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Online retail expanding through marketplace model

Released at: 14:09, 25/05/2018

Online retail expanding through marketplace model

Illustrative image from vnexpress.net

Proliferation of marketplace model behind much of the recent growth in online retail sales in Vietnam, "Vietnam B2C E-Commerce Market 2018" report reveals.

by Linh San

The “Vietnam B2C E-Commerce Market 2018” report from Research and Markets, the world’s largest market research store, reveals that much of the recent growth in online retail sales in Vietnam is due to the proliferation of the marketplace model.

The report noted that growth in business-to-customer (B2C) e-commerce in Vietnam has attracted the attention of global and regional investors. Online transactions account for about 1 per cent of total retail sales in Vietnam, indicating plenty of room for growth, with sources cited in the report projecting annual growth in the double digits to 2021. E-commerce marketplaces, led by Lazada, are gaining popularity among Vietnam’s online shoppers, driving further growth.

The expansion of online marketplaces in Vietnam complements the increasing internet penetration in the country, where logistics and payment systems are improving. The report also indicates that Vietnam has a high rate of purchases made through social media, especially for apparel and make-up.

Meanwhile, the new “Southeast Asia B2C E-Commerce Market 2018” report from yStats.com forecasts that sales volumes will be eight-times higher than last year by the middle of the next decade. Mr. Yücel Yelken, CEO of yStats.com, said at the report’s release that “increasing connectivity, especially through mobile technology, along with improvements in infrastructure are driving strong growth across this dynamic region.”
 
Though online shopping currently registers only about 1 per cent of total retail sales in most countries in Southeast Asia, the region is prepared for rapid expansion of B2C e-commerce. Over 500 million people live in the six countries covered in the report, and that population is increasingly connecting to the internet and moving towards making purchases online. Indonesia, already the online sales volume leader in the region, is projected to see the highest growth in the region.

Several factors contribute to the rapid growth of B2C e-commerce. Shoppers in Southeast Asia are warming to the concept of online shopping because of the ability to read item reviews and compare prices. The wider offering is a result of growing numbers of and competition among online merchants, as well as improvements in payments and delivery. Still, the report includes surveys indicating that many potential online consumers lack trust in the online purchase process or balk at perceived high delivery fees or long delivery times.

The marketplace model of online retail is expanding in Southeast Asia, though sales through social media are pronounced, especially in Vietnam, Indonesia, Thailand, and the Philippines. The top online retailer and marketplace host in the region is the Singapore-based Lazada, backed by China’s Alibaba. Amazon and JD.com are also expanding in the region, and local bricks and mortar retailers are turning to online sales as well. The report notes that the top categories in online sales throughout the region are fashion items and electronics, with online purchases of services such as travel also expanding.

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