1

Online shopping boom

in Vietnam

Ho Chi Minh city, 19th April 2019

2

Internet economy

US$9 billion in 2018

3.8% of GDP

US$3 billon in 2015 and 1.7% of GDP

Internet economy is triple in 3 years

Source: GSO, Temasek, Google, Cimigo

10%11% 12%

23%24%

26%

2016 2017 2018

Growth rate of total retail sales Growth rate of e-commerce sales

The numbers got bigger…

3Source: GSO, Temasek, Google, Cimigo

Men and women HCMC and Hanoi

18-55 Class ABCD

4

300 respondents

in Q1

2019

5

1. Demand now spans a diverse product range

2. Price competition has bought transaction growth

3. The app battle for screen real estate

4. The next battle will be for the hearts

5. Price knowledge and comparison is constant

6. Trust is built, we expect transaction values to explode

7. COD reduces risk, an enabler for trust

Online shopping boom in Vietnam

6

7

1. Demand now spans a diverse

product range

Food and beverage are common in Vietnam

8

Penetration of

food and beverage

32%

5 times a month

6 times a month

33%

32%

23%

21%

19%

14%

14%

13%

9

12%

12%

9%

7%

6%

5%

5%

Fashion

Food and beverage

Electronic accessories

Cosmetics and personal

care

Books and stationery

Household items and

furniture

Personal electronic

devices

Ticketing

Products for babies

Sport equipments

Supplements/ functional foods

SPA/beauty services

Kitchen/ home appliances

Vehicles and accessories

Learning courses

Penetration of items bought online

Trust has been built…

10

11

2. Price competition has bought

transaction growth

12

13

977

77

1019

164219

619

282

Lazada Shopee Tiki

2015 2016 2017

The competition got fiercer…

14

Lost (billion VND)

15

28%

79%

17%

74%

25%

88%

16

81%

25%

Awareness

Usage in past 12

weeks

The battle is of big guys…

(Social commerce)

17

▪ Better in Hanoi, among females and age

18-34

▪ Strengths: cheap price and free/ low cost

delivery

▪ Weaknesses: not good client service and

not friendly platform

▪ Main items sold: fashion and cosmetics

18

▪ Better among males and age 35-55

▪ Strength: wide range of products

▪ Main items sold: fashion and electronic

accessories

19

▪ Better among age 18-34

▪ Strength: Fast and reliable delivery

▪ Main items sold: books and stationery

20

▪ Better among females and age 35-55

▪ High app installment

▪ Low chosen as first choice

▪ Strength: friendly platform

▪ Main items sold: fashion

21

Wide range of products/

specialized product

Price and promotion

Free/ fast/ reliable delivery

Trust of product quality

???

22

3. The app battle for

screen real estate

App is now a focus

23

App is now a focus

24

25

26

87%

79%

44%

43%

29%

Application installment rate

How long can the apps

stay?

27

28

4. The next battle will be for the hearts

The higher net promoter scores (NPS), the more the satisfaction

▪ Net promoter score is used to

identify the satisfaction of customers

toward the online provider.

▪ Question to be asked:

“How likely is it that you would

recommend [brand] to a friend or

colleague?”

29

30

11% 15% 9% 4%15%

58% 52% 64% 66%59%

30% 32% 26% 29% 26%

Positive (Top 2 box)

Neutrals (Medium 3 box)

Negative (Bottom 5 box)

Likely to recommend shopping channel in 10 point scale

19% 17% 18% 25% 10%

Total

NPS

NPS of online shopping channels are weak

The average NPS score in the US for online shopping is 45% according to the Satmetrix NICE 2018 average NPS by industry report.

31

5. Price knowledge and

comparison is constant

32

… among different

sites appear on

search engine

…among different

sellers in the same

shopping site

…using price

comparing

sites

57% 50% 32%

74%

26% Yes

No

Total

Did you compare price before purchasing?

Shoppers compare price in 74% of online purchases

Male vs. female shoppers

33

70% of women

compare price

before purchase

79% of men

compare price

before purchase

More in price comparison

▪ among different sites

▪ different dealers

▪ using comparing sites

Wide range

of products

Improve

customer

experience

Strong

search and

comparison

functionality

What could help shoppers stay with one platform?

LOYALTY

Booking.com (travelling site) has delivered well

35

Strong

search and

comparison

functionality

They guarantee to offer the lowest price. Will pay back the price gap if customers

can find the cheaper price for the same service from other providers

36

6. Trust is built, we expect

transaction values to explode

Transaction value is not yet prioritised

37

USERS

SITE VISITS

PAGE VIEWS

TRANSACTION

VALUE

Spending on small value products

38

46%

Under 300,000VND

(approx. USD13)

23%

VND300,000 – VND500,000

(approx. USD13 – USD 21)

21%

VND500,000 – VND2,000,000

(approx. USD21 – USD87)

10%

Above VND2,000,000

(approx. USD87)

Trust has been build

so the next is…

… increasing basket size

39

40

7. COD reduces risk,

an enabler for trust

Online shopping is still cash based

41

Cash on delivery

88%

Bank card

6%

Bank transfer

3%

E-wallet

2%

COD reduces the

risk for shoppers

Early-adopters

of fintech

Electronic payment is more common among young professionals

42

Age 35-44Age 25-34

Bank card

6%

Bank transfer

3%

E-wallet

2%

43

What is next?

% %

Online platforms improve the customer experience

44

Online platforms will continue competing for customers’ heart.

Improving customers’ experience is the key for success.

Customers would expect to enjoy a process of online shopping

from searching for various products, looking for best price, good

delivery service, good product quality and other after sale

services.

Shoppers can fully control the price

45

With the support of technology, the online platforms in Vietnam are

expected to provide the strong search and comparison functionality.

It definitely helps the consumers aware of and control the price

easier. It also enables trust to stay with one online platform and

consumers are not necessary to hop around for better prices.

The transaction value is expected to explode

46

Consumers now have confidence and trust in wider shopping

services and products, so what we can expect is the online

platforms will continue building trust to maximize the basket

size and compete with each other on the transaction value.

1. Demand now spans a diverse product range

2. Price competition had bought transaction growth

3. The app battle for screen real estate

4. The next battle will be for the hearts

5. Price knowledge and comparison is constant

6. Trust is built, we expect transaction values to explode

7. COD reduces risk, an enabler for trust

Online shopping in Vietnam

47

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ask@cimigo.com

Cimigo

217 Dien Bien Phu Street, Ward 15, Binh Thanh District

HCMC, Vietnam

T: +84 28 3822 7727