Amazon is on its way to set foot in the emerging e-commerce market of Vietnam, while facing fierce competition from its Asian rivals.
In March, Amazon confirmed its cooperation with Vietnam E-Commerce Association (VECOM), an NGO and industry group composed of 172 member businesses.
Amazon’s remarks centered around their interest in helping Vietnamese small and medium businesses export their products through its global online platform.
According to Business Insider, the partnership with VECOM may be the first step towards Amazon gaining an understanding of Vietnamese consumers before launching its full marketplace, as it did in Singapore, the first Southeast Asian country Amazon stepped into in July 2017.
Gijae Seong, head of Amazon Global Selling in Singapore, appeared in March at the Vietnam Online Business Forum 2018 to discuss with local businesses how to use Amazon to sell globally.
Amazon and VECOM’s cooperation was welcomed by Vietnamese businesses and consumers alike. VECOM’s president considered the support for exporting Vietnamese products globally a positive development. Meanwhile, consumers were enthusiastic about the prospect of being able to use Amazon to buy international products in the near future.
Alibaba to Respond
Less than one week after Amazon announced the partnership, Chinese billionaire Jack Ma’s e-commerce giant Alibaba increased its investment in Lazada, one of the largest e-commerce platforms in Southeast Asia.
Alibaba spent US$1 billion to buy 51 percent of shares in Lazada in April 2016, and another US$1 billion in 2017 to increase its total shares to 83 percent.
The most recent investment, a whopping US$2 billion, was announced on March 18 along with the decision to name Lucy Peng, one of Alibaba’s founders, as Lazada’s executive in chief.
According to VnEconomy, after two years of operation Lazada has become the top e-commerce website in Vietnam by revenues in 2014, taking up 36.1 percent of the country’s e-commerce market.
Competition and Growth
Vietnam’s e-commerce market is one of the fastest growing in the world.
According to market research firm Kantar Worldpanel, Vietnam’s e-commerce revenue increased 23 percent to US$5 billion in 2016, accounting for three percent of total retail revenue. The country’s e-commerce annual revenue is forecasted to reach US$10 billion by 2020, accounting for five percent of total retail revenue.
Other than Alibaba, China’s tech and investment giant Tencent also has a lot of interests in the Vietnamese market.
Financial Times reported that Tencent holds a 39.8 percent stake in Singapore-based company Sea, an enterprise that creates e-commerce platforms and services. One of Sea’s assets is online retailer Shopee, Lazada’s biggest competitor in Southeast Asia. Foody.vn, a restaurant review, booking and food delivery services platform, is also owned by Sea. In addition, Tencent is a shareholder of Chinese e-commerce company JD.com and Vietnamese tech firm VNG, a group which invested heavily in local e-commerce site Tiki.vn in January.
As Tiki.vn’s CEO Tran Ngoc Thai Son told an audience at a conference in Ho Chi Minh City in December 2017, the appearance of international e-commerce giants is proof that the Vietnamese market has a lot of potential for growth.
It remains to be seen whether Amazon will be successful in getting a foothold in Vietnam as it did in Singapore. Although Chinese competitors may have an advantage in being more familiar with the local infrastructure and customer dynamics, Amazon’s strong global presence and high brand recognition is friendly to Vietnamese consumers who have a demonstrated, strong interest in services with a well-known brand.
By Minh Hieu