According to the website bnnbloombere.ca on June 2, e-commerce is estimated by Euromonitor International to account for only 3% of Vietnam's retail market in 2020 - the lowest in Southeast Asia, but the growth potential of this sector is very attractive.

According to Google research, the value of Vietnam's digital economy is forecast to increase to USD 52 billion by 2025, an increase of 29% compared to 2020.

Start-ups backed by Warburg Pincus LLC, Goldman Sachs Group Inc. and JD.com Inc., regional players including Shopee by Sea Ltd in Singapore and even Amazon.com Inc. are also targeting the growing middle class in Vietnam.

Research by Google, Temasek and Bain shows that from 2016 to the first half of 2020, investors poured USD 1.9 billion into Vietnam's online sector.

The Vietnamese government has set a target that by 2025, the online shopping sector will account for 10% of Vietnam's retail sales, of which the proportion in Hanoi and Ho Chi Minh City is up to 50%.

In order to build a more transparent modern economy, regulators are promoting cashless payments for public services and improving the regulatory framework for electronic payments.

The consortium comprising Alibaba Group Holding Ltd. and Baring Private Equity Asia are investing USD 400 million to hold a 5.5% stake in Masan Group's retail arm in Vietnam. Under the agreement announced on May 18, Masan will partner with Alibaba's Southeast Asian e-commerce unit, Lazada.

"The combination of Alibaba's online retail expertise, Lazada's e-commerce platform in Vietnam and Masan's leading offline network will be a powerful catalyst to modernize the retail sector of Vietnam" said Kenny Ho, Investment Director in charge of Southeast Asia at Alibaba.

In January 2021, Vietnamese startup M-Service JSC, part of Goldman Sachs Group Inc. raised more than USD100 million from a group of investors, including Warburg Pincus.

For the first time, Vietnamese people are being cared for in a customer-first retail model, which is common in developed economies, where e-commerce companies maintain a "loyal" customer base in the growing middle class.

Mr. Matthaes, Managing Director of Infocus Mekong Research based in Ho Chi Minh City, said the pandemic has and will continue to boost the online retail industry. In 2020, 30% of Vietnamese buy everything from food to electronics online. Meanwhile, according to Jeffrey Perlman, Managing Director of Warburg Pincus in Singapore, Vietnam's retail landscape is changing faster than that of "mature" markets.

Kylie Nguyen