Vietnam’s Internet Consumer is on Fire and Driving Interest in Venture Capital in Vietnam
Posted By Admin on June 15, 2013

Vietnam’s consumer internet ecosystem continues its rapid development according to a recent report by New York market research firm eMarketer. An example of this rapid acceleration – the Vietnam Internet Network Information Center (VNNIC) reports people with ready access to broadband in the Country has gone from 10,000 people in 2003 to 4.3 million in 2013. With over 35% of the country’s population presently accessing the internet and mobile phone usage targeted to reach well over 90% of the population by 2020, the stage is set for dynamic development of the ecosystem around this robust user and consumer base.

Where do the opportunities lie? First let’s review online behavior. The internet has not yet eclipsed television as the major media medium in Vietnam households. But Mindshare and Mastercard just released studies showing that consumers are accessing the internet on a daily basis more frequently than reading newspapers, reading periodicals, or listening to the radio.

Now let’s see what is driving time spent online. PWC estimates the ecommerce market will grow at an annual rate of 75% from 2011 through 2015 and will amount to US$2.8 billion in sales by 2015. Vietnam’s ecommerce market is crowded, with dozens of companies competing aggressively to establish market share and loyal customer bases in both B2C and B2B segments. With this hyper-competitive environment, no dominant player has emerged with the largest market share controlled by any one competitor being only 5%.

Without a clear marker leader, numerous players have entered the market, many with ASEAN venture capital investors and operators backing them. Some of the bigger names backed with Southeast Asia venture capital funding include, a premium e-retailer for clothing and shoes operated by Rocker Internet; Lazada, a catch-all eretailer for home goods and electronics also operated by Rocket, and local player Vatgia which takes the marketplace approach and has the largest share of unique visitors in the Country. Reliable data on consumer purchasing activity is difficult to ascertain but recent surveys conducted by Epinion and Acorn revealed surprising widespread online purchasing by Vietnamese consumers with 99.7% of respondents confirming they visited an online shopping site and 72% confirming did this every day. Furthermore and more surprisingly, the survey confirmed that 9 out of 10 respondents claimed to have made an online purchase.

“The emergence of the internet consumer in Vietnam has happened quickly and furiously,” exclaims Quan Nguyen with Inspire Ventures. He adds, “Inspire is positioning itself to ride this seachange by investing in key players within ecommerce and social media verticals in Vietnam. These early plays are likely to have a meaningful impact on the overall attractiveness of venture capital in Vietnam.”