Personalization: What Retailers in Vietnam Can Learn From China

Post by 
Matthew Ryan
July 30, 2020

Vietnam: the Rising E-Commerce Tiger

As the China retail market matures, industry focus has switched to South East Asia, where the growth is significant and the future potential evident . Starting from a low-base, it’s expected that these markets will emulate the disruptive innovation-led approach witnessed in China over the last decade.  A recent report from Bain&Company, corroborates this position and particularly highlights the Vietnam as a market suitable for prominent digital disruption.

Unlike more mature European and North-American markets, Vietnam is comparably at an embryonic stage in its E-Commerce development, but is experiencing dramatic upturns in E-Commerce adoption and sales. Previously, E-Commerce penetration had been sluggish online retail only accounted for 5.5% of retail sales in 2020. However, since then, the country has experienced an E-Commerce boom, according to the Vietnam E-commerce Association (VECOM) has reached recent growth rates of 30%. The demand for E-Commerce is high in Vietnam, but technology wise it is still in a low stage of maturity.

Tiki and Sendo discuss merger – GEREJE Corporate Finance ...
Tiki, Shopee, Sendo & Lazada are the big 4 players in the Vietnam E-Commerce market

Getting Personal Like China

China is the obvious benchmark for developing digital retail markets like Vietnam. The country only really opened up in the mid-90’s which led to leapfrogging of traditional retail models. The bedrock of the China internet boom has been an intensely competitive environment with major players battling to better use data and technology in order to win customer engagement. In order to retain customers, providers are forced to continually update services and touch-points to match consumer needs. Like many developing countries, China is extremely mobile-centric and business models are mobile focused.

There is strong reason to believe that similar conditions are now beginning to arise in Vietnam, while it’s hard to replicate retail models, there are specific areas of Chinese retail innovation that are ripe for emulation. Where China has really excels over other countries, is in the area of personalization and customization. In this article, we look at personalization retail concepts suitable that are recommended for adoption in Vietnam.

O2O Personalized Service

Retailers in China are masters at monitoring consumers behavior on a granular level and using the resulting data to provide next-level personalized experiences. Integration with the WeChat ecosystem allows brands to offer this type of intimate service, round-the-clock and both online and offline.

Take the example of the health and beauty retailer Watsons, who launched cloud-based stores in the beginning of 2020 on the WeChat Work platform. Each of the cloud stores is linked to a physical store that acts as a warehouse for instantaneous purchases. Customers are encouraged to visit the physical store to try products before making purchasing decisions.

It is the integration with WeChat that really personalizes service. Customers are encouraged to add staff on the Chat app, who then offer personal recommendations and advice and guide them to order products. When human advisors are not available, this same guidance is provided by an AI chatbot, named Wilson. These digital initiatives helped Watsons’ to improve digital sales by 80% at the peak of the COVID pandemic, while competitors struggled.

Vietnam Messaging App Zalo: A Super App which might be bought by ...
Vitenamese Messaging app Zalo has morphed into a a full Super-App ecosystem like WeChat

In Vietnam the most popular messaging app is homegrown Zalo, that is following the WeChat ‘Super App’ model, including offering payment options. This integration of chat, payment and ecommerce functionality creates the potential for replicating the 24hr cloud store Watson’s model.

Personalized Stores

Many brands are reluctant to sell their products through larger internet marketplaces because they worry about not being able to communicate their value proposition in the noise of so many products. E-Commerce marketplaces in China offer innovative sets of tools to brands to customize flagship pages in order to offer personalized service to customers.

Personalized Experience on Tmall

Tmall powers partnered brands to be able to offer customized flagship pages and product selections to individual customers based on their preferences. Content offered is also tailored for different audience preferences. An example of this is that users who enjoy live-stream shopping will see more of this type of content than those who prefer short-form videos.

Right now marketplaces and online stores in Vietnam are still lacking in terms of personalization. Shopee, the market leader, plans to offer more personalized and entertaining online shopping experience this year. There is no overall leader yet in the unfolding eCommerce landscape in Vietnam, but the personalized assortments, user experience and content is the big opportunity to get ahead.

Data-Driven Customer-to-Manufacturer Retail Models

Being so close to the supply chain in China, means that retail players can harness customer data to offer customized and made to order products for consumers. For millennial and Gen-Zers, self-expression and individuality is important, hence the need for greater personalization. Take for example, the case of sportswear manufacturer Anta that has foot measuring machines in their physical stores. Measurements and customer data is saved in the company’s system and this can be used to create a custom pair of shoes for the individual in less than 45 days.

Anta customization through data
Anta leverages data and close-relationships with manufacturer to offer customized products

Vietnam is rapidly becoming a major player in apparel manufacturing and if e-commerce manufacturers take the initiative, there is clear capacity to offer data-driven customizations that we see in China. Vietnam is the third largest garment exporter in the world, and headed for 10% YOY growth in 2020 pre-COVID.

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