INDUSTRY PREVIEW

Vietnam retail market 2019

Prepared by FiinGroup
Aug 2019

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Content

Content Page

1 Overview of retail market in Vietnam 2 -7

2 Infrastructure for modern trade & e-commerce 8 - 16

2.1 Payment services 8 - 13

2.2 Express services 14 - 16

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Overview of retail market in Vietnam

Vietnam has been experiencing rapid retail growth

Figure 1: Vietnam retail revenue & growth

CAGR 2014 – 2018 = 11.0%
160
142
129
116
120 107
94

80 85

40

0
2013 2014 2015 2016 2017 2018

Revenue (US$bn)
Source: FiinGroup

• In recent years, Vietnam has been experiencing rapid retail growth. From 2013-2018, the retail sector recorded a compound annual
growth rate (CAGR) of 11.0%. Total retail revenue is also expected to reach US$180bn by 2020, which would represent an increase of
26.6% from 2018. With the influx of investments into the sector, it is poised to witness further growth in the near future.

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Overview of retail market in Vietnam

Despite having the most traditional retail landscape compared to other region, Vietnam
represents a huge opportunity for modern trade and e-commerce
Figure 2: % value share 2017 and annual growth %

+11.0%

17.4
4.8

77.8

Source: FiinGroup, Kantar Worldpanel

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Ecommerce in Vietnam

Booming e-commerce market in Vietnam

Figure 6: B2C e-commerce revenue in Vietnam

10.0 7.5%
Robust growth
8.0
with CAGR 2014-2018 of 27.3% 5.5% 6.0%
4.8%
4.3%
6.0 3.8% 4.5%
3.1%
4.0 3.0%

2.0 1.5%

3.0 4.1 5.0 6.2 7.8

0.0 0.0%
2014 2015 2016 2017 2018e

B2C e-commerce revenue (US$bn) Percentage of total retail revenue (RHS)

Source: FiinGroup, VECITA

Recently acquired by Alibaba Group, Lazada has been With VinGroup’s backing, adayroi.com has the
prominent in the B2B2C model. financial support and the logistics advantages that
other e-commerce sites often lack.

Shopee is an e-commerce platform headquartered in Vat gia has been around since 2007 under a
Singapore under Sea Group (previously known as Vietnamese owner. It was one of the first to offer an
Garena). Shopee first launched in Singapore in 2015, online marketplace with logical structure and
and since expanded its reach to Malaysia, Thailand, categorization, smart searches and secure
Taiwan, Indonesia, Vietnam and the Philippines transactions.

The recent recipient of US$ 18mn from VNG, Tiki.vn Sendo belongs to FPT Telecom, which has been
has been aggressively expanding its products offering growing at a fast pace these past two years.
further away from its original starts in book selling.

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Modern trade

Robust expansion of modern trade retail in Vietnam

Figure 4: Number of MT stores in Vietnam

Home appliance & 2,263

consumer electronics No. Store brand* Owner # stores 2018 Expansion plan
chains 2,927
1 Mobile World 2,166 N/A
Investment
1,333
Minimarts & foodstores Corporation
2,121
2 Vincommerce 1,828 N/A
(Subsidiary of
736 Vingroup)
CVs
856 3 FPT Shop FPT Retail 531 N/A
FPT Studio
374
Mom & kid chains 4 Saigon Co.op 111 130 by 2020
503

336 5 Central Group 35 7 new stores,

Supermarket (Thailand) starting from 2016
385
6 TCC Group (Thailand) 19 5 new stores/ year
Modern drugstores & 246 during 2018 – 2020
personal care 347
7 Lotte Group (Korea) 15 60 by 2020

2017 2018
8 Aeon Group (Japan) 4 2 new malls/year
Source: FiinGroup

• In recent years, there has been an explosion in the number of Modern Trade channels across Vietnam, with a variety of players
offering different retail formats. Some of the most notable recent developments can be found in commercial centers, convenience
stores, as well as digital platforms.

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Modern trade I Profile of a leading retail chain

MWG is a leading player in Vietnam home appliance and consumer electronics retail
COMPANY OVERVIEW PARTNERS
• Established in 2004 STRATEGIC PARTNERS
• Website: https://mwg.vn/
• Contact: investor@Thegioididong.com
• Head Office: No. 222 Yersin Street, Phu Cuong Ward, Thu Dau Mot
Town, Binh Duong Province, Vietnam
• Net sales 2018: US$3.72bn
• Business lines: Mobile World Investment Corporation, formerly known
as Mobile World Co., Ltd, was established in 2004. The Company
mainly operates in the field of retailing of mobile phones, laptops,
tablets, household electronics, digital appliances and food products.
According to the Annual Report 2017, The Company maintains its
leading position in the mobile phone and electronics markets with
43% and 30% of market share respectively. The Company has been
listed on the Ho Chi Minh City Stock Exchange (HOSE) since July 2014
(ticker: MWG).

