The arrival of many supermarket chains and e-commerce platforms is expected to fundamentally change the way the essential retail market operates.

Vietnam is on its way to becoming one of the fastest-growing e-commerce markets in Southeast Asia, second only to Indonesia. The Southeast Asia E-commerce Report 2020 by Google, Temasek, and Bain & Company said that Vietnam’s e-commerce in 2020 will increase by 16% and reach a scale of over 14 billion USD. It is predicted that the average growth rate in the period 2020-2025 is 29% and by 2025, the scale of our e-commerce will reach 52 billion USD.

E-Commerce attracts huge capital

The attractiveness of Vietnam’s e-commerce market attracts strong foreign investment flows. Currently, all four largest e-commerce exchanges, namely Shoppe, Lazada, Tiki, and Sendo, have the participation of foreign investors. For example, at Tiki, many names appear such as VNG Company (Vietnam), Singapore government’s venture capital fund, EDBI; (the second-largest e-commerce company in China, after Alibaba), investors from Korea such as STIC, KIP and from Japan such as CyberAgent Ventures, Sumitomo…

Meanwhile, Shopee received an investment capital of 50 million USD from SEA Company (Singapore). Tencent (Chinese Technology Company) is the largest shareholder of SEA – Shopee’s parent company with a 40% stake. The controlling shareholder in Lazada is Alibaba. In addition to Alibaba, among other shareholders of Lazada is Singapore’s national investment fund Temasek. In Sendo, domestic investors hold nearly 35% of shares, while 16 foreign shareholders own more than 65% of shares

Notably, Alibaba has a global investment strategy, not only the Vietnamese market. According to Hampleton’s M&A report in the second half of 2019, within 30 months, Alibaba has made 8 investments in the e-Commerce sector, including investment deals in Daraz Group (retailer). online in Pakistan), ORDRE (online apparel retailer), Ele. me (food delivery service for online orders in China).

In 3 years (2018-2020), Alibaba has made many investments in Lazada (the leading e-commerce platform in Southeast Asia) with the value of 1.5 billion USD, 790 million USD, and 790 million USD respectively. 2.3 billion USD. In 2018, Alibaba bought an 85% stake in Trendyol, the leading e-commerce site in Turkey, for a cash value of $728 million. In 2017, Alibaba invested $1.1 billion in Tokopedia – the leading e-commerce platform in Indonesia.

Supermarkets go online: Changing the way the retail market operates

Shopee, Tiki, and Lazada are the leading e-commerce sites in Vietnam with a wide range of goods. However, the e-commerce industry in Vietnam currently does not focus on essential needs, which are used every day such as food and beverages. E-commerce is currently serving non-essential, high-value needs such as cosmetics, clothing, travel… To promote online shopping, it is necessary to focus on serving essential products – products that are not consumers use every day. Essentials currently account for 50% of Vietnam’s retail market and 25% of Vietnamese consumer spending.

The market is recording a strong online movement of essential retailers. Mr. Yol Phokasub, Managing Director of Central Retail (CRC), said that the percentage of revenue contribution from online channels is increasing. From the end of 2020, sales from BigC’s multi-platform channels, Nguyen Kim contribute 5% and 8% of total revenue, respectively. CRC’s forms of promoting online retail such as building e-commerce stores on Lazada, Shopee, and Tiki; cooperation with ordering applications Grab, Chopp, Now. Van and Baemin; developing e-commerce combined with social networks like Zalo.

Not only have offline selling points, Bach Hoa Xanh is also expecting and focusing resources to develop the online segment. Mr. Tran Kinh Doanh, General Director of Bach Hoa Xanh, said that in June, this store chain will offer a delivery service within 2 hours, applied from Khanh Hoa to Ca Mau. “We have the densest network of distribution warehouses in the grocery segment today. This forms a logistics system across provinces and cities,” said Mr. Doanh.

After merging the Vinmart store system of Vincommerce, Masan is showing more drastic action in the strategy of bringing essential goods online. In fact, Masan sets a target that in the period 2021-2015, online retail sales will contribute about 25% of total revenue. This is not a small number, as, in 2020, Masan Consumer’s net revenue is more than 22 trillion dongs, with the goal that online revenue will contribute no less than 4,000 billion dongs/year.

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