From Inflection Point to Catalysts of Change: The Rise of Vietnam’s E-Commerce Frontier

Southeast Asia and its emerging markets have seen rapid growth in recent years, driven by a burgeoning middle class and a developing digital economy. While the emerging markets in Southeast Asia still face various challenges—from wealth inequality to climate change and its impacts—this growth has given opportunities to a world of digital commerce. In Vietnam—one of Southeast Asia’s fastest-growing digital markets—e-commerce, which is at the forefront of this transformation, has achieved a gross merchandise value of $13.8 billion, marking an over 50% year-over-year growth–the highest increase in Southeast Asia. Projections remain optimistic: some go as far as predicting that its digital economy could reach triple digits by 2030. This rapid expansion of e-commerce in Vietnam drives the growth of technological innovation (in the form of digital marketing practices) and the greater digital economy, benefiting the overall standard of living in the country.

The rise of online shopping in Vietnam reflects a growth in digital marketing and the digital economic framework. This massive expansion is driven by a young and energetic population and an increasingly prevalent internet presence, which reached an 89% usage rate in 2023. One result of the internet boom is the success of e-commerce platforms, such as Alibaba and Shopee. These platforms make it easier for individuals to buy and sell goods and services, but they also highlight key economic challenges, including competition between local and global businesses, logistical inadequacies, and fragmented payment systems. Thus, merchants will rely less on Chinese imports–which was previously the primary source of many goods and services–and will instead look to include more Southeast Asian countries and their e-commerce platforms. This shift in supply chains will allow the shoppers to tap into a greater value pool, or a market segment that addresses customer needs, technological advancements, and regulatory changes, opening up more opportunities for logistics providers and businesses. As companies adapt to this digital transformation, they have made it clear the importance of having innovative digital marketing strategies and developing a thorough digital economic framework. 

Another aspect that drives this growth in Vietnam is the adoption of smartphones into everyday lives, leading to rapid uptake of online shopping fueled by digital payment methods. As the internet becomes more accessible to consumers in Vietnam, they increasingly buy smartphones, switching to mobile-first platforms and towards more social, livestream lifestyles. According to McKinsey’s researchers, supply-driven “inflection points” have seen an uptick in recent years, with Vietnam’s inflection point coming in at close to a 100% e-commerce growth in 2019. These inflection points suggest a significant increase in e-commerce activity that are a result of better infrastructure, market readiness, and overall supply. For Vietnam, the near 100% increase in e-commerce represented a pivotal period where the market rapidly transitioned to a new phase of expansion. This shift has gone hand-in-hand with the rise of digital payment methods, as smartphones serve as the platform through which individuals engage in seamless, app-based transactions. Individuals have begun to favor digital payment methods, driven by the advent of advanced technological payment systems such as Blockchain and a growing cross-border e-commerce, where it is more convenient for consumers to pay online. 

The recent trend of online marketing strategies has encouraged Vietnam’s e-commerce to leverage AI to cater products and services towards specific consumer’s needs. In Vietnam, the growing digital economy has allowed businesses to use AI to tailor customer experiences and boost loyalty, allowing brands to make more informed decisions when it comes to digital marketing and sales. For example, Shopee provides a selection of AI-powered tools for small businesses to help them establish their online presence and overcome language and cultural barriers when crossing borders digitally. Additionally, Vietnamese brands (e.g., Guno) have leveraged companies outside of the region to achieve unprecedented growth. Guno leveraged TikTok’s live streaming feature to attract over 3000 viewers and sell goods worth close to $100,000. Accordingly, the company’s monthly revenue increased by twenty. Hence, this AI-powered digital marketing state of the economy in Vietnam has catapulted its e-commerce and reaffirmed  its presence as an emerging market: one that is growing rapidly. 

The harmony between the rise of a young and energetic population, an expansion in e-commerce, and a growth in an AI-powered digital marketing state fuels Vietnam’s digital transformation. Together, these trends are reshaping Vietnam’s economy, as small and local businesses and enterprises are digitizing at striking rates in order to remain competitive in the digital world. Larger players are investing big in the online marketplace, and Vietnam has emerged as a digital hub in Southeast Asia. There are obvious challenges to this rapidly growing digital economy in Vietnam. First, there is still an apparent gap between the urban and rural areas: infrastructure issues, policy gaps, and more. There are also strong concerns with data protection, digital privacy, and regulatory inconsistencies, and there is constant, immense pressure from regional players, including Singapore, Malaysia, and China. However, the most pressing challenge may be the hidden environmental issues that a growing e-commerce network may cause, including extensive packaging that may lead to elevated waste levels, carbon emissions stemming from deliveries, further packaging waste via return rates, and resource intensity loss due to significant energy consumption in servers and warehouses. Some immediate solutions to these include adopting sustainable packaging materials (such as biodegradable or reusable alternatives to plastic) and consolidating deliveries using smart logistics (such as batch deliveries and optimized routes to reduce trips). Longer-term solutions involve investing in energy-efficient warehouse operations to improve energy efficiency and supporting green transportation to reduce carbon emissions from deliveries.

Overall, Vietnam’s emerging market, characterized by a strong push towards a digital economy, is a vital engine for technological growth and advancement. From the internet boom to logistics businesses to AI, this interconnected progress is one of the driving forces of this digital growth. As we look into the future, in Vietnam, the rest of Southeast Asia, and beyond, we must continue to build this digital revolution through an inclusive framework, cross-sector collaboration, and a sustainable, environmentally-friendly infrastructure.

Kei Obata (CC ‘27) is a writer for the Columbia Emerging Markets Review studying cognitive science, decision science, and applied statistics. He is passionate about geopolitics and has a keen interest in the intersection of international relations and developing economies. In his free time, he enjoys listening to music (especially r&b and jazz), playing basketball, and watching crime films. 

Sydney Smith (Trinity / GS ‘26) is a managing editor for the Columbia Emerging Markets Review studying classical civilization. She is interested in clean energy in emerging economies, as well as geopolitical analysis.