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Amazon to enter Vietnam in challenge to Alibaba

US e-commerce company teams up with local businesses to boost product offering

A staff member collects merchandise for customers' orders at the Amazon Prime Now facility in Singapore, which opened in 2017.   © Getty Images

HO CHI MINH CITY -- is to officially launch its e-commerce services in Vietnam, with the aim of taking on Chinese rival Alibaba Group Holding in one of the fastest-growing e-tailing markets in the world.

The U.S. company has partnered with Vietnam E-commerce Association (VECOM), which, with its 140 members, forms one of the biggest groups of local online businesses. This will be the first time VECOM has joined hands with an e-commerce player. The partnership will enable Amazon to beef up the products available on its platform and allow local small and medium-sized enterprises to sell and export their goods through the platform. Nguyen Thanh Hung, chairman of VECOM, told reporters that the association met a representative of Amazon last year to discuss the U.S. group's expansion plans in Vietnam. 

Amazon is expected to reveal the detail of its plans on March 14 at the Vietnam Online Business Forum 2018, which will be held in Hanoi. The e-commerce group's move into the country follows its expansion into Singapore last year.

Amazon has been lagging behind its Chinese rivals in cultivating Vietnam. Alibaba officially entered the country last year, and claimed it had accumulated tens of thousands of business members after just half a year. By comparison, some 200 Vietnamese companies are currently selling their items on the Amazon platform, according to the latest survey by the Vietnamese authorities.

The Chinese group also increased its ownership in Lazada Group, an e-commerce company widely operating in Southeast Asia, including in Vietnam, from 51% to 83% in June last year. Lazada is currently the biggest e-tailer in Vietnam, controlling some 30% of the country's online shopping market. The move enabled Alibaba to rapidly penetrate Vietnam's e-commerce market and bring in products directly to local consumers through its business-to-consumer model.

Vietnam's e-commerce market is among the fastest-growing globally, according to a report released by market researcher Kantar Worldpanel. In 2016, Vietnam's e-commerce revenue increased 23% to $5 billion, accounting for 3% of total retail revenue in the country. The growth rate was estimated at 25% over 2017, and is expected to continue to rise over the next three years. Vietnam's e-commerce annual revenue is projected to reach $10 billion by 2020, accounting for 5% of total retail revenue.

More than 90% of investment into Vietnam's e-commerce platforms has come from foreign sources, including from China, South Korea and Thailand as of 2017. Popular names in the market include Lazada, Tiki, Vatgia, Hotdeal, Shopee, Nguyenkim, Adayroi, Thegioididong, Sendo, FPT shop and Careerlink.

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