About This Source - Bloomberg QuickTake: Now
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Bloomberg Quicktake: Now published this video item, entitled “Amazon, Alibaba Want a Piece of Vietnam’s Booming Online Economy” – below is their description.
E-commerce giants like Amazon and Alibaba want a piece of Vietnam’s booming online market. Vietnam’s digital economy is forecast to grow to $52 billion by 2025, an annual 29% increase from 2020, according to a study by Alphabet Inc.’s Google, Temasek Holdings Pte and Bain & Co.
Startups backed by Warburg Pincus LLC, Goldman Sachs Group Inc. and JD.com Inc., regional players including Singapore’s Sea Ltd.’s Shopee and even Amazon.com Inc. are also targeting the country’s growing middle class. Between 2016 and the first half of 2020, investors funneled $1.9 billion into Vietnam’s online sector, the study by Google, Temasek and Bain showed.
“Vietnam is at the beginning of becoming a digitalized society with a young population that loves technology,” said Ralf Matthaes, managing director of Ho Chi Minh City-based Infocus Mekong Research. “So all these companies are tripping over themselves to offer these services.”
The government targets online shopping to account for 10% of Vietnam’s retail sales — and as much as 50% in Hanoi and Ho Chi Minh City — by 2025. Officials want to reduce cash payments to create a more transparent modern economy by increasing cashless payments for public services and improving the regulatory framework for e-payments.
A consortium led by Alibaba Group Holding Ltd. and Baring Private Equity Asia is investing $400 million for a 5.5% stake in Vietnamese conglomerate Masan Group Corp.’s retail arm. As part of the deal announced May 18, Masan will team up with Lazada, Alibaba’s Southeast Asia e-commerce unit. “The combination of Alibaba’s online retail expertise, Lazada’s e-commerce platform in Vietnam, and Masan’s leading offline network will be a strong catalyst to modernize Vietnam’s retail landscape,” Kenny Ho, Alibaba’s head of investment for Southeast Asia, said in a statement.
M-Service JSC, a Vietnamese startup backed by Goldman Sachs Group Inc. that operates the MoMo payment app, in January raised more than $100 million from a group of investors including Warburg Pincus.
For the first time in their shopping lives, Vietnamese are being wooed with customer-first retail common in developed economies as dozens of e-commerce companies build loyalty among the nation’s growing middle class.
Digital retailers are engaged in a courtship with shoppers wary of fraud and stores that traditionally eschew return policies. “Vietnamese are distrustful of what they can’t see,” said Hanoi-based economist Nguyen Tri Hieu. “Ordinary people need to see what they are buying. They need to smell it, touch it.”
So e-commerce sites offer promotions — Shopee calls them “hunting hours” — with price cuts on everything from AirPods to Samsung washing machines. E-wallet startups provide vouchers. Tiki has an up-to-30-day return policy.
Hanoi shopper Nguyen Thi Kim Chi, 31, who works at an entertainment media website, said e-commerce’s customer focus and 70%-off flash sales won her over. Online ratings of products and services empower consumers, she said.
The Covid-19 pandemic gave digital retail a boost with 30% more Vietnamese buying everything from food to electronics online last year, Matthaes said. A new virus surge sweeping across the country could further enhance e-commerce as Ho Chi Minh City, Hanoi and other regions experience virtual lockdowns.
Vietnam’s retail landscape is shifting faster than mature markets did, said Jeffrey Perlman, Warburg Pincus managing director in Singapore who overseas Southeast Asia and Asia Pacific Real Estate. Its move to modern retail skipped catalog shopping and stand-alone department stores as malls began sprouting largely over the past decade.
Tiki is the nation’s largest homegrown e-commerce site among dozens of local online shopping platforms, including some operated by retailers that have set up their own websites. Software engineer Tran Ngoc Thai Son launched Tiki in 2010 with $5,000. Tiki now has 3,100 employees and a state-of-the-art warehouse management system overseen by Henry Low, a former Amazon and Coupang Corp. executive.Bloomberg Quicktake: Now YouTube Channel
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