STORE COVERAGE

Figure 5: MWG’s no. of outlets by business line, 1H2019

OTHER PARTNERS

2,449
Segment Partner
1H2018 1H2019
2,166 Sound Dalton, Arirang, Rinton, Nanomax, Acnos
1,782 1,849
Mobile Vivo, Xiaomi, HTC, Mobell. Motorola, BKAV
Housewares Sunhouse, Luminarc, Comet, Happytime
838
724
600 Cooking appliance Fivestar, Philips, Braun, Kangaroo, BlueStone
384

BHX DMX TGDD + DMX Total

(supermarket) (home appliance (consumer electronics
retail) retail)
Source: MWG’s performance report 1H2019

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Content

Content Page

1 Overview of retail market in Vietnam 2 -7

2 Infrastructure for modern trade & e-commerce 8 - 16

2.1 Payment services 8 - 13

2.2 Express services 14 - 16

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Payment services in Vietnam | Non-cash payment

Non-cash payment has been gaining the popularity in Vietnam with CAGR 2015-2018 of
35% for transaction value…
CASH PAYMENT: 90% NON-CASH PAYMENT: 10%
Figure 9: Domestic transaction by means of payment, non-cash payment

1,500 500
CAGR 2015–2018 (transaction value) = 35%
Domestic transaction value by means of payment
1,200 1,131.6 1,120.0 400 100.0%
1,066.0

6.1% 5.3%
96.0%
900 338.0 300
762.1
702.1 283.4
262.0 92.0%
5.0%
600 200 5.1%

88.0%
151.3
300 100
114.6 84.0% 87.8% 88.7%

0 0 80.0%
Dec-15 Dec-16 Dec-17 Dec-18 Mar-19 Dec-18 Mar-19

Transaction value (US$bn) # transaction (mn items) - RHS Credit transfer Direct debit Bank card Check Others (1)

Source: FiinGroup, SBV

(1) Other payment instruments include bills, standing orders, domestic letter of credit, SMS banking, mobile banking, phone banking, internet
banking, money transfer instructions from CA-current account,...

• Vietnam has seen the soaring number of non-cash payment in terms of # transaction and transaction value. As of March 2019, non-cash
payment jumped to 338mn transactions with total value of US$1,120bn.
• Credit transfer and direct debit are the most common means of liquidity, accounting for over 90% of total domestic transaction volume
as of March 2019.

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Payment services in Vietnam | Strong Foundation for Cashless Payment

Vietnamese population are young, have rising disposable income, are well-connected and
tech- savvy
Figure 10: Breakdown of Vietnamese population by age, Figure 11: Disposable income per capita (US$)
2018
6.4% 8.3% 5.5% 7.5% 10.1%
29,856

22,812
Over 40, 38%

Under 40, 62%

5,149
3,593
1,769 2,418 1,797
1,204 837 1,352

Singapore Malaysia Indonesia Phillippines Vietnam

2016 2021 CAGR

Source: FiinGroup from World Bank Source: FiinGroup from BMI

A Profile of Vietnam

47% 54%
Rise in household spending are Internet Users
Expected during 2017-2021

1.31 46.7%
Mobile phones/person are Facebook Users

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Payment services in Vietnam

Ecosystems are key: E-wallets are currently focusing on grabbing market share through
ecosystems, which in turn could bring in profits via increased transaction volumes
Figure 12: E-wallets in Vietnam

Number of users by end-2017 2018 Target Ecosystem

Momo 5,000,000 10 million

Vi Viet 2,000,000 3.5 million

Ngan Luong 1,300,000

ViettelPay 1,000,000 ? Very strong growth

VTCPay 950,000

Moca 100,000
1 million

AirPay 40,000
?

ZaloPay 20,000

Source: FiinGroup

• The use of e-wallet in Vietnam is still limited. Almost e-wallet users maintain their accounts to pay utilities, internet bills, taxi bills
and especially top-up their phones. To increase the operation efficiency, E-wallets are currently focusing on grabbing market share
through ecosystems which in turn could bring in profits via increased transaction volumes

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Payment services in Vietnam | Trends of E-payment

Electronic payment rising on the back of e-commerce platform expansion, with focus on
strong growth for mobile banking, e-wallet and QR code.
Figure 7: Number of registered mobile wallets in Vietnam Figure 8: QR payment value, 2017 vs 2018

CAGR = 19.2%

+592%
6.5

5.2 3.01

USDmn
4.3
MILLION

3.5
3
2.5
1.9 2.1
0.44

2017 2018
2013 2014 2015 2016 2017 2018 2019f 2020f

Source: FiinGroup, ASEAN Banker Research Source: FiinGroup, Statista, PwC’s “The Future of ASEAN - Time to Act,” 2018

41/45 65.8% increase

Banks with m-banking Internet transactions volumes in Q1/2019

28 97.7% increase
E-wallet licenses
(23 IPS and 5 banks) Mobile transactions volumes in Q1/2019

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Payment services in Vietnam

With Payment Services as the introductory feature, FinTechs will build upon collected
user data to develop more sophisticated products

Not yet
Overseas Transfer
available in
+ Remittances Vietnam
Credit Scoring
+ Financial P2P Lenders
Services
MicroLoans

+ Credit Cards Partner with banks to

issue virtual credit cards
+ Lifestyle
One stop shops via
Apps
partnerships: Insurance,
Consumer Finance, Delivery
Services, Taxi services, E-
commerce, Flights and Hotels
Intermediary
Payment Domestic fund
Services
transfers via E-wallet,
QR Pay for Utilities,
Mobile Top-ups, etc.

