Vietnam’s e-commerce market tipped to grow second half of the year

In case the Covid-19 pandemic continues to pose major risks to the economy in the final quarter of 2020, Vietnam’s e-commerce market could be severely impacted, seeing a revenue loss of US$2.6 billion from the previous estimate to US$11 billion this year, according to a report from the Ministry of Industry and Trade (MoIT).

Such a figure would indicate a revenue growth rate of 13% year-on-year, stated the MoIT.

In a more positive scenario, the MoIT expected revenue from e-commerce activities to expand by 20% year-on-year in the fourth quarter, resulting in a combined revenue of US$12 billion for 2020.

In 2019, revenue from online sales of business-to-consumer e-commerce, known as B2C e-commerce, stood at US$10.08 billion, accounting for 4.9% of total goods retail sales and services revenue, while the rate of the population shopping online reached 42%.

This led to the e-commerce revenue projection of US$13.6 billion in 2020. However, the Covid-19 pandemic has dealt a major blow to the forecast. During the first four months of 2020, 57% of firms operating in the e-commerce market saw their revenue grow less than 30% year-on-year while 24% reported an increase of at least 51% in revenue.

Revenue growth in e-commerce in the January – June period was estimated to decrease by 6 percentage points year-on-year, despite a 25% surge in the number of transactions.

In May, the government released a national plan for the development of e-commerce by 2025, which targets revenue from B2C e-commerce to reach US$35 billion, or a growth rate of 25% per annum and to account for 10% of total goods retail sales and service revenue.

Meanwhile, the government expects the rate of the population using related services, including non-cash payment services, at 50%, and through intermediary payment services at 80%, along with 55% of the population to shop online with average spending of US$600 annually by that time.

Notably, Hanoi and Ho Chi Minh City would make up half of e-commerce revenues in the next five years.