As it is quite evident by now, the COVID-19 pandemic has forced several business verticals across the globe to change and adapt to newer circumstances to serve customers and more importantly, stay in business. This adaptation has taken time, resulting in lower economic growth. The rapid digitization and acceptance of technology, fueled by the desire to stay at home and perform contactless delivery has pushed both the consumers and businesses to look for alternative touchpoints to complete transactions. Hence the already popular trend towards implementing e-commerce solutions became a necessity. That’s not to say that e-commerce did not exist prior to the pandemic, but the adoption was definitely accelerated due to the pandemic.
1. Journey of E-commerce in Vietnam
In recent years, the Vietnamese market has been steadily warming up to e-commerce adoption, many traditional brick and mortar giants have either started considering or implemented an e-commerce service to make shopping convenient for their users. However, this change was guided because of the rapid adoption of mobile and internet among the millennials among other age groups. Added to that, several dedicated e-commerce platforms have emerged as well, along with a slew of delivery and logistics apps to help businesses deal with the last mile and door delivery. But the market response to all these was limited to the early adopters only. All the players were competing for market share only among the digitally savvy population, but a large chunk of the population remained untapped.
However, with the strike of the pandemic, amidst the inevitable lockdowns and restrictions, even the traditional brick and mortar consumers increasingly went online, leading to the e-commerce boom. Businesses had to speed up their digital transformation. This became evident by the fact that the top e-commerce players in Vietnam not only remained unaffected but also grew exponentially compared to their traditional counterparts. The demand was driven by the pandemic, and it provided opportunities for several other e-commerce retailers and helped them to emerge to a whole new level. Under these circumstances, both large and small businesses made digital transformation their topmost priority.
The adoption of e-commerce and digital transformation is more than a fad or a trend, it is here to stay. E-commerce, when implemented correctly, has its own set of varied advantages, both in long and short term, including customer retention and loyalty along with centralized warehousing. Let’s now investigate the effects of the global pandemic on the e-commerce landscape in Vietnam and understand how various e-commerce retailers fared, with the increased consumers’ shopping activity online.
Journey of E-commerce in Vietnam
2. Consumer Demand-Driven E-Commerce
The lockdown announcements led to panic buying amongst the consumers for stocking up essential goods at supermarkets. Most people must stay home for days to prevent the spreading of the infection and the government needs short-term solutions to avoid facing the shortage of food supplies.
Also, purchasing non-essential goods such as electronics, white goods, furniture, gifts, clothing, home decor, etc at stores became a riskier option, across several waves of the pandemic. Hence retailers turned towards online channels for the survival and safety of the consumers.
More importantly, it created a perfect stimulus to sell groceries and fresh products directly to consumers using e-commerce platforms. It eliminated middlemen, stockpiling, and more importantly storage creating better margins for producers and fresh products to consumers, who are willing to pay an extra buck to get fresher supplies. Although it might appear to be a temporary trend to address the situation, it has set a new habit of online shopping and may well have changed the habits of the consumers of Vietnam permanently, because the pandemic has reiterated the importance of living a healthy lifestyle, at all costs.
Consumer demand-driven e-commerce in Vietnam
3. The Positive Impact On E-Commerce Retailers And Other Digital Businesses
As more and more consumers started relying on online stores to meet their daily necessities of F&B and FMCG, the growth story of e-commerce in Vietnam aided the growth of other digital-first services such as mobile wallets and other related payment solutions.
The surge that started in late 2020 and continued across the year 2021, was witnessed not only in the bigger cities of Hanoi and Ho Chi Minh City but also in other regions including the rural areas.
The top 3 e-commerce players in Vietnam – Lazada, Tiki, and Shoppe witnessed a steady growth between quarters amidst the pandemic. YouGov Vietnam report stated that 4 out of the 10 top brands are e-commerce companies and retailers. Also, it’s interesting to note that the 3 retailers (Uniqlo, Bach Hoa Xanh, and Concung) connected to online channels and 3 Mobile wallet brands (Airpay, Momo, and Viettel Pay), are amongst the top 10 best-improved brands alongside the e-commerce giants Shoppe and Tiki.