Source: FiinGroup

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Content

Content Page

1 Overview of retail market in Vietnam 2 -7

2 Infrastructure for modern trade & e-commerce 8 - 16

2.1 Payment services 8 - 13

2.2 Express services 14 - 16

Financial Information | Business Information | Market Research 14

Express services in Vietnam

The robust growth of ecommerce in Vietnam drives express service industry

DEFINITION: As of Decision No. 128/2007/ND-CP, Express delivery means delivery services with a quick factor in terms of time and a high degree of
reliability. Express delivery shall also include other value-added elements such as collection from a sender's address; delivery in person to the receiver,
discovery of current addresses and locations for receipt in person; the capability of changing the place and address for receipt during transportation;
reporting on delivery and other value-added elements.

Figure 13: Service offering of Express services in Vietnam

SERVICES MARKET OVERVIEW

Same day ➢ 1986: Since Vietnam participated WTO, the rising of demand for
Next flight
& in-night/ Air Charter time-sensitive international trading urged the emergence of express
Next day out/Road express
services.

➢ 1995 – 2013: Big international companies such as DHL, UPS, FedEx,

Specified TNT penetrated the market by forming joint
time
Priority express
venture with domestic firms. For example: DHL-VNPT, DHL-VNpost,
UPS – VNPost Express, FedEx – a domestic firm, TNT – Viettrans.
Express freight After the government relaxed the threshold of foreign ownership in
postal service by 2012, the giants stepped up and wholly purchased
Certain/ Deferred or other the shares from their joint-ventures.
uncertain
day
express services
➢ 2015 – 2017: Thanks to exponential growth in e-commerce, many
new domestics firms were established to meet the demand of cash-
on delivery trend resulting from online shopping and e-commerce.
Source: FiinGroup Some of the names can be seen as Giao Hang Nhanh, Giao Hang So 1,
and Giao hang Ong vang. On top of that, the increase number of
smartphones gives a new
breeze into apps to facilitate e-commerce delivery such as ShipS,
AhaMove, Giao hang ong vang. The newest launched app in the
market is Pegasus Speedlink, which is developed by Indo Trans
Logistics.

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Express services in Vietnam
Foreign players dominate Vietnam express services market, especially the international
route
FOREIGN PLAYERS
DOMESTIC PLAYERS
NEW PARTICIPANTS
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• MNCs such as FedEx, UPS and DHL participated in Vietnam courier services market in early day through the
partnership with domestic players. Thanks to the strong financial base, technology-driven services,
professional team and its reputation, international corporation can meet the demand from highly time-
sensitive order to tailor-made freights, thus, quickly capture the majority of express delivery market
share in Vietnam, especially the international route segment.
• In near-term prospects, giant international companies would keep strengthening its presence and tapping
Vietnam E-commerce market. For instance, in May, 2018, DHL eCommerce introduced DHL Parcel Metro
Same Day services utilizing different transportation lines for lowering in HCMC and Hanoi. Meanwhile,
FedEx also established new enterprise in Vietnam (‘FedEx Trade Networks Transport & Brokerage Co.,
Ltd’).
• Domestic players are struggling in the fierce competition with giant international competitors to capture
the domestic delivery share. While big names such as VNPost and Viettel Post invested in new trucks and
warehousing services, smaller-scaled enterprises (Nhat Tin Logistics, 247Post, Netco, etc.) tended to push
sales by offering discount/lower price and serving demand from big cities mainly (Hanoi, HCMC and Da
Nang). In 1Q2018, Viettel Post express services revenue grew significantly by 58% y.o.y, occupying 92% of
the total revenue.
• In postal service segment, key domestic players such as VNPost and Viettel Post still remained its leading
position thanks to the long operation history in Vietnam market, nationwide distribution channels and
well-established network.
• The fast-paced growth of e-commerce in Vietnam resulted in the rising number of new participants
commencing in 2012. There are two main types of new businesses in Vietnam:
➢ Individual companies: These companies tend to focus on a certain service serving the domestic
delivery demand from individuals or small-scaled businesses, especially in eCommerce field. In 2012-
2013 period, the business model of customers sending goods to the shippers at the point of delivery
was very popular. Key names include Giaohangnhanh, Giaohangtietkiem, Ninja Van and DHL
eCommerce. However, as the demand for time-sensitivity and convenience is on the rising trend,
recent years witnessed the appearance of Lalamove, AhaMove, GrabExpress, Delivery Now, of which
shippers will take the orders from the appointed places and directly deliver to the customers.
➢ Subsidiaries of e-Commerce companies: Lazada (LEL Express), Tiki
16
Contact us

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