Insight from around the World: Vietnam
STEVEN KAISER, DIRECTOR OF RESEARCH - SOUTH EAST ASIA, EFFECTIVE MEASURE
Vietnam’s burgeoning digital sector is shaping up to possess a lot of ripe, latent opportunity in the next five years as broadband usage grows in tandem with shifts to online transactional consumer behaviour. Currently sitting on 30 million online users, Vietnam’s digital maturation is enjoying more of a behavioural evolution rather than playing the numbers game of its more net-savvy neighbours.
With broadband penetration on the rise and mobile broadband access emerging as a feature trend, online retailing, once established strategically, is poised to make an impact. The trend is supported by the increasing online engagement patterns of the average Vietnamese netizen. Recent studies suggest that average time spent on the internet tripled from 43 to 130 minutes per day between 2008 and 2011.
One of the barriers so far to the emergence on online retailing has been a lack foreign investment in retail services, which continues to be highly regulated. Meanwhile, local retailers are also constrained by capital to invest in robust ecommerce platforms.
However, like the rest of the e-tail world, the group buying phenomena has taken its hold on the Vietnamese market. Since the first group buying sites entered the market in 2010, the concept has worked to whet the appetite of the reluctant online shopper. Moving from serial coupon buys to fully- fledged online shopping is, after all, only a few habitual clicks away.
Meanwhile, local entrepreneurs are seizing on these low barrier to entry ecommerce plays by finding a business opportunity in e-marketplace sites where they sell space on their sites to local retailers who lack their own web presence to bring their product offers to consumers.
This trend is getting traction with technology products and durable appliances, which is understandable given Vietnam's highly rural population. With less than 30% of the population living in major cities, bigger ticket items like technology assets, which have limited availability in physical retail stores, have a natural affinity with ecommerce opportunities.
According to Effective Measure’s data, currently just under 50% of internet users surveyed can access the internet from their mobile phone, with most using their handsets to conduct research in shopping for products. More than 40% of respondents use their mobile phone at least occasionally when researching and shopping for technology, fashion and entertainment products. Price comparison emerges as a key tool for online engagement via the handset, with over a third of users claiming it as "very important".
While the majority of users currently rarely pay for goods via their mobile phone, around a quarter claim that they use vouchers or coupons stored on their mobile phone when shopping.
Another roadblock is the inherently low credit card usage rates among consumers, estimates range between 1-5% of Vietnamese consumers own a credit card. But, with the mobile payment systems like NFC and apps on the horizon, this cultural issue could be eventually conquered by technology.