Vietnam E-Commerce: Structurally Different!
3PL dependence has remained relatively high as players optimise their in-house logistics spend.
1. Formal E-Commerce platforms grow alongside Social Commerce
Vietnam’s e-commerce market structure is very different from neighbouring Indonesia and many other developing countries. Despite the continued penetration of the formal e-commerce, the share of social commerce has not declined to the levels seen in the peer countries.
Social networking platforms have been ingrained in the daily lives of Vietnamese people. As a result, they use these platforms for various activities starting from online education to shopping. One key driver is the flexibility offered by social networking platforms (to shoppers) is to develop a rapport with the sellers and add an informal element to the transaction. This aspect has not been fully cracked by the formal e-commerce platforms.
2. Online category mix: Low on electronics, but high on e-Grocery
Within formal e-commerce, the share of electronics has remained relatively low versus other developing countries. However, FMCG (including BPC) has continued to grow from strength to strength in 2020. FMCG has emerged as the biggest gainer driven by Covid-19 induced lockdowns. While in a post lockdown scenario people went back to offline stores for essentials needs, FMCG continued to be higher than pre-Covid levels. On the other hand, online fashion has been adversely impacted with spend shifting towards low-value fashion products.
Category Mix of Vietnam eCommerce, USD Mn , Quarterly
3. Consumers are driven to online platforms for grocery needs by wider assortment and fast delivery
With FMCG emerging as the biggest gainer, wide assortment and fast delivery emerged as the top decision-making criteria for consumers. Platforms like Grab and BHX have performed well in this regard and have delivered consumer delight by providing a wide variety of products and with shorter delivery times.
Key consumer decision drivers for online grocery shopping, N=100
4. Unlike other E-commerce markets, 3PL dependence has remained relatively high as players optimise their in-house logistics spend
In Vietnam, the share of captive logistics has been relatively stable in the last few years. Most players have relied on 3PLs to meet their logistics needs. This is because of meaningful operational challenges in managing in-house logistics outside the top 2-3 cities. This approach has allowed the platforms to optimise their investments. Directionally, we see various platforms taking a more gradual approach towards building logistics capabilities.
Total E-commerce Parcel Volume by logistics type, In Mn