Rising Internet and smartphone penetration coupled with a large young population will propel Vietnamese e-commerce market. It is project to grow at a compound annual growth rate (CAGR) of 16.3% from VND218.3 trillion (US$9.4bn) in 2019 to VND399.5 trillion (US$17.3bn) in 2023, according to forecast from GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Vietnam Cards & Payments: Opportunities and Risks to 2023’, states that the country’s e-commerce market has doubled during the past five years with total online spending increasing from VND90.1 trillion (US$3.9bn) in 2015 to VND218.3 trillion (US$9.4bn) in 2019.

Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “While the traditional payment instruments such as cash, cards and bank transfers are widely used for e-commerce purchases, consumer preference for alternative payments is on the rise. There is a growing demand for faster and convenient payment means, especially among tech-savvy millennials.”

According to GlobalData’s 2019 Banking and Payments Survey, cash is still the most preferred payment mode for e-commerce purchases in Vietnam, accounting for 35.6% in 2019. Alternative payment solutions are gradually gaining ground and accounted for 15.5% share. MoMo is the most preferred alternative payment solution in Vietnam, followed by PayPal.

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Strong growth has prompted global companies to invest in Vietnamese e-commerce companies. In 2018, e-commerce company, Tiki received US$5.3m and US$44.0m funding from VNG Corporation and Chinese investor JD.com, respectively. In the same year, another company Sendo secured US$51m from SBI Group (a Japan-based financial services company) and other investors. Furthermore, Chinese e-commerce giant Alibaba invested an additional US$2bn in Lazada, one of the leading e-commerce companies in the country.  

Reddy concludes: “Improving payments infrastructure, coupled with rising consumer confidence in online shopping and the availability of convenient payment solutions are expected to further drive e-commerce growth in Vietnam.”