Vietnam Online Grocery Market: Ken Research

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Overview:

Vietnam Online Grocery Delivery service gained traction among consumers as it allows customers to avoid the hassle of crowds, payment & parking queues and offers convenience as one doesn’t need to be at home to pick up the order.

Gaps in offline grocery shopping such as inconvenience of commute, long payment queues and cost of impulse buying led to the introduction of the e-grocery delivery in Vietnam. Population aged between 25 and 44, is considered an influential customer base for online grocery shopping.

High internet penetration and rising working population has led to the growth of e-grocery services in Vietnam.

Market Size:

The Online Grocery Delivery Market in Vietnam is positioned to be at a growth stage with at a CAGR ~% during the period 2016-2021P. The online grocery penetration in 2021P was ~%.

The Vietnam Online Grocery Market has been segmented on the basis of product category, mode of delivery, preferred payment method, by cities, and by age group.

The Beauty and Health segment contributes the most in GMV, followed by Food & Beverages category.

Service providers in Vietnam are constantly upgrading themselves to adapt to the needs of the customers. Companies have been focusing on developing infrastructure to control last mile delivery and offer express delivery to customers, within 120 minutes.

Express delivery is the most preferred delivery type in Vietnam for online grocery delivery.

Vietnam Online Grocery Market Segmentation

By Product Category

The Beauty and Health segment contributes the most in GMV, followed by Food & Beverages category. This is due to the fact that masks and sanitizers fall in this category and due to Covid-19 pandemic, a significant increase can be observed in the beauty & health segment as of 2021P. Fresh food (fruits, vegetables, dairy & eggs) is recognised as the emerging category.

By Cities

Ho Chi Minh City and Hanoi are the major cities of Vietnam based population and urbanization. These cities are equipped in terms of setting up warehousing facility, transportation, procurement of grocery and carrying out other backend operations.

Working professionals, who are the major end users of online grocery delivery services, are concentrated in Ho Chi Minh City, Hanoi and Da Nang.

By Mode of Payment

Demand is dominated by cash on delivery payment method. This was followed by online payment methods. Even though cash is still very much a part of payment culture in Vietnam, the growing mobile internet penetration has led to a surge in e-commerce platforms in recent years, opportunity lies for the digital payment providers.

By Mode of Delivery

Customers in Vietnam prefer their orders to be fulfilled within 30 minutes – 2 hours. They are willing to pay extra charges for Express Delivery to get their orders on time.

Second most preferred mode of delivery is – Standard delivery in a Specific time period, this mode of delivery is generally preferred by working professional in Vietnam.

By Business Type

The B2B Business in the online grocery market stands at ~% and is expected to grow and reach to ~% by the year 2026F, Whereas, The B2C Segment will still be a dominating type with an expected percentage of ~% by the year 2026F.

By Age Group

The current trend shows that Population between 25-37 and 38-44 age group dominates as they are the major target population for Online grocery Market.

Smartphone and Internet availability makes them ideal users for the market.

By the year 2026F however, the percentage of 38–44-year-old online shoppers are expected to Increase as the age group would by then be well-versed and habitual to online grocery shopping.

Smartphone user population aged 25-44 stood at ~ Mn in 2021P.

These smartphone users (Tech-savvy population) who are willing to rely on online grocery delivery platforms for fulfilling their grocery needs is the target population for online grocery delivery companies.

Operating Models

Marketplace model of grocery delivery refers to a company providing an e-commerce platform that connects customers and grocery stores for the purpose of buying and selling groceries respectively. Shopee, Lazada, Tiki has been following marketplace model in Vietnam. Omnichannel model provides customers access to groceries from offline and online platform. Saigon coopmart, Big C, Lotte Mart have been following omnichannel model in Vietnam.

Competitive Landscape

The competition in the industry is concentrated with presence of more than 8-9 players in the industry. Some of the major players include Shopee, Tiki, Lazada, GrabMart, Chopp, Co.opmart.

Companies are increasingly evolving their business strategies in order to elevate the user experience. Companies have been battling against each other to acquire and retain clients, expand geographical presence, expand product offering and improve unit economics to increase margins. Companies with large product assortment, wide regional presence and express delivery are identified as clear leaders in the industry.

What is the Future of Vietnam Online Grocery Delivery Market?

The online grocery delivery market GMV in Vietnam is expected to reach ~USD million by the end of 2026F.

Impact of Covid-19: As a result of the global pandemic COVID-19 there was seen a drastic increase in the average order size and delivery time across the industry. Companies partnered with third party delivery companies to address last-mile logistics challenges.

Key Segments Covered: