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COVER STORY

tively penetrate regions outside of Vietnam’s
larger cities means there is a large, under- In the first quarter of 2022, a total of Mio, Selly, Aemi, and On Group,
served market in rural areas, where social $13.7 million in funding to Vietnamese respectively, netted $8 million,
commerce will have an advantage. social commerce startups was announced, $2.6 million, $2 million, and $1.1 million
It is not just market size that makes indicating a sectoral expansion and in funding in the first quarter.
Vietnam an ideal place. According to Mr. changing competitive dynamics.
Eddie Thai, General Partner at Ascend
Vietnam Ventures (AVV), the unique social
and consumer behavior of Vietnamese Reseller e!ciency and optimization Establishing an asset-light and
people are also key factors. are the current focus of social commerce capital-e!cient model is one of several
“Commerce in Vietnam has long been innovations because of the central role keys to success in an increasingly
quite social,” he explained. “Digitized social that resellers play in the majority of social competitive space.
commerce is simply a natural evolution of commerce transactions.
that pre-existing behavior. Consumer research
even before social media platforms became
popular in Vietnam showed how Vietnamese
people overwhelmingly rely on recommen- ager at AVV. “These nuances and the need competitive moat while bleeding heavily.”
dations from friends and family about prod- for working capital make it challenging for Ms. Nguyen underlined that asset-light and
ucts and services. That’s why, despite the online resellers to scale their business.” capital-efficient models are ways to scale
success of Tiki, Shopee, and Lazada in This presents an opportunity for startups while maintaining healthy unit economics.
building large conventional e-commerce to address significant pain points for resellers. For example, a company that engages and

businesses and marketplaces, a large portion For example, Mandu has an ecosystem for retains quality resellers, sells a diverse selec-

of e-commerce in Vietnam is still happening professional resellers and provides everything tion of products sourced directly from

as ‘low-fidelity’ social commerce on Facebook they need to sell online, from product sourc- brands, and does not need to pay for inven-

pages or in Zalo chat groups.” ing and marketing content creating to ware- tory can achieve scale and profitability.
housing, fulfillment, and logistics, without These are key considerations for building
RESELLER-FOCUSED STARTUPS THE requiring resellers to buy inventory. This winning competitive strategies.
RISING STARS helps remove the need for heavy working Vietnamese social commerce startups
Startups are now capitalizing on existing capital and thus empowers resellers to scale are still at an early stage and no single

social commerce behavior through three their business faster and more efficiently. player has secured a significant market
different business models: content social Three out of the four companies that share. The influx of funding to several social
commerce; reseller-led social commerce; raised funding in the first quarter of 2022 commerce companies in the first quarter is
and social group buying. Reseller-led solu- have reseller-focused business models. The an indicator of an expanding sector and
tions (for example, Selly, On, and Mandu) economic impact of reseller startups is pro- changing competitive dynamics. Increased
are becoming popular business models in found, because they make entrepreneurship investments and fierce competition, com-

Vietnam because of the central role resellers accessible for everyone, especially for those bined with the innate characteristics of

play in the majority of social commerce who are easily affected by economic fluctu- Vietnam’s social commerce market, could

transactions. For brands and wholesalers, ations and thus need them the most: home- mean that the next big Vietnamese company

resellers are cost-effective customer acqui- makers, the unemployed, and office workers will evolve from this space. Companies that

sition and distribution channels. For cus- looking for an extra source of income. can effectively seize Vietnam’s social com-

tomers, they provide a convenient and per- merce opportunity have the potential to

sonalized shopping experience and better MATTERS TO ADDRESS command a lion’s share of the digital econ-
prices and purchase options. In a highly-competitive market, choosing omy / digital commerce.

Despite their vital role in driving social the right strategy is the difference between
commerce growth, online resellers face success and failure. FUTURE PROSPECTS

numerous hurdles that hinder even the best “Most current social commerce players Vietnam is expected to be the fastest-grow-

performers from achieving scale. “They in Vietnam are focusing on groceries and ing e-commerce market in the region in

manage a complex, multi-step process that perhaps FMCG,” said Mr. Thai. “These the next five years, according to a Bain &

requires sourcing products from different are small basket size, low-margin product Company report. Social commerce helps
suppliers, then introducing and selling prod- categories. It seems likely to me that at democratize Vietnam’s e-commerce sector
ucts to customers, providing logistics for least grocery-focused social commerce will and will be a major contributor to the
orders, and also after-sales support,” said be a tough battle in the coming few years. overall growth of online commerce.
Ms. Thao Nguyen, Senior Investment Man- The challenge ahead is to build a true Social commerce will play an important
role in unlocking the potential of millions of
micro-entrepreneurs, creating opportunities
for small businesses to leapfrog into online
e-commerce, and supplementing their existing
Growth of social
commerce’s gross Growth of social income from other channels.
E-commerce share “In the coming years, we predict there
of total retail sales in merchandise volume commerce orders
Vietnam (2015-2020): in Vietnam in Vietnam will be new players emerging from the local
(Q1 2020 - Q2 2020): (Q1 2020 - Q2 2020): breeding ground,” said Ms. Nguyen. “This
5.5%
28% 101% coupled with the penetration of regional players
in Vietnam will increase competition. A few
major players may consolidate and end up
taking a majority of the market share when
Source: Statista
the market reaches the maturity stage.” %
www.en.vneconomy.vn JUNE 2022 | VIETNAM ECONOMIC TIMES | 19