E-commerce upstarts commanding new strategies

According to a study by Google, Temasek, and Bain & Company, Vietnam’s digital economy is expected to reach a 31 per cent on-year growth in 2021, and reach a gross merchandise value of $21 billion. E-commerce is expected to grow by 53 per cent, while the food delivery and transport sector is projected to post a 35-per-cent increase.

Consumer good distributor One Mount has seen this growth first-hand through its business units. Since its introduction in 2020, its Vinshop mobile app has built up a network of more than 80,000 shop owners across 14 regions nationwide, offering a wide diversity of more than 2,000 consumer goods. This has helped establish the company as one of the country’s largest consumer goods distributors. Meanwhile, the VinID super app has established itself as one of the largest loyalty platforms in Vietnam, reaching millions of users.

A representative of One Mount told VIR that the COVID-19 pandemic has underlined the importance of digitalisation for both consumers and businesses.

“We believe that retail tech will continue its upward trajectory for the foreseeable future, in line with the nation’s digitalisation goals, as well as its objective of establishing the country as a regional technology hub – both of which One Mount supports,” the representative said. “Our optimism is in line with the observations from the Google study that the stickiness of digital services adoption of consumers has remained high as digital consumption becomes a way of life.”

Meanwhile, Kilo, a Vietnamese platform that aims to digitise enterprises, has raised $5 million in a pre-Series A. Founded in 2020, Kilo offers an online platform that connects wholesalers with retailers and helps them manage businesses across multiple sales channels. With Kilo, small- and medium-sized shopowners now have a one-stop shop where they can browse and buy with transparent pricing, with a wide array of goods and in-stock details. This helps them optimise inventory turnover, saving costs and reducing risks over the long term.

Kartick Narayan, founder and CEO at Kilo, told VIR, “Small- and medium-sized companies are the backbone of the retail economy in Vietnam and account for up to 80 per cent of total retail. Our vision is to use technology to connect, enable, and enhance the core components of the retail value chain with a deep focus on customer experience.”

Narayan added that Kilo offers services in 24 provinces across the country, and customers across the nation have been very vocal about how it has kept their business running and families safe during the pandemic.

“Kilo will empower wholesalers and retailers with better end-to-end tools and systems to run a more efficient and profitable business,” Narayan claimed.

Meanwhile Telio, Vietnam’s first business-to-business e-commerce platform, has secured $22.5 million in funding from Vietnamese IT unicorn VNG, bringing its total investment to $51 million as of September 2021.

Founded in 2018, Telio connects small shops with brands and wholesalers on a centralised platform that offers a large assortment of items, competitive pricing, and efficient shipping. Telio is available on a variety of platforms, and has created a Teliobooks app to assist store owners in managing debts and revenues.

Bui Sy Phong, CEO and founder of Telio, said, “Vietnam’s retail market is seeing big changes with more enterprises and retailers adopting IT to improve their business and quality. The cooperation between Telio and VNG will help us provide the most comprehensive services to everyone, from manufacturers and brands to retailers and customers.”

The rise of retail tech companies is in line with the changing consumer behaviour during the pandemic. A survey by KPMG Vietnam revealed that the pandemic has boosted the Vietnamese consumer’s receptiveness towards e-commerce and online purchasing channels, especially for certain product categories. Consumer companies should therefore strive to diversify their route-to-market strategies by establishing strong multi-channel – and eventually, omnichannel – capabilities, while working to overcome some of the existing logistical and customer acquisition issues posed by e-commerce channels.

Many tech companies are popping up with a mission to recolonise the traditional retail industry. SoBanHang is a Vietnamese bookkeeping software for small retailers and traders while KiotViet is a platform for retailers and merchants to manage orders from multiple sales channels. Another company, Sapo Technology JSC, is providing retail businesses with an overall sales and management platform from online to offline.

Callum Maxwell, senior consultant of business transformation consultancy TMX said, “The massive shift to e-commerce and the rush of organisations to reconfigure supply chains and fulfilment strategies makes the move to automation even more pressing. With demand for logistics automation already strong before COVID-19, the upcoming demand surge further underscores the need for digitalisation and technology adoption.”