The majority of articles discussing investment in Vietnam primarily focus on the country’s economic potential. They often do not go into details on how to actually set up and run a business in Vietnam.
With local teams on the ground in Vietnam and offices across Asia, GMA will provide some key insights into what foreign brands should focus on to kick off their sales as soon as possible and at the lowest cost.
1. Prospects and Obstacles for International Businesses Engaging in Sales Activities in Vietnam
1.1. GROWTH EXPECTATIONS SURPASSED THREEFOLD WITHIN THE PAST DECADE
The consumer market in Vietnam has undergone remarkable changes in both size and structure during this period. In 2010, the total value of Vietnam’s consumer market was estimated at $54.3 billion.
However, by the end of 2022, this figure is projected to exceed $150 billion, reflecting a compound annual growth rate of 17.4% over the same 12-year span. Several factors have contributed to this impressive growth, including increasing wages, the expansion of the middle class, and improved access to credit.
1.2. UNIQUE CULTURAL AND REGULATORY FACTORS
When venturing into the Vietnamese market, foreign companies face the task of navigating distinct cultural and regulatory elements. Vietnam possesses a unique business culture, social norms, and consumer preferences that often diverge significantly from Western markets. It is imperative for companies to comprehend and honor these cultural intricacies in order to establish trust and forge prosperous business connections.
Furthermore, Vietnam has its own set of regulations and policies that govern foreign enterprises, encompassing areas such as licensing prerequisites, intellectual property safeguarding, and data privacy provisions. Upholding compliance with these regulations can prove to be challenging, necessitating a comprehensive grasp of the legal framework in Vietnam
1.3. LANGUAGE AND LOCALIZATION BARRIERS
Foreign companies face difficulties when selling in Vietnam due to language and localization barriers. Mandarin Vietnam serves as the dominant language spoken by the majority of the population, and although English proficiency is improving, it remains limited in comparison.
To successfully connect with Vietnam consumers, foreign companies must allocate resources to translation services, local language customer support, and the creation of localized marketing materials.
Localization extends beyond language and involves adjusting products, packaging, marketing campaigns, and customer experiences to align with Vietnamese preferences and cultural sensitivities. This process entails comprehending local market dynamics and consumer behaviors, as well as integrating Vietnamese elements into the overall brand strategy.
2. Main Ways to Sell in Vietnam for Foreign Brands
2.1. WHOLE-SELL TO LOCAL DISTRIBUTORS
If you lack familiarity with Vietnam and don’t have an established presence there, teaming up with a distributor would likely be the most efficient way to enter the market. Distributors possess extensive experience in selling various brands within the local market, so once you establish a partnership with them, you’ll start generating sales right away.
By partnering with a distributor, you gain access to multiple sales channels, including supermarkets, hotels, convenience stores, and more. This is in contrast to relying solely on cross-border eCommerce sales, which limit you to a single sales channel. Additionally, with a distributor, you can sell your products both online and offline, which can be advantageous for B2C sales, although online sales might not be as prevalent for B2B sellers.
Furthermore, collaborating with a distributor allows you to benefit from their knowledge and expertise in navigating local product registrations. This encompasses tasks such as customs registrations, product labeling, facility inspections, and more. By leveraging their experience in these areas, you can save significant time and avoid confusion.
However, it can be difficult to find a Vietnamese distributor due to the following reasons:
- Most of the distributors are active offline, in their own network of business. If you are an outsider, it’s not easy to get access to them unless you’ve got a referral.
- They use mainly Vietnamese for communication. You can hardly search for them online, especially in the English language.
- They have their sourcing team, and they may not be open to brands approaching them
However, there are a few things you can do to increase your chances of success;
- You can reach out to local trade associations or chambers of commerce in Vietnam to get connected with local distributors.
- Another option is to contact agencies in Vietnam that can help you connect with local distributors
- Generate leads through online marketing and build your reputation in Vietnam
We can help you contact Vietnamese distributors and find the perfect ones for your brand. We have a list of distributors for every industry and a long-lasting relationship with them. Contact us to schedule a meeting.
2.2. SELL DIRECTLY TO VIETNAMESE CONSUMERS
Opting for direct sales requires additional effort on your part in terms of obtaining a business license and managing logistics. However, the benefit is complete control over your brand in Vietnam, without the need to depend on others. Furthermore, as we will explore later in this article, there are simplified methods available for Western brands to sell their products in the Vietnam market.
2.2.1. SELL ON E-COMMERCE
a) More than half of the population is shopping online
According to a report by Vietnam’s e-Commerce and Digital Economy Agency (governed by the Ministry of Industry and Trade), online shopping is embraced by 53% of the population. In 2020, the e-commerce market in Vietnam witnessed an 18% growth, reaching a value of 11.8 billion USD. This accounted for 5.5% of the total retail sales of consumer goods and services in the country.
