Start an E-commerce business in Vietnam

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What you need to know to open a new E-commerce business in Vietnam

E-commerce business in Vietnam – the opportunity

Southeast Asia’s internet economy is expected to triple in value over the next few years, with e-commerce accounting for the majority of that value. E-commerce business in Vietnam has a market value reached around 12 billion US dollars in 2020, ranking only after Indonesia, Thailand, and Singapore as one of the region’s fastest-growing internet economies.

In Vietnam, the current digital population and rising internet penetration provide favorable conditions for the growth of e-commerce businesses. As a result, the country’s e-commerce share of total retail sales has been rapidly increasing, and online channels have surpassed modern retail channels in terms of growth within the FMCG market.

The market opportunities are obvious, more and more people are investing in online or e-commerce businesses in Vietnam nowadays. If you are one of those who have an interest in this field, the explanation below may bring some clarification that can make the ground for your successful e-commerce business in the future.

How to sell products online in Vietnam?

or what are the forms of e-commerce business in Vietnam?

In a nutshell, e-commerce is the sale of products over the internet. There are several options. Products can be listed on an e-commerce platform. Or they can also set up a website to sell their own products.

E-commerce platform Vs. E-commerce Website

It is critical to understand the distinction between these two ideas. The business model and entity will be shaped differently depending on which sales channel is used.

E-commerce platform

This is a place to connect multiple buyers or sellers together at the same time. Amazon is a well-known example of this concept. The most popular e-commerce platforms in Vietnam are Lazada, Shopee, Tiki, Sendo, Voso. These platforms are available to anyone who needs to sell their products online. Some platforms, such as Tiki, only allow corporate sellers (those with business licenses). However, the majority of them allow both individual sellers and companies to list their products for sales.

Selling products on e-commerce platforms in Vietnam

To sell your products on these existing e-commerce platforms, you must first create a seller account. Each platform has its own set of terms and conditions for sellers, which are available on their publicly accessible websites. However, the most common requirements are identification documents (personal ID cards for individual sellers or a Business License for corporate sellers) and a bank account in Vietnam. The income from products selling on these platforms will be subject to income tax according to the law of Vietnam.

If a person wishes to open a corporate seller account, he must first obtain a business license. In this case, a trading company with a retailing license will suffice.

Even for foreign investors, forming a trading company is simple. The typical time frame for obtaining a business license is 1-2 months. The retailing license can be obtained after the company is established, and it usually takes about a month, depending on how many products need to be registered.

Creating an e-commerce platform in Vietnam

If you want to build your own e-commerce platform (like Amazon), you must first register a business entity with an E-commerce Platform license. Because the E-commerce platform is regarded as an IT product, such as a website or a phone app, the company can be registered as an IT company with E-commerce and product distribution functions. The process for registering an IT company is similar to that of registering a trading company. The tricky part, however, is the E-Commerce platform license.

The license for the e-commerce platform is subject to ministry approval (multiple ministries). Approval can take up to 6 months or even a year. There are currently only 5 E-commerce platforms operating in Vietnam, and the market is largely untapped. The regulatory requirements mentioned above are the main source of entry barriers. As a result, many investors with limited financial capital and technical capability are discouraged from going this route.

E-commerce website and Selling products on a website

If the website sells products from only one seller (the owner of the website), then this is called an E-commerce website (different from the E-commerce platform described above).

This is essentially a Trading company business model (as described above) with an additional Website Notification step. This is a straightforward task that can be completed in 3-5 working days.

Can a foreigner open an e-commerce business in Vietnam?

Foreign investors are welcome to start an e-commerce business in Vietnam (can own up to 100% of the company). Both a trading company and an IT company are unconditional businesses (See Conditional business in Vietnam). As a result, the incorporation step will take between 4 and 8 weeks. After the entity is established, additional licenses should be obtained.

What are the costs to start an e-commerce business in Vietnam?

The cost to start an e-commerce business in Vietnam involving some factors as follows:

Company incorporation (set up the entity)
Obtain additional licenses (retailing license or E-commerce platform license)
Cost of operations (address leasing, hiring people, tax and accounting)
Cost of Products (Importation, delivery, logistics), etc.

The cost may vary depending on the product sourcing and selling models. To have the most accurate estimation and the free quotes, contact our consultant today via the following forms.