Alibaba, Warburg Want Piece of Vietnam’s Booming Online Economy

Bloomberg2021-06-02

Startups focus on building loyalty among skeptical consumers Nation’s digital economy forecast to reach $52 billion by 2025 Weaving through congested Ho Chi Minh City on his Honda motorbike, Ho Duc ...

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Comments

th0mastan
2021-06-09
th0mastan
Vietnam is the one of the fastest growing countries in Southeast Asia. Good to capture this rising demand early
Deonc
2021-06-02
Deonc
Good
Jazling
2021-06-02
Jazling
Comment pls
Priscyn
2021-06-02
Priscyn
cool! now we all want a piece of that
shawnhuat
2021-06-02
shawnhuat
How to receive response to my comment?
- Dan94:
  Done
- JiaLe:
  Comment Please
RexChuah
2021-06-02
RexChuah
Comment
- shawnhuat:
  How to receive response to my comment?
- Jovvvvv:
  Done

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He uses AirPods to let customers know he’s about to arrive, but there’s one thing slowing him down: Quang has to wait for customers to open packages and confirm everything is correct before speeding off on his next delivery. It’s a must for many Vietnamese still unsure if they can trust e-commerce merchants.\nQuang’s race through the city of nine million people is part of a campaign to win over reluctant Vietnamese, many of whom are trying online shopping for the first time during the pandemic. It’s not an easy sell in a cash-based society where only about a third of adults have bank accounts, less than 5% own credit cards and most shop at mom-and-pop stores and traditional wet markets.\nThough Euromonitor International estimates e-commerce accounted for just 3% of the nation’s retail market last year -- the smallest amount among Southeast Asia’s major economies -- the potential for growth is alluring. 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.\nCompetition for Customers\nStartups backed by Warburg Pincus LLC 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.\n“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.”\nThe 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.\n\nA 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.\nM-Service JSC, a Vietnamese startup that operates the MoMo payment app, in January raised more than $100 million from a group of investors including Warburg Pincus. MoMo’s registered users last year doubled to 23 million, said Nguyen Manh Tuong, co-founder of M-Service JSC, and the company forecasts it will have 50 million registered users in two years.\nFor 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.\nConsumer Distrust\nDigital 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.”\nSo 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.\nHanoi 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.\n“Usually customers have to go to stores to complain about low-quality products, sometimes even have arguments,” Chi said, “but still they cannot get anything fixed.”Vietnam Wants to Leap From Gold Bars to Credit Cards\nThe 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.\nShifting retail\nVietnam’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.\nWarburg-Backed Vietnam E-Wallet Said to Raise $100 Million\nTiki 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. He wrote the code, purchased 100 English books from Amazon, and then delivered them on his motorbike.\nTiki 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.As his company grew, so did efforts to attract consumers. Son deployed a system to weed out fake products and says Tiki will back legitimate customer complaints. “If there is a defect in, say, a new phone and the customer wants to return it, we support the customer 100%,” he said. “If the seller is not OK with that, we will turn off the seller.”\nDiapers to Beer\nInvestors including Sumitomo Corp. and JD.com have backed the startup with $192.5 million, according to Crunchbase. Son said he expects more funding rounds and plans an eventual initial public offering.The startup handles just under two million orders a month, said Low, as workers stacked pallets with everything from boxes of diapers to cases of Corona beer in a 10,000 square-meter fulfillment center on a recent afternoon. Tiki is deploying artificial intelligence and robots capable of moving 800 kilograms of products to speed things along.\n“It’s so fast,” Son said of his logistics system that looks to offer 500,000 products for two-hour delivery from 200,000 now, helping Tiki reach profitability. “Customers don’t have a chance to change their mind.”","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":180554282,"gmtCreate":1623214637146,"gmtModify":1704198528339,"author":{"id":"3573383537150312","authorId":"3573383537150312","authorIdStr":"3573383537150312","name":"th0mastan","avatar":"https://static.tigerbbs.com/84d76bcdad50787fa2929139725c46f0","vip":1,"crmLevel":5,"crmLevelSwitch":0,"idStr":"3573383537150312"},"htmlText":"Vietnam is the one of the fastest growing countries in Southeast Asia. Good to capture this rising demand early&nbsp;","listText":"Vietnam is the one of the fastest growing countries in Southeast Asia. Good to capture this rising demand early&nbsp;","text":"Vietnam is the one of the fastest growing countries in Southeast Asia. Good to capture this rising demand early","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/180554282","repostId":2140948434,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":111028216,"gmtCreate":1622645181735,"gmtModify":1704188017076,"author":{"id":"3569316529855154","authorId":"3569316529855154","authorIdStr":"3569316529855154","name":"Deonc","avatar":"https://static.tigerbbs.com/d9aa45dd2eb58357f6477dcfb99d1415","vip":1,"crmLevel":2,"crmLevelSwitch":1,"idStr":"3569316529855154"},"htmlText":"Good","listText":"Good","text":"Good","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/111028216","repostId":2140948434,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":113703468,"gmtCreate":1622638022354,"gmtModify":1704187795943,"author":{"id":"3566821013640470","authorId":"3566821013640470","authorIdStr":"3566821013640470","name":"Jazling","avatar":"https://static.tigerbbs.com/85e0a83573d9307f57fca9b2baed72af","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"3566821013640470"},"htmlText":"Comment pls&nbsp;","listText":"Comment pls&nbsp;","text":"Comment pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/113703468","repostId":2140948434,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":113475588,"gmtCreate":1622637534444,"gmtModify":1704187790081,"author":{"id":"3574922224515422","authorId":"3574922224515422","authorIdStr":"3574922224515422","name":"Priscyn","avatar":"https://static.tigerbbs.com/f8d975ba47d25b1cd747c29f03928d8d","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3574922224515422"},"htmlText":"cool! now we all want a piece of that","listText":"cool! now we all want a piece of that","text":"cool! now we all want a piece of that","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/113475588","repostId":2140948434,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":113441485,"gmtCreate":1622636561947,"gmtModify":1704187770002,"author":{"id":"3575420754880245","authorId":"3575420754880245","authorIdStr":"3575420754880245","name":"shawnhuat","avatar":"https://static.tigerbbs.com/ce96f5461b1fd7c34fc7f8592a7eb525","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3575420754880245"},"htmlText":"How to receive response to my comment?","listText":"How to receive response to my comment?","text":"How to receive response to my 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