On the other hand, in another report from We Are Social, up to 45.6 million Vietnamese people buy consumer goods via the Internet .85.5% of consumers (16-64 years old) surveyed said that they had searched for products/ services online channels. 77.3% of them have visited an online retail store and 78.7% have made a purchase on any device.
b) Get instant access to the huge customer base of e-commerce platforms
The e-commerce market in Vietnam is experiencing strong growth. To establish a strong presence in the market, these platforms continuously invest in buying and selling policies, providing support to both sellers and buyers. Therefore, e-commerce platforms have become popular channels for many businesses and independent entrepreneurs.
- Reach a large customer base: These platforms consistently offer attractive programs and promotions that attract a significant number of potential customers.
- Supporting shipping costs and increasing revenue for businesses: Shipping fee assistance policies provided by e-commerce platforms are currently among the appealing factors for buyers. This helps businesses increase their revenue on these platforms.
- Quick and easy store registration on e-commerce platforms: The process of registering a store on e-commerce platforms is extremely fast and easy because the platforms create optimal conditions for opening a store. The registration steps only involve signing up and confirming the store owner’s information.
c) Familiarize yourself with the top 4 e-commerce platforms
Currently, there are four prominent e-commerce platforms in the Vietnamese market: Shopee, Lazada, Sendo, and TiKi. Each platform offers its own advantages, such as:
- Shopee: A massive customer base that is easy to reach customers; the selling process is simple, completely free of charge; support shipping for orders, with highly favorable shipping policies for sellers; etc
- Lazada: Provides a wide range of products in various industries such as fashion, furniture, smartphone, tablets, and accessories, health and beauty products, toys, and sports equipment,…; strong marketing team; etc
- Sendo: A reputable e-commerce platform that leverages the FPT brand; strong development in the fashion and non-technology sectors; excellent customer information security policies.
- Tiki: All products from TiKi undergo strict inspection to ensure their origin and quality are of a high standard; the return and exchange policy follows regulations, creating favorable conditions for buyers
d) Four golden rules to succeed with e-commerce
- Aim for unique products, which attract customers’ attention
Unique products help you face less competition and stand out among other sellers on e-commerce platforms. If you sell generic products, you should add additional value to them in some way, such as enhancing their appearance or giving them a more catchy and distinctive name.
Additionally, e-commerce platforms offer numerous promotional programs every month, including free shipping and industry-specific discount campaigns. You should monitor and take advantage of these programs by registering to improve traffic for your products. It’s also a significant advantage for increasing revenue.
- Invest in high-quality product images and detailed content
Since customers cannot physically see the products, images are the only way to make them feel and experience your shop’s products. Product images should be visually appealing, capturing every angle and aspect of the product, from close-ups to overall views. This helps customers easily visualize and accurately understand what the product will be like. Moreover, attractive images will draw customers’ attention to you rather than your competitors.
The product description should be complete and detailed, providing customers with a clear understanding of the product’s benefits, usage instructions, purchasing process, and warranty, and addressing any customer concerns. This increases the likelihood of successful transactions and reduces product returns. Additionally, remember to optimize the content with SEO techniques to improve visibility on Google search engines.
- Customer reviews are of paramount importance
People often have a habit of searching for and purchasing products that have received positive reviews from previous customers. Evidence from social media and objective reviews from previous buyers help customers make decisions on whether to make a purchase or not.
These customer reviews need to be natural and sufficiently numerous, as customers tend to be skeptical if the quality does not match the price they pay. Therefore, the first principle for selling on e-commerce platforms is to strive to encourage all customers to provide detailed reviews about the product, service, shipping, images, and actual products.
- Avoid engaging in price competition when selling on e-commerce platforms
Participating in price wars while selling on e-commerce platforms will only reduce your profitability and potentially lead to losses, as there are many competing sellers willing to undercut prices.
Instead, focus on improving your ranking by processing customer orders quickly, investing in quality products, content, and images. Build a long-lasting brand with a unique style, manage inventory, deliver orders to customers on time, and prioritize efficient shipping processes, rather than competing on price with other competitors. Additionally, invest in expanding sales channels to reach customers through various channels.
2.2.2 SOCIAL MEDIA IS ALSO AN E-COMMERCE CHANNEL
With the growth of online shopping usage in Vietnam, both businesses and consumers now use these channels to advertise, sell, purchase products, and more. In fact, in rural areas in Vietnam, social commerce channels outperformed conventional e-commerce marketplaces when it comes to FMCG product sales.
Outstanding social commerce platforms in 2022
a) Facebook
Throughout Vietnam, Facebook has consistently held its position as the leading social media platform and has more recently emerged as a favored online shopping destination among Vietnamese consumers. Similar to other e-commerce platforms, Facebook commerce offers a diverse array of products, ranging from snacks to home appliances.
A recent survey revealed that approximately one in every five online shoppers in Vietnam has directly made purchases on Facebook, although the platform has primarily been utilized for product exploration and discovery.
Live streaming commerce, or live selling, hosted on social media platforms such as Facebook, is expected to further boost sales through direct engagement with consumers.
b) Zalo
Zalo started as an app to connect and listen to calls and gradually developed into a social networking platform. Because of this, Zalo not only supports businesses in sales but also in marketing and customer care activities.
