Retailers in Vietnam are seeking opportunities on e-commerce platforms as omni-channel shopping is on the rise.
Southeast Asia’s leading e-commerce platform Lazada, which sells everything from household items to electronics and smartphones, last month struck deals with a raft of retailers in Vietnam such as FrieslandCampina, Bosch, Lock&Lock, and Realme, in a bid to distribute their products on its shopping platform. Amid an online shopping boom, Lazada’s partner businesses now range from dairy producers and household appliance manufacturers to smartphone brands, as part of their plans to expand their customer base via Lazada’s name and reputation.
Strategic moves
The cooperation between e-commerce platforms and retailers is emerging as a new trend in Vietnam, diversifying product categories for shopping platforms and in return promoting marketing and sales for retailers. “Pushing the expansion of online sales is essential for retailers to approach and attract a larger number of target customers,” said Mr. Jack Kwon, Online Sales Manager at Lock&Lock Vietnam. “The partnership with Lazada is therefore a crucial step for us, especially as Lazada facilitates retailers bringing their products to online buyers in a fast and convenient manner via major programs throughout the year and with sales support tools to help them increase revenue.”
Under its strategic partnerships, Lazada is also committed to distributing products at the most affordable prices on its online shopping mall LazMall. The cooperation between Lazada and FrieslandCampina Vietnam, meanwhile, is valid for three years from 2019-2021, with the former’s dairy brands such as Friso, Dutch Lady, Yomost, Fristi, Ovaltine, and Hoan Hao continuing to be sold on Lazada’s online shopping platform.
Sales of the Friso brand milk powder have grown nearly five-fold in the three years since 2016 and it was the best-selling powdered milk brand at Lazada’s year-end shopping campaign last December. “We want to provide consumers in Vietnam with a fast electronic shopping solution anytime, anywhere, as well as contribute to the development of Vietnam’s e-commerce market,” said Mr. Berend van Wel, General Director of FrieslandCampina Vietnam.
With these strategic moves as part of Lazada’s Joint Business Plan (JBP) campaign for amplifying product categories and customer segments, the e-commerce platform is moving towards its ambition of building an online supermarket model in Vietnam. “Our goal in the future is to develop a dynamic e-commerce ecosystem along with leading local and international partners, based on the ‘3E’ criteria: Empowering, Efficiency and Experience,” said Mr. Max Zhang, CEO of Lazada Vietnam. “We will continue signing cooperation agreement with more partners.”
The Vietnamese subsidiary of lifestyle and household item retailer Miniso also cooperated with Lazada last October to open an online store, LazMall. “Cooperation with Lazada has reaped positive results,” Mr. Ted, General Director of Miniso Vietnam, told VET. “Our products online are always among the best-sellers on Lazada. Lazada is also supporting us in expanding business on e-commerce channels. More attractive promotional programs and continually updating new products are the main keys to achieving solid results at our store on Lazada.”
Growth of 15 per cent between the last quarter of 2018 and the first quarter of this year in Lazada’s online store’s revenue is acceptable under its business strategy. Household products, cosmetics and beauty care, daily essentials, and fashion accessories hold the highest revenue share at the store. “To boost sales on the online channel to 30-40 per cent this year, together with our offline store chain, the store on Lazada is treated as an effective marketing channel in this era of digital technology,” said Mr. Ted. “It allows us to approach more customers in cities and provinces where we don’t have physical stores. Revenue from the online store remains a small part of overall revenue, but I expect it will increase given the online shopping trends of young Vietnamese consumers.”
E-commerce boost
Multi-channel shopping is on the rise and becoming a vital factor helping retail businesses expand sales channels, thereby expanding their reach to customers and enhancing their competitive edge given the online shopping boom in Vietnam. Realizing the trend towards digital transformation, Vietnam’s largest pharmacy store chain, Pharmacity, introduced its e-commerce platform and mobile app Extracare more than a year ago. “We reached 1 million Extracare members in April this year,” said Mr. Chris Bank, CEO of Pharmacity.
With an e-commerce website focusing on selling pharmaceutical products as well as household necessities for all ages and genders, Extracare is a unique app where the company provides dedicated care to customers via a range of features. “Most of our online sales come from the website,” he added. “After eight years of operations, we’ve opened 200 outlets and our rapid expansion of physical stores nationwide is in line with our development strategy for a strong digital technology system.”
Meanwhile, providing technology solutions for many local retailers to transform their business model, Haravan helped dairy giant Vinamilk increase revenue by 10 per cent at its 400 stores around the country. Haravan has designed a system that connects the 400 stores with the online website in order to process online transactions and make delivery in under 24 hours when the customer is within a radius of 1-2 km. Major brands like Biti’s, Juno, The Coffee House, and Couple TX are using Haravan’s platform and have achieved good business results, according to Mr. Huynh Lam Ho, CEO of Haravan.
More than 60,000 small and medium-sized enterprises (SMEs) in Vietnam are now using the Haravan omni-channel platform to transform their business, especially in operations and engagement with customers. In April, Havarvan and VP Bank cooperated to kick-off the “Empower 50,000 Vietnam Businesses” project, with two years free on the hararetail system to help businesses manage sales, inventory management, and customer management, together with support in flexible loan packages for local SMEs.
Identifying potential
The shift from traditional retail to e-commerce demands a new retail model that integrates the advantages of both: omni-channel. With the four main pillars of retail, e-commerce websites, customer care centers, and social networks in the same system, brands will capture many opportunities to approach, interact with, and retain customers. The effectiveness of this trend is shown by 93 per cent more consumers shopping via omni-channels than online shopping and 208 per cent more than in-store shopping, according to the Retail in Vietnam report released by Deloitte in February.
Joining the market quite late, in late March, local diaper brand Mamamy is actively launching its products on leading e-commerce platforms. The brand believes Vietnam is an attractive market for diapers as it is going through a “golden population” period, with a large number of young people. There are currently about 25 million people under 15 years old in the country. On average every day, Vietnam sees 4,300 babies born, and few families are without children under ten years of age. These figures reveal the potential of mother and baby products, including diapers, according to a company representative. Total revenue in this market is estimated at more than $7 billion, with a growth rate of 30-40 per cent.
Vietnamese e-commerce platform Tiki intends to boost mother and baby products through cooperating with partners to provide the products to Vietnamese moms more conveniently. As these products can be quite bulky, the company is also seeking solutions to help mothers shop more easily. Though Tiki declined to reveal its detailed plan, it has expressed a desire to penetrate deeply into segments of potential in Vietnam. Revenue from the diaper segment is only a small proportion of total monthly revenue but is expected to grow handily in the next few years.
After starting out with a focus on the male segment, Lazada Vietnam switched to the female segment last year. According to its sales report, 50 per cent of mom shoppers purchasing diapers and milk have decided to buy online in developed countries, especially in China. Many major brands in diapers and milk recognize this trend and have invested a great deal in Southeast Asia and Vietnam, according to Mr. Zhang.
As such, the two categories are the key factor in the mother and baby segment and part of Lazada Vietnam’s business strategy to develop its supermarket model LazMall, which now has 1,500 brands in Southeast Asia and aims to increase numbers by five-fold this year. Haravan believes the online store model for traditional retailers will bring them higher revenue in the future.
Source: Vneconomictimes