ecommerce in vietnam

E-Commerce in Vietnam: Overview 

Vietnam’s economy is swiftly transforming with the surge of the digital revolution, placing ecommerce in Vietnam at its forefront. As technology permeates society, traditional commerce methods are giving ground to innovative digital platforms, altering business operations and consumer transactions. This article looks into Vietnam’s dynamic e-commerce landscape and unravels Vietnam’s digital economy tapestry, exploring the forces propelling its ecommerce sector into a new era of unparalleled opportunity and transformation. 

E-Commerce in Vietnam: Global Market 

The e-commerce market is facing contraction due to several factors, primarily inflation and the lingering effects of the pandemic. High inflation has diminished purchasing power, prompting consumers to become more cautious with their spending and prioritize saving. 

Moreover, rising fuel prices have led to increased shipping costs, offsetting the cost-saving advantages of online shopping. While the pandemic initially drove a surge in online shopping out of necessity, the return to normalcy post-pandemic has seen a shift back to traditional offline shopping habits, driven in part by the desire for human interaction and the perceived benefits of physical retail experiences. 

Corporate Tax Rates for E-commerce Business in Vietnam

In Vietnam, the standard Corporate Income Tax (CIT) rate for enterprises, whether local or foreign, is 20%. However, various incentives and policies exist that may reduce this rate for foreign investors and certain local businesses, as detailed in our tax incentives guide. CIT is applicable to business entities across all economic sectors, including professional organizations, foreign corporations engaged in production and trading activities within Vietnam, and other entities. 

E-Commerce in Vietnam: The Heavy Hitters 

Tik Tok, Shopee, Lazada, and Tiki are prominent social ecommerce platforms in Vietnam. Shopee offers a seamless shopping experience with integrated social features, while Tiki emphasizes a wide product range and social media integration. Sendo focuses on creating a social shopping experience through user-generated content and interactive features. Lazada incorporates social elements for user interaction and product reviews, and Leflair specializes in discounted branded products, utilizing social media and referrals to engage its community of bargain-seeking shoppers. 

E-Commerce in Vietnam: Preferences 

In Vietnam, electronic devices like smartphones and laptops are highly sought after due to the increasing reliance on technology for communication, work, and entertainment. Food and cosmetic products also hold a significant share of the e-commerce market, driven by the convenience of online shopping and home delivery, which is particularly appealing to busy urban dwellers. 

Additionally, home and lifestyle products, including furniture, decor, kitchen appliances, and fashion accessories, are popular among Vietnamese consumers who appreciate the convenience, competitive pricing, and variety offered by ecommerce platforms for improving their homes and lifestyles. 

E-Commerce in Vietnam: The Influence of China on E-Commerce Platforms 

China leads the global e-commerce market due to its vast population and key factors such as widespread internet and smartphone usage, growing consumer confidence in online shopping, and diverse online payment options. Between 2022 and 2027, the country’s ecommerce sector is projected to expand by almost 13%. Alibaba Group dominates with platforms like Taobao, a C2C platform, and Tmall, a B2C platform, capturing 63 percent of the market share. 

ECommerce in Vietnam: The Vietnam and China Avenue 

Leveraging China’s dominant e-commerce platforms like Alibaba’s Tmall Global and JD Worldwide offers foreign investors a robust infrastructure for market entry into China and Vietnam. With access to a vast customer base, these platforms enable businesses to showcase their products and expand their reach efficiently. For instance, international brands on Tmall Global initially tap into the Chinese market before leveraging cross-border ecommerce to expand into Vietnam. 

China’s advanced logistics and supply chain networks serve as a regional hub, benefiting businesses engaged in cross-border e-commerce between China and Vietnam. The well-established shipping routes and efficient port services ensure swift and reliable transportation of goods, optimizing supply chain management and timely delivery to Vietnamese customers. 

Efficient customs clearance processes in China streamline cross-border ecommerce operations, reducing bureaucratic hurdles and paperwork. Simplified procedures expedite customs clearance, minimizing delays and ensuring a smooth flow of products between China and Vietnam. Additionally, China’s extensive network of warehouses and distribution centers strategically located in Vietnam facilitates efficient inventory management and order fulfillment, enhancing delivery efficiency and customer satisfaction. 

E-Commerce in Vietnam: China’s Pilot Zones 

China has approved 105 comprehensive pilot zones for cross-border e-commerce (CBEC), excluding Tibet, to boost import and export businesses, particularly focusing on increasing exports. These zones aim to capitalize on China’s enhanced manufacturing infrastructure to export higher-value products and diversify trade connections, aligning with the One Belt and One Road Initiative (OBOR/BRI). Foreign investors can utilize this policy support to navigate regulatory frameworks, streamline customs procedures, and benefit from preferential trade policies, facilitating entry into the Vietnamese ecommerce market. 

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1. What are the major challenges for e-commerce in Vietnam?

Challenges include underdeveloped logistics, payment security concerns, intense competition, and the need for continuous adaptation to changing consumer behaviors.

2. How is the Vietnamese government supporting e-commerce growth?

Government support includes policies for digital infrastructure development, facilitation of cross-border transactions, enhancing online payment security, streamlining regulatory procedures, and investing in digital literacy programs.

3. What are the emerging trends in Vietnam's e-commerce landscape?

Emerging trends include the rapid rise of mobile commerce, the growth of social commerce platforms, the integration of AI and big data analytics, and the expansion of niche e-commerce segments like health and beauty products.

4. How has COVID-19 affected e-commerce in Vietnam?

The pandemic has accelerated e-commerce growth in Vietnam as consumers increasingly rely on online shopping due to lockdowns and social distancing measures, prompting businesses to enhance their digital presence and adapt operations to meet changing preferences.

5. What are the key factors driving the rapid growth of e-commerce in Vietnam?

Key factors include increasing internet penetration, rising smartphone usage, growing digital literacy, an expanding middle-class population, and the convenience and accessibility offered by online shopping platforms.