With a population of over 90 million, there is no doubt that the middle class in Vietnam is growing; in 2012 the middle class consisted of 8 million people and consumed $46 billion up from around $20 billion in 2004. Today, Vietnam is the 13th most populous country in the world—and almost one million people are born here each year.
The mobile phone (and smartphone) continues to rise in Vietnam. There are approximately 140 mobile cellular subscriptions for every 100 people in Vietnam. Vietnam is the second-fastest growing smartphone market with approximately 13 million iOS and Android users as of 2013. 40% of those are iOS users. Mobile phones will soon overtake PCs as the most common web access. According to 3rd party app store Appota, “on average, mobile users consume 4.5 hours of media daily of which 35% is on mobile devices.”
In terms of social media, Vietnam is one of Facebook’s fastest growing nations. Facebook has over 70% penetration rate for internet users which equals approximately 22 million people. Furthermore, Google officially entered the Vietnamese market by establishing AdWords here in early 2013.
E-commerce is growing but consumers still prefer cash on delivery (COD) payment for online orders. For the most part, consumers are simply unwilling to use their credit cards. Of the total $700 million in e-commerce sales in 2012, only 11.8 percent of online consumers used a non-cash payment method. For 2013, 74% of all online consumers had used COD as a major payment method.
Why? Because consumers are suspicious about the quality of the products they have ordered and want to inspect the item before paying to make sure it’s what was advertised. Even at retail stores, buying a $15 rice cooker or $10 electric kettle may result in the floor staff taking out the item from the box and plugging it in, thereby proving to the consumer that it does indeed work.
As with much of Asia, the society here on a public level revolves around the concept of “glamour” or being able to show off that one is successful (which is closely tied to “saving face,” another HUGE deal in Vietnam—that can’t be stressed enough). This theme can take shape in several forms: ostentatiously counting money when one (usually the oldest male member at the table) goes to pay the bill at a restaurant, aggressively pushing past those already queued up to show that one doesn’t need or have time to wait around, or belittling service staff in front of others. Successful Vietnamese are willing to spend big money on luxury cars as they are often twice or thrice the price of the same or comparable model in the United States. However, wealthy Vietnamese also love a good deal and some may feel entitled to not pay the same price as everyone else (looking for special price) due to their VIP status. As for the normal folks, they will have to make do with daily deals sites.
Vietnam’s Groupon (Nhom Mua) skyrocketed in recent years, reaching over $30 million in total revenue in 2011 and over two million users in 2012—but ultimately crashed. Customers and merchants are generally wary of the group buying facilitators due to a history of mismanagement of the former leader, a large number of clones, and the customers that they drive to businesses are usually one-time consumers.
Generally, Vietnam is still a largely cash-based society so due to inflation there are some large denominations ranging from 100 to 500,000 Vietnamese dong (VND), with the latter being worth about $25.
Some figures about the local market:
- Total Advertising Spending in Vietnam is a $770+ million industry.
- Digital Advertising Spending in Vietnam is $40+ million.
- E-Commerce spending was over $300 million by 2011 and has the potential to be over $2.5 billion by 2015. Some estimates project that e-commerce spending can top $4 billion by next year.
The challenges ahead for e-commerce in Vietnam are for consumers to be more comfortable using credit cards, the negative reputation Vietnam has for fraudulent activities in payment processing, and establishing effective trust verification and logistics systems for fulfilment as volume increases. New solutions and incentives different from those in the west will have to be proposed to Vietnamese consumers in order to entice them to embrace e-commerce more efficiently and wholly. As with most things, it boils down to trust.
For more information on the state of e-commerce in Vietnam see here: http://goo.gl/XoRroO
 McKinsey & Company
 The World Bank
 The World Bank