Vietnam’s e-commerce market is projected to surpass VND399.5 trillion (US$17.3 billion) in 2023 from VND218.3 trillion (US$9.4 billion) in 2019, according to forecasts from data and analytics company GlobalData.

This represents a compound annual growth rate (CAGR) of 16.3%.

Over the past five years, the country’s e-commerce market has doubled with total online spending increasing from VND90.1 trillion (US$3.9 billion) in 2015 to VND218.3 trillion (US$9.4 billion) in 2019, said GlobalData in its latest “Vietnam Cards & Payments: Opportunities and Risks to 2023” report.

“While the traditional payment instruments such as cash, cards and bank transfers are widely used for e-commerce purchases, consumer preference for alternative payments is on the rise. There is a growing demand for faster and convenient payment means, especially among tech-savvy millennials,” said Nikhil Reddy, banking and payments analyst at GlobalData.

According to GlobalData’s 2019 Banking and Payments Survey, cash is still the most preferred payment mode for e-commerce purchases in Vietnam, accounting for 35.6% in 2019. Alternative payment solutions are gradually gaining ground and accounted for 15.5% share. MoMo is the most preferred alternative payment solution in Vietnam, followed by PayPal.

Meanwhile, such strong growth of the market has prompted global companies to invest in Vietnamese e-commerce companies. In 2018, e-commerce company, Tiki received US$5.3 million and US$44 million funding from VNG Corporation and Chinese investor JD.com, respectively. In the same year, another company Sendo secured US$51 million from SBI Group (a Japan-based financial services company) and other investors. Furthermore, Chinese e-commerce giant Alibaba invested an additional US$2 billion in Lazada, one of the leading e-commerce companies in the country.  

“Improving payments infrastructure, coupled with rising consumer confidence in online shopping and the availability of convenient payment solutions are expected to further drive e-commerce growth in Vietnam,” Reddy concluded.