and Southeast Asian bigwigs Shopee and Lazada. Like elsewhere in the region, ecommerce players in the country have been rushing to tap into a pandemic-fueled spurt in demand for online groceries.

All major general ecommerce platforms in Vietnam have accelerated their offerings in online groceries. Alibaba recently led a US$400 million investment in Masan Group, which owns supermarket chain VinMart. Naturally, the deal is expected to give the Chinese tech giant’s Lazada a competitive edge in the online groceries segment.

See also: Why Alibaba is betting on Vietnam to reclaim Southeast Asian ecommerce

Homegrown player Tiki has also reportedly secured US$100 million in a bid to stay competitive in Vietnam’s ecommerce race, according to DealStreetAsia. To expand its financial services, which are currently rather limited, Tiki has also struck a partnership with global insurance firm AIA.

As a whole, the industry is experiencing strong headwinds in the form of tighter rules for online shopping platforms in Vietnam. A controversial regulation that would require ecommerce platforms to fulfill tax duties on behalf of sellers has been delayed just days before it came into force only because of the severity of the current Covid-19 wave in the country.

Tech in Asia remains bullish on the opportunities in niche areas like social commerce and business-to-business commerce that are presented in Vietnam. Social commerce firms – or more specifically, community group-buying startups such as Mio (which in May announced a US$1 million fundraising) – are joining the global quest to become the next Pinduoduo.

See also: Indonesia’s unicorns have been avoiding community group buying, but the clock’s ticking

Verticals such as beauty and electronics are also worth noting. Last October, Indonesian beauty startup Sociolla announced its expansion to Vietnam as its first international foray after raising US$58 million in series E funding. Since then, the company has opened two offline stores in the country. Mobile World, a local retailer that pioneers the offline-to-online model, continues to hold the pole position in the electronics segment, clocking a 26% increase in net profit during the first half of this year.

Vietnam’s ecommerce sector is predicted to be worth US$29 billion in terms of gross merchandise volume by 2025, according to the Google, Temasek, and Bain & Company 2020 report on Southeast Asia’s digital economy. The country ranks second only to Indonesia, where the industry is predicted to reach US$83 billion in GMV.

However, it remains to be seen how online marketplaces in Vietnam can continue diversifying their offerings and sway consumers away from traditional outlets when the pandemic subsides.

Here’s a look at how funding in the space has been going lately:

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