This goes to show the amount of unprecedented COVID-19 pandemic brought across the e-commerce industry and associated retailers, delivery services and mobile wallet companies in Vietnam.
Positive impact on E-commerce in Vietnam
4. How Businesses Had To Adapt
4.1. Supply Chain Transformation
With customers getting used to the ease of purchasing online, it’s essential for companies to swiftly organize themselves to encash the opportunity. Logistics scarcity in pandemic hit cities due to restrictions and regulations by the authorities and delayed shipping were the challenges faced by the e-commerce companies, but this challenge was short-lived. Many hyper delivery, last-mile delivery, and logistics businesses that were labor-centric, started to adopt digital platforms in supply chain to address this challenge. Creating more opportunities that will change the supply chain methods in Vietnam forever.
Supply chain transformation
4.2. Digital Wallets
Meanwhile, even money transfers witnessed a major change, cashless transactions and e-wallets picked up as well, topping the charts. 51% of customers started preferring cashless transactions and set a trend that will change Vietnamese e-commerce for good. Hence, online platforms that offer a range of payment options, are gaining more traction and popularity.
4.3. Mobile Apps
According to YouGov’s survey, 66% of the e-commerce activity was registered from mobile devices thanks to the increased use of smartphones. For companies, it means they should optimize their platforms to mobiles and even build mobile apps, to maximize their reach.
Businesses took a more agile approach to this transformation. They used ready-to-build solutions followed by continuous testing to ramp up their online presence to grab the opportunities ahead of the competition. This meant instead of going with a set long-term plan, of optimizing the website, app, and more, they simply went live with whatever media was ready and optimized, then pushed a series of updates and options so that they could stay in the race. Because of an expected surge in customer grievances, they even trained the customer service and call-centre executives to address them accordingly. In the post-pandemic world, they can adapt these executives to facilitate contactless shopping at stores as well. It will be a hybrid model that will be digitally-driven but doesn’t take away the experience of visiting the physical stores.
Mobile apps for E-commerce
4.4. Omni-Channel Retail Development & Digital Transformation
Every business digital ecosystem now includes websites, e-commerce platforms, mobile apps, and more. They also have started adopting alternate channels to address customer complaints and issues. These include AI-driven chatbots and ML-based hotlines.
With the technological developments and digitization, online retail is set to become a powerful and revenue-generating channel for businesses of all sizes. So, it has become a norm for several retailers to adopt digital transformation to increase their reach through online channels, to make themselves available for consumers from all walks of life.
Vingroup’s VinID app has been a success story of digital commerce. Lotte Mart launched a mobile app as well, enabling consumers to shop for essential goods and get them shipped to their doorstep. Even the food production companies are now looking to push sales through online channels. Recently, Vissan Foods has launched an e-commerce platform and has set ambitious targets for the upcoming quarters.
Omnichannel retail development
5. Choosing A Digital Transformation Partner
With all this happening, retailers must pay attention to choosing their digital transformation partner. Because, as we’ve mentioned earlier, starting in 2021, e-commerce and digital sales have started to contribute a significant amount of the revenue to every business. This trend will continue for decades to come. Having a defined and definitive User Experience (UX) is the key to ensure a good customer experience. If customers have an unpleasant online shopping experience, it might also affect your overall brand persona. Hence, your partner must not only employ the right set of latest technologies but also use these tools in the right way to maintain your brand standards across the channels.
Choosing a digital transformation partner
The e-commerce and online retail industry growth continued through the growth trajectory, despite the effects of the pandemic. There are several benefits of e-commerce that include gaining valuable consumer insights and trends that will not be available otherwise. Also, e-commerce coupled with logistics can enable you to attract customers from places that are far beyond your physical stores. Furthermore, websites and apps can be quickly changed and optimized to respond quickly to the market needs, creating customized campaigns for every user. This is a boon for both established and emerging brands because it enables them to focus on customers rather than retailers that will reap the long-term benefits.
If you are a business, looking to expand your reach and reduce operational costs, then building high-performance e-commerce websites and mobile apps that are light, fast, and user-friendly, is the smart thing to do.
Get in touch with Kyanon Digital today, for a personalized consultation on effective e-commerce development solutions, that fit your business model, and turn profits your way. Start your e-commerce journey with us now!