HANOI, July 31 (Xinhua) -- The Vietnamese e-commerce market, with its lure of bankable opportunities, is not as easy to capitalize on by players without sufficient insights into the competitive online playground.
Vietnam, with a population of some 93 million people, was, just a few years ago, ranked the smallest e-commerce market in Southeast Asia in terms of revenue.
Now it is defining itself as one of the world's most fertile virtual lands for online retailers, with an annual growth rate of 22 percent.
The total revenue of online sales is expected to rise to 30 billion U.S. dollars in 2026 from 1.7 billion dollars in 2016, which represented only 1.5 percent of retail sales in Vietnam, according to the largest local customer-to-customer (C2C) e-commerce platform Sendo.vn.
Global research companies have pointed out certain driving forces behind the Vietnamese market, which are believed to promise success for newcomers, including the rapid growth of middle-income earners and a young population who are "super-connected" to the internet.
Out of 50 million internet users, as many as 23 million Vietnamese frequently shop online, with each internet user spending three hours per day online on average, Nielsen reported in late May.
In addition, 95 percent of Vietnam's urban population have phones, of which 78 percent are smartphones.
However, the traditional shopping habits of Vietnamese people will continue to cap the rise of internet shopping, insiders have said.
Firstly, Vietnamese customers still prefer to pay by cash due to an overriding fear of being defrauded online.
The Vietnamese E-commerce Forum 2017 held early this year revealed that by the end of 2015, only 7 percent of transactions were paid online regardless of the global cashless trend.
"Vietnamese shop online, but they want to pay cash-on-delivery, this is the market's uniqueness," a representative from Sendo.com told Xinhua in a recent interview.
For Hanoian Tran Thi Van, 26, paying after touching the product is crucial.
"I am afraid of being fooled with fake and low-quality items. And I feel confident in the fact that I can return goods after delivery if I don't like them," she said.
Van's demand, which is typical among Vietnamese consumers, has been well-served by local retailer Mobile World Group, particularly by its online shops Thegioididong.com and Dienmayxanh.com.
"These two websites are designed in a very 'pumpkin' way. They do not require your email address to make an order, your phone number alone is enough. And they will reach you via phone in just seconds," said Van, explaining why the retailer is favored among low-tech homemakers.
As a result, Mobile World Group has maintained its top position in the fields of phones, computers and accessories, with an annual revenue growth rate of 200 percent since being launched in 2014, with revenue expected to reach some 292 billion dollars this year.
Secondly, it is somewhat predictable that Vietnamese customers in general are not loyal to any particular brands or items.
"They have relatively more time than money. They won't mind flicking through dozens of pages until they find the cheapest offer," observed Nguyen Ngoc Diep, CEO at Vatgia.com, one of the largest e-commerce platforms in Vietnam regarding consumer access.
According to Vietnam's General Statistics Office, the country's per capita income as of December 2016 was 48.6 million Vietnamese dong (2,215 dollars) per year, up 106 dollars compared to 2015.
"Such a level of income, though rising gradually, guarantees their loyalty neither to brands nor to online retailers," Diep told Xinhua.
As customers may easily switch their online shopping sites, even back to regular shops, Diep surmised that the common strategy of many new websites, which are offering customers below market-price deals in hope of gaining market share, is not applicable here in Vietnam.
In some other markets, according to Diep, it is reasonable for sellers to run their businesses at a loss for a period of time until customers get used to online shopping habits and their brand loyalty increases.
"However, it will take years in Vietnam, long enough to cause unbearable losses that force retailers to give in before businesses actually see positive growth," Vatgia.com's CEO noted, recalling when he had to shut down his Cucre.com website in early 2015.
It was once very common here for many e-commerce platforms to fail, for instance, Foodpanda backed by German startup incubator Rocket Internet or several other projects supported by venture capital fund IDG Ventures.
Closed in November 2015, IDG Ventures' online retail project specializing in trading items for mothers and and babies Beyeu.com, left impressive last words that surprised its fellow rivals.
"E-commerce requires lots of money that many companies will decide to stop burning. Good luck to the rest who are still trying," it wrote in statement announcing its closure, despite the market for products aimed at mothers and babies heating up.
In Diep's view, the market is becoming more and more competitive with the increased presence of new players, both foreign and local ones. "Nevertheless, a leading position is still achievable if a new approach is found," he said.
In case of Vatgia.com and Sendo.vn, two examples of successful e-commerce websites in Vietnam, the "new approach" may be supporting small and medium retailers, for instance, providing them with software solutions to manage their online sales or helping them mobilize shippers.
With its business beginning in 2012, Sendo.vn witnessed the total value of its transactions triple over the years, becoming the largest C2C platform domestically with over 120,000 shops and 10 million items.
The website is set to achieve 1 billion dollars in sales by 2020, said its representative.
