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5 Reasons to Put Mobile at the Heart of Vietnamese E-Commerce

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The mobile market in Vietnam in undergoing a radical change as smartphones go from a luxurious to a ubiquitous item. You only need to look at the increasing smartphone ownership figures between 2014 (23 million), 2015 (34 million) and 2016 (c. 40 million) to realise that there is something seismic going on.

With close on 72% of the adult population in possession of a smartphone, and with a total of 124.7 million mobile subscriptions currently in the market (that’s 1.3 active devices per person), businesses across industries are waking up to the business opportunities suddenly on offer.

Of all the opportunities up for grabs, few are as exciting or as immediate as mobile commerce. From product discovery through to personal customer service and secure online payment, the mobile device provides a compelling platform upon which to build a successful e-commerce business.

Furthermore, the accessibility of social platforms through both smart and feature phones, means that mobile-enabled social commerce is becoming a significant opportunity both for traditional merchants and also for C2C sellers.

In this post we’re going to take a closer look at five of the key reasons why mobile is where e-commerce businesses in Vietnam need to be.

The mobile generation

One of the most compelling reasons for a mobile first approach to commerce is the generational differences between mobile penetration rates. Whilst internet access amongst those aged 50-64 rests around 19%, amongst those aged 15-24 that number rockets to 95%. Of all those accessing the internet, some 93% of them are doing so on a mobile device.

The impact of this trend is clear. For a whole generation of online shoppers, the internet is something that is accessed primarily or, in many cases, exclusively on the mobile device. This means a generation of shoppers who will not excuse a poor mobile experience in favour of a flashy web browser store.

Given the demographics, it is also apparent that those pursuing e-commerce must be aware that the products most likely to sell are those targeted at the younger consumer. Simply put, if your target audience is those approaching retirement, you are at most only able to reach one fifth of the market.

Successful e-commerce early movers in Vietnam like Tiki.vn have clearly targeted their product range and marketing activities at those most likely to be online, namely the affluent and the younger generation.

It’s not all about the smartphone

With 98% of the Vietnamese market in possession of at least one mobile device, and 72% in possession of a smartphone, it is evident that the feature phone still has significant market penetration. Whilst these users do not have the same web and app access that their smartphone-equipped brethren do, they should not be ignored as a potential market.

One of the most exciting opportunities for reaching out to this market is through social platforms, and especially via Facebook which is almost fully accessible on the feature phone device. Successful merchants are building effective stores on Facebook from which they are able to complete the full transaction process, rather than pushing traffic to their website. This allows for users without browser capabilities to still benefit, whilst assisting in the building of an active community around the brand.

Social commerce is growing rapidly both regionally and locally in Vietnam, counting for 30% of digital sales across Southeast Asia. As the platforms themselves make it easier for customers to discover, engage, transact and arrange delivery with merchants, having a store on Facebook and other social sites is going to become even more essential.

Saying “tạm biệt” to cash

Cash has long been the thorn in the side of e-commerce growth, especially in emerging markets where low formal banking penetration rates, fear over fraud and more means that cash remains the payment method of choice.

Nevertheless, in many countries including Vietnam, the mobile device is proving to be a promising platform from which cashless payments can become a reality. Riding the wave of fintech innovation and investment, companies like MoMo in Vietnam are growing at a remarkable 30-50% per month as they provide trustworthy, simple cash alternatives to empower seamless e-commerce to thrive.

Companies like MoMo, 1 Pay, Vimo and more are benefiting from a perfect storm of innovation friendly regulation, a growing pool of merchants willing to benefit from solutions to help them overcome the cash problem, and an increasingly mobile-enabled and technology-savvy customer base.

To allow for future growth it is important for merchants and payment solution providers to deepen their symbiotic relationships in order to encourage greater uptake and a reduction in the reliance on cash.

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Reaching rural

With both China and India experiencing significant e-commerce growth in rural locations, experts have long seen the real value of online retail as being the opportunity to offer products to those who previously did not have access. In many tier 2 & 3 cities e-commerce is already having a big impact, and as logistics and smart supply chains get better, towns and villages of even smaller size will start to feel the benefit.

The reason why the mobile device is important in the rural commerce discussion is that manufacturers like Coolpad, Hisense and TCL are providing cheap mobile computing that is slowly bringing rural areas online for the first time. The mobile is a natural fit for e-commerce in these areas as not only is it cheap, but it also acts as a near end to end tool, providing everything from search to payment to customer service functionality.

In Vietnam, with 70% of the population living in rural areas, it is essential for e-commerce merchants to understand the nature of rural demand, overcome the challenges of logistics and mobile-first computing, and demonstrate the clear value of online shopping, especially in categories like FMCG.

A multi-channel reality

Ultimately, mobile is not ever going to account for 100% of commerce end-to-end. There will always be a role to be played by physical brick-and-mortar retail and by traditional websites, not to mention whatever the next big technology revolution will be. Nevertheless, it is not difficult at all to imagine the day where a mobile device plays some role in every transaction, whether that be for product discovery, price comparison, payment, customer queries or delivery arrangement.

E-Commerce businesses in Vietnam who use mobile effectively will be those who are able to understand how their potential customers use the device, how they transact across channels, and how the most can be gotten from the small screen experience.

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