In the five surveyed sectors, how does Vietnam differ from other countries?

Marc‌ ‌Woo

Vietnam has the fastest-growing digital e-commerce in Southeast Asia for the second year in a row and is forecast to hold this position in 2025 (tying with the Philippines). The country’s gross merchandise value (GMV) is expected to grow at a 20 per cent compound annual growth rate from $30 billion in 2023 to $45 billion in 2025.

Online travel and e-commerce will be the main drivers of GMV growth from now to 2025. One other notable thing about Vietnam is that this country had the fastest-growing digital payments in Southeast Asia in 2023.

This is what I observed in Vietnam. The first is tailwinds: Vietnam is the fastest-growing Southeast Asian country from a GDP perspective. Well-positioned to take advantage of supply chain shifts in manufacturing. Strong government focus on the digital economy. The second is headwinds: lower-than-expected external demand affecting near-term growth. Digital adoption growth is slow, potentially due to the broader economic situation

How can Vietnam attract high-value users (HVUs)?

We define high-value users as the top 30 per cent of spenders in the digital economy, based on their total spends across seven verticals: e-commerce, groceries, ride-hailing, food delivery, gaming, streaming, and travel. They account for around 70 per cent of spending in the region.

It’s important to make the distinction that HVUs do not equate to affluent; only half come from the affluent segment, and 30 per cent come from smaller cities and towns.

HVUs are a core group of consumers who contribute to an outsized majority of the digital economy’s GMV. Serving the needs of this group will allow digital economy players to capture high lifetime value customers, which will be core to their ambitions of driving revenue and attaining profitable growth. In Vietnam, the group spends more than five-time other groups.

Most live in metropolises, but through the report, we see this group does exist beyond the big cities too. Different from other surveys and research, when it comes to HVUs, our report does not only look at the income base, as income does not always translate to high-value users. As we have repeatedly called out, it’s critical to aim for a more inclusive digital perspective, beyond the big cities.

On this, Vietnam has some advantages when looking at the digital participants across the country. In six Southeast Asian countries, Vietnam has more big cities that lead digital participation, with three cities from north to south: Hanoi, Danang, and Ho Chi Minh City. Other neighbouring countries have just one big city, while Singapore has reached internet saturation with a 100 per cent urban rate.

This means Vietnam still has a lot of potential to push forward, accelerating on a stronger foundation where it is easier to spread internet participation from three metropolises instead of one.

Online spending in Vietnam is slowing. Can you share more about this decline?

In general, there is a lower degree of digital spending accessibility in Southeast Asia compared to other regions, which largely inhibits online spending for households with lower expenditures.

We still believe that $45 billion in GMV is within reach for Vietnam if certain conditions are met. More people must engage in the digital economy; more businesses must cross the digital threshold; geographic digital coverage must expand beyond the major cities; there needs to be more interconnected regional activities through trade and digital agreements; and digital sectors must become more profitable individually.

Have Vietnamese businesses recognised the best way to develop is not to grow at all costs, but to focus more on sustainability?

Southeast Asia private funding has declined to its lowest level in six years after record highs, in line with global shifts towards high costs of capital and issues across the funding lifecycles. Investors want companies to achieve financial independence and generate cash by focusing on profitable unit economics, optimising operations, and scaling core services.

And as we shared in our report for 2023, Vietnam, as well as Southeast Asia businesses, have turned to profitable growth, and profitability can put short-term pressure on our growth in the long term if we don’t put efforts into the digital headroom beyond the big cities.

We are at an inflection point. What we see is a natural tendency, to focus on monetising in the metros, but this is and can create a digital economic divide. For short-term prioritisation, businesses focus on HVUs, but growth opportunities are almost twice as high for people outside the big-spending group.

I believe most businesses in Vietnam know about the short-term and long-term opportunities, and if a few are not yet aware of this, we hope the report will put a spotlight on this through valuable insights to guide the planning for the short and long-term, as well as to debunk myths, like having internet access does not always translate to consumption in the digital economy sectors, or lower consumption does not necessarily mean there’s lower demand.