- Zalo Official Account
OA allows access to 100% of users interested in each post, while Facebook Fanpages have limitations, reaching only about 20% of the page followers.
Maximize user experience. Zalo restricts sending spam notifications, avoiding user annoyance.
Easily set up targeted messaging for specific user groups (age, gender, location, etc.).
Send messages quickly with fast speed, including high-quality image and video attachments.
Achieve fast reach with cost savings, suitable for all businesses.
…
And many other features that support effective business access and customer service. Therefore, OA is always a marketing strategy that every business is interested in and invests in.
- How to optimize Zalo Official Account for your brand
– Optimize the number of followers
Zalo OA allows a maximum of inviting 20 interested friends per day. Therefore, you should utilize this feature to naturally increase the number of followers and interest in your OA account.
– Invest in quality posts
Content is always a crucial factor in determining whether customers are interested in your business or not. Additionally, developing high-quality content is an effective way to utilize Zalo OA to build your brand and establish business credibility.
Therefore, always prioritize refreshing your content, focusing on creativity and attraction. Create value for your customers when they follow and pay attention to your daily posts!
In particular, the frequency of posting is also important. Plan your posts to maintain interaction and a regular presence of your brand. This is a secret to increasing brand recognition for your business.
– Advertising on Zalo (Zalo Ads)
Zalo Ads is an effective tool for promoting and reaching customers. Therefore, businesses can invest an appropriate budget in it. Implementing advertising campaigns helps increase the number of followers, and customer interest, and improves sales performance.
2.2.3. SELL CROSS-BORDER ON LAZADA GLOBAL OR SHOPEE GLOBAL
Vietnam’s cross-border (B2C) retail sales are estimated to grow by over 20% annually, reaching VND 75.4 trillion (equivalent to USD 3.3 billion) in 2021. As a result, it is expected that Vietnam’s B2C will reach 256.1 trillion VND (11.1 billion USD) by 2026.
Numerous e-commerce platforms provide cross-border options for merchants, with Shopee and Lazada being the most renowned online stores in Vietnam. These platforms enable businesses to engage in international trade and connect with a broader range of customers.
a) Shopee global platform
Shopee is gradually becoming the best Vietnamese website for business-to-consumer (B2C) online retail, not only offering online shopping services but also owning various mini-apps such as Shopee Food, Shopee Mart, Shopee Wallet, insurance services from banks, booking flights, hotels and so on.
Shopee has some very simple and easy-to-use features for users. Now, they are starting to add more features to make it easier for sellers to analyze data and start advertising on Shopee.
b) Lazada global platform
Lazada accelerates in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam through entrepreneurship and innovation. With the largest installed orchestration and network around, Lazada is part of the daily lives of customers around and they are meant to serve 300 million customers by 2030.
With great resources from the parent company, Lazada always carries out large-scale investment advertising campaigns. Lazada implements a marketing strategy that covers all media from Online to Offline and social networking platforms.
2.2.4 SELL ON YOUR OWN WEBSITE
Website is considered an official sales channel, bringing many benefits to businesses. However, not everyone knows how to sell products on the website effectively
- Provide information about the sales policy
Your website, besides providing product information, provides information about purchasing and sales policies (delivery, return, as well as product warranty policy) to customers is an effective way to sell on the website today to help customers easily order products.
Besides, it also gives customers a lot of interesting experiences when visiting your website.
- Respond to Customer Consultation Messages Quickly
Bringing a high experience to customers is an effective way to sell on the website that you need to pay special attention to. Any customer can encounter problems while surfing the website.
Maybe customers do not know how to order online, need more advice on models, need to answer questions about product size, color … And you need to answer immediately.
- Focus on Website Content and Images
The website will be arranged with a detailed and easy-to-understand product division system, sharp images will create the attraction of many customers. Therefore, the more professional your website is in terms of content and images, not only helps you win the trust of customers but also puts them in a higher position than competitors.
- Link with other Sales Channels
In addition to selling on the website, combining multiple sales channels such as Facebook, Instagram, and Shopee, … at the same time will help you make the most of the number of potential customers.
Through these sales channels, you can easily reach a wide range of customers, and your products will be more visible to everyone.
- Run Ads for the Website
The website is the bridge between businesses and customers on the online platform. So, to get more visits and visits from customers, you need to run ads for your website.
GMA can help you create your own website in Vietnam and build the perfect strategies for your brand.
3. In Conclusion
We possess the necessary skills and knowledge to assist you in capitalizing on the possibilities offered by online distributors in Vietnam. Whether your aim is to collaborate with distributors who operate on well-known eCommerce platforms like Shopee and Lazada, we have the expertise and resources to provide guidance.
Our capabilities extend beyond distribution. As experts in lead generation, we can streamline your prospecting endeavors, enabling potential partners to uncover your brand. Through the cultivation of a robust online presence and strategic investments in advertising and high-quality content, we will support you in establishing a trustworthy reputation that deeply connects with Vietnamese consumers.
Don’t hesitate to contact us!
