With the funding of the Vietnam-based Internet company VNG Corporation (VNG), the e-commerce platform Tiki has been more confident in making new investments. Tiki has become the first enterprise in Vietnam to use the marketing technology of Criteo, a fairly expensive foreign technology that allows Tiki to track behaviours, choices, habits, and psychology of online customers. As a result, Tiki’s number of orders and revenue have increased by more than 65 percent after just three months of application. Marketing director of Tiki Phan Anh Tuan said that Tiki continues to seek personalised solutions for every customer as well as providing multi-platform for multi-device transactions of customers.

Compared to the time when Tiki was established (2010), the consumer spending habits of Vietnamese have changed. A report of Euromonitor pointed out that 75 percent of the survey respondents preferred online shopping, because shopping online helps buyers save time, conveniently conduct payment, easily make price comparison, and be able to purchase at cheaper prices while products can be home delivered to and the purchase can be made at any time, etc. This convenience, in addition to the young population of Vietnam, the improved income level and the increasingly strong penetration of the internet and smartphones, has facilitated the online retailing activities in Vietnam to record outstanding growth.

According to assessment of the market research firm Nielsen, the e-commerce market of Vietnam in 2016 was valued at up to four billion US dollars (equivalent to nearly 100 trillion dong) with annual growth rate of 22 percent. The Vietnam E-commerce Association forecasted that the scale of the market may reach 10 billion US dollars in the next five years. The competition will not only occur among e-commerce firms but retailers such as Mobile World Group (MWG), FPT, Nguyen Kim, Vien Thong A, Lotte, Big C, and Saigon Co.op, etc. are also joining the market.

In fact, retailers like MGW, FPT, and Nguyen Kim have sought to accelerate online retail. MWG even proudly showed investors about the 3.3 trillion dong revenue from online sales achieved in 2016, a 104 percent increase compared to the previous year. Chair of MWG Nguyen Duc Tai has revealed an ambition to turn another retail website – vuivui.com – into a project which creates breakthrough in the future of MWG. This project is expected to grow even faster than MWG’s Mobile World chain, Green Electronics chain, and. Green Grocery convenience store chain.

Cooperate or compete?

The trend to expand investment in online channel of traditional retailers has been developing strongly. Typically, after being surpassed by Amazon in both growth and brand valuation, Walmart has boosted investment in e-commerce. In just one year, Walmart launched a series of investments such as acquiring the commercial start-up Jet, taking over the online furniture retailer Hayneedle, expanding its online grocery business, and providing home delivery services at some places. As a result, according to CNN, the e-commerce sales of Walmart jumped 29 percent, higher than the 22 percent of Amazon. Notably, Walmart has become the second largest online retailer in the US in terms of revenue. The mobile application of Walmart was ranked in the top three most popular retail applications.

However, Alban Villani, Commercial director of Criteo in Southeast Asia, Hong Kong and Taiwan said that e-ecommerce has not overwhelmed and replaced the direct sales channel because consumers are not fully confident in shopping online for many items related to beauty care, health care, entertainment, travelling, home appliances, grocery, furniture, and training, etc. A survey in the US by TimeTrade in 2015 also showed that 85 percent of shoppers want to touch and feel the products before buying.

Obviously, the supermarket chains and stores are still very important in the retail activities of firms. That is the reason why many retailers have continuously making efforts to expand their number of stores. Even e-commerce giants such as Amazon and Alibaba are returning to the real world. In November 2015, Amazon opened its first bookstore in Seattle, the US; while Alibaba opened its first store in China in January 2016.

The expansion of stores increases costs and decreases profit of the retail industry. E-commerce appears and levels off these advantages of retailers. However, e-commerce needs experience space to make customers become more loyal and connected. The combination of online and offline channels, to some extent, is necessary for retailers.

In Vietnam, no online firm has penetrated offline area. Tiki has recently confirmed that the firm has not thought about this yet. Nevertheless, Alban Villani believed that at some point, Tiki as well as e-commerce firms will grow to a level where online and offline are combined like Amazon and Alibaba. The report released earlier this year by Nielsen also mentioned that since the psychology, habits and choices of consumers have changed, multi-channel business model which connects both online and offline shopping will become the retail trend in the future. Those who have built a good foundation in both offline and online sales will not have to worry. However, retailers that have not paid adequate attention to the online channel can hardly feel comfortable. In fact, although e-commerce is estimated to account for just four to five percent of the total retail sales from now until 2020, consumers have, and will use online channel to search for products, compare prices, and read reviews, etc. If websites are the places to generate revenue, stores offer customers space to experience, thereby luring and retaining them. Certainly, an online and offline mixed system is not suitable for small firms.