How to Enter the Vietnamese E-Commerce Market 🇻🇳

Something is happening in Vietnam that’s making the nation a particularly attractive place for expansion at the moment. The economic slowdown happening in most of the world is not affecting the fast-growing markets of Vietnam in the same way.

 While it’s true that growth slowed down in 2023, when the economy grew by 5.05% instead of the projected 6.5%, the nation faces serious potential for growth in 2024 and beyond. In spite of slowed growth, foreign direct investment and government reform continue to bolster the nation forward.

The momentum that began building during the pandemic seems to have been a catalyst for growth that not even a landslide of inflation and geopolitical issues could deter.

This sustained surge of growth in the region means that Vietnam is an excellent choice for foreign investment, and as a new market to enter as an e-commerce business. Many foreign e-commerce retailers are shifting their focus towards Vietnam to take advantage of the growth opportunities.

However, there are still challenges imminent. Whether you are just beginning to sell to Vietnam, or you have a well-established market in the nation, there are some key elements you’ll need to understand in order to succeed in the region, including:

• Trends and preferences in the region
• The logistics infrastructure in Vietnam
• Challenges and opportunities for e-commerce retailers

Read About CBIP's Full-Service Adaptable Logistics Solutions

E-commerce trends and preferences

Buyer preferences

The top e-commerce marketplaces in Vietnam are Shopee, Lazada, Tiki, Tiktok Shop, and Sendo. It’s important to have a presence on at least a couple of the top marketplaces, plus your own website specially tailored to Vietnamese shoppers.

Mobile e-commerce is key, and smartphone usage is the backbone of the e-commerce growth in the region.

Speaking of technological access, online banking and payments have made leaps and bounds in recent years in Vietnam. However, like other countries in the region, some shoppers still prefer to use the cash-on-delivery method to pay for goods bought online. 

Fast-growing young population

The population is growing and young. A growing population under forty means more tech-savvy consumers - an excellent statistic for e-commerce sellers, who rely on tech-savvy internet shoppers to make sales. 

Lack of space in Vietnam cities as populations grow quickly means retail stores are no longer practical. Selling and buying online makes more sense in a cramped city filled with young people.

Logistics infrastructure

Although Vietnam is likely the most developed nation in terms of logistics infrastructure among the ASEAN nations, the country still has some work to do to create better logistics facilities to support its fast-expanding e-commerce fulfillment network.

On the positive side, the nation has seen and continues to see high rates of investment into logistics-related areas — some of the highest rates of FDI in the world currently, in fact.

However, the nation still has some gaps, particularly when it comes to e-commerce fulfillment and the last mile of fulfillment.

RELATED: ASEAN Series: How To Enter The Philippine E-Commerce Market

Foreign & government investment

In 2023 the Vietnamese government prioritized investment in transportation infrastructure, including rail, inland waterways, air, and highway transport. 

The construction of various expressways is a major example of this progress. The growth in transportation infrastructure means that logistics and last-mile fulfillment are easier than ever, and improving still.

A 2022 report by Google puts Vietnam as one of the top three countries attracting e-commerce investment. Foreign investment slowed in 2023 but continues to be a main driver and source of growth for the country's manufacturing and logistics sectors.

Last-mile still fragmented

While e-commerce is booming in the country, the last mile of fulfillment is still far from perfect. Moving within the major cities poses little issue, but outside of that things get a little hairy. Moving outside of the cities is challenging, as various parts of the country have developed and urbanized at very different rates.

This means moving from town to town you will have to deal with a lack of good roads and inadequate warehousing facilities.

Other issues stemming from poor infrastructure and facilities, such as parcel theft and loss, are also prevalent in some areas.

Challenges and opportunities

As growth stagnates in other parts of the world, many e-commerce retailers are looking to Vietnam as the kingpin in their Asia growth strategy. Between the US and Vietnam alone, trade in the past ten years has grown more than 360%.

Trade conditions could not be better, particularly for the many countries with which Vietnam has bilateral trade agreements. The government, the growing young population, and foreign businesses all seem to be creating the perfect environment for e-commerce growth in the region.

However, there are still some negative aspects to contend with. Despite the positive nature of a government invested in improving infrastructure and encouraging international trade, Vietnam still suffers from a slow, corrupt bureaucracy. 

While the nation is one of the best in terms of corruption in SE Asia, overall, corruption remains an issue for those trying to do business in the nation. The northern and southern parts of the country can be quite politically different as well, resulting in confusing commercial laws and overly complicated tax structures.

And, like many nations in the region, the country has yet to make real strides in meeting its stated goals to transition to clean energy.

Work with a 4PL who can make your Vietnam expansion seamless

What do you do when the opportunity is there, but you aren’t sure how to build business relationships in a faraway market?

 No matter how far away you are, if you are entering the Vietnamese market without any logistics connections in Vietnam, you will have a hard time making sure your supply chain is effective.

That’s where we come in; we have partners located right there in Vietnam, everything from warehouses and fulfillment centers to trucking companies. All these partners are in our network, meaning we work with them, connecting all their software and technologies to ours, in the same logistics ecosystem, but we do not own them.

The partner network we have as a 4PL provider gives us, and you as our e-commerce retailer client, the flexibility needed to design the optimal supply chain for your business.

If you are curious about how working with CBIP Logistics can help you scale your business into Vietnam and beyond, give us a call for a complimentary logistics consultation.