E-commerce boosts Vietnam's express delivery industry
E-commerce boosts Vietnam's express delivery industry
Vietnam's express delivery service market is estimated to reach US$2.19 billion by 2027.
The outbreak of the Covid-19 pandemic has stagnated Business-to-Business (B2B) express delivery services whereas Business-to-Consumer (B2C) emerged, pushing up the growth of the Vietnamese online retail and e-commerce industry.
Vietnam e-commerce drives the development of the express delivery market. Photo: GHN
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Delivery market boosted
The e-commerce and daily essentials goods industry in Vietnam is expected to drive the growth of e-commerce parcels due to an increased number of people shopping from home during the pandemic.
According to Nguyen Thi Hong Ngoc, Commercial Director of GHN, the Vietnam-based delivery startup, besides the surge in the number of order deliveries in Hanoi and Ho Chi Minh City, the rest of the regions including rural areas also recorded galloping growth from 2020 to the first months of 2021.
“In the early months of the year, the number of GHN’s delivered orders in the rural areas, where accounts for more than 70% of the country's total population, monthly increased by 25-50% compared to the same period of last year. In some areas, the surge is even by 100%,” she told Hanoitimes.
Ngoc added that online sales of the company’s business partners operating in food & beverage and FMCG have earned a high growth during the pandemic.
A report from the Kantar Worldpanel Division showed more than one-third of fast-moving consumer goods (FMCG) categories achieved a double-digit increase in 2020 despite impacts caused by the Covid-19 pandemic, growing faster than the pre-Covid time and higher than the FMCG market’s 2019 growth, driven mainly by cooking, transfer from out of home and hygiene.
Prospects for express delivery
The latest report published by Allied Market Research showed factors, such as the growing e-commerce industry coupled with rising in B2C deliveries and rapid growth in international trade services, are expected to drive the market growth.
Vietnam's express delivery service market is estimated to reach US$2.19 billion by 2027, witnessing a compound average gross rate (CAGR) of 22.4% in the 2020-27 period, the report noted.
Regarding end-use, the e-commerce platform segment accounted for the largest share in 2019, contributing to more than four-fifths of the Vietnam express delivery services market, and is projected to maintain its leadership status by 2027.
Source: Allied Market Research, June 2021
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According to a plan set by the Vietnamese government, the number of online shoppers would make up around 55% of the country’s total population with annual average spending of US$600 by 2025.
The growing e-commerce industry would provide opportunities for foreign and local logistics services, especially express delivery services, in the country. The Vietnam e-commerce and Digital Economy Agency (iDEA) has predicted the Vietnamese e-commerce market will reach US$23 billion by 2025.
The rise in the growth of value-added services in express delivery and same-day delivery services are some trending factors in the market.
“Service providers in the market in Vietnam are increasingly focusing on providing distinct types of services such as grading & assortment of products, packaging, labeling, online tracking of parcels, mobile applications, e-mail, and SMS alerts,” the latest report released in June by Allied Market Research noted.
Kerry Express, the Thai express delivery services provider in Vietnam, has offered a diversified range of value-added services at origin and destination, including labeling, packing, gift packing, security tagging, reverse logistics, and call center support.
According to Ngoc, GHN has put into operation its third automatic warehouse in Hanoi, increasing its daily capacity to more than 1.5 million orders and reducing the delivery time to 30 minutes instead of three hours as previously.
She said the company plans to open 1,000 post offices nationwide this year, as part of the goal of shortening delivery time to meet the demand of customers.
Nguyen Van Tu, General Director of Nhat Tin Logistics, a traditional service provider, said that the market has seen an increasing number of logistic providers having invested in large-scale warehouses to optimize operations and offer high-speed delivery to customers. “The boom in e-commerce amid the pandemic is accelerating the warehouse expansion in Vietnam.”
“We will continue to recruit employees, expand our networks and improve the quality of service to meet the increasing demand in Vietnam,” he said.
