Vietnam’s traditional markets try e-commerce, but some sellers are wary

In Hanoi’s historic Dong Xuan Market, stalls are filled with clothes, shoes and souvenirs. Sellers sit around chatting, or play on their phones as an occasional tourist wanders about, a far cry from the bustling center of trade it once was. 

“It’s 12 p.m., no one has come in to buy a single thing,” Phung Mai Hung, a wholesale clothes merchant, told Rest of World. “Sales are poor because of e-commerce’s enormous impact.”

Hung and his wife have run the Lan Hung store in the large indoor marketplace for over 30 years. Faced with dwindling sales in recent years, he taught himself to set up a website, a YouTube channel, and put his shop on Google Maps. But it hasn’t helped. “Selling for tourists is just for fun, it can’t sustain us,” Hung, 63, said.

There are around 9,000 brick-and-mortar markets across Vietnam, with hundreds of shops selling everything from food to clothing to home appliances. They were once thriving business centers. But with the country now the fastest-growing e-commerce market in Southeast Asia, they have fewer shoppers.

“Consumption at many markets is now at just 60% capacity,” said Vo Van Khanh, an executive at the industry body Vietnam E-commerce Association (Vecom) who leads an initiative to revive traditional markets. “They could shut down if we don’t act.”

Across Southeast Asia, e-commerce is booming, with gross merchandise value of about $115 billion in 2023, up 15% from a year earlier, according to research firm Momentum Works. Local sellers have struggled to adapt to the heavy discounts, fast delivery, and cross-border sales from the largely Chinese e-commerce platforms. 

In response, authorities in Indonesia, Malaysia and the Philippines have imposed higher import tariffs on e-commerce purchases. In Thailand and Vietnam, small businesses have called for similar measures.

But Vietnam has taken a different approach: Authorities are encouraging vendors to embrace e-commerce, with the government backing efforts by industry players including Vecom, TikTok Shop, and Shopee, to train merchants. The e-commerce association has trained about 450 sellers at nine markets since May, on how to set up on e-commerce platforms, manage online orders, and do livestream sales, where viewers can purchase products in real time as a host presents them.

Next year, Vecom aims to reach 1,000 markets with an aim of successfully converting 500 vendors. It has also collaborated with Shopee to train more than 20,000 small businesses across the country. 

Separately, at a TikTok event at Ben Thanh Market in Ho Chi Minh City last December, social media influencers helped merchants sell thousands of items via live stream. AI avatars developed by a local company rang up hundreds of orders for everything from home appliances to coffee, according to a local media report.

But beyond a few success stories, most sellers are “very slow to adapt,” Khanh said. According to a Vecom report, less than half of the 450 merchants that it trained have added an online presence, as they lack digital skills, and struggle with managing suppliers and logistics.

“Another key challenge lies in the ability to adapt to rapidly evolving consumer preferences and market trends,” a Shopee spokesperson told Rest of World.

Not all sellers who have been through the training are convinced that going on e-commerce platforms is the solution.

Mai Van Tung has been selling dried seafood at Da Nang’s Con Market for nearly a decade. He joined TikTok Shop after a Vecom training session earlier this year, he told Rest of World.

“But each day, I sell just two to three items — it’s not effective,” he said. “If I post a video and it goes viral, then more people know my shop, and they’ll come visit, so it’s effective in that sense, but not in terms of sales.” Livestreams are also not that useful, as customers in northern Vietnam can’t understand his accent, the 35-year-old said. In addition, shipping costs on TikTok Shop are high because he could not control the logistics. 

For traditional sellers, invoicing, taking care of packaging and logistics, and having to trace a product’s origin to meet the platform’s requirements are all challenges that cannot easily be solved with training, Pham Trung Thanh, CEO of AZ Digital, which trains retailers on online commerce, told Rest of World.

Even getting used to the way that e-commerce operates can be a challenge.

“A traditional sausage seller could close for the day once they sell out,” Thanh said of one shop he had trained. “But online, customers don’t sleep, and if they have to deliver … they don’t have the staff to handle it. Being able to sell is one thing, doing it effectively is very difficult.” 

E-commerce platforms are also becoming more selective. While sales on the five biggest e-commerce sites in Vietnam, including Shopee and Lazada, rose nearly 16% in the third quarter from the same period a year earlier, the number of online shops fell by nearly a fifth as consumers preferred verified sellers, according to analytics firm Metric.

Many sellers would rather not compete in the cutthroat e-commerce marketplace, and instead rely on social media sites and messaging apps to reach customers. Even tech-savvy customers who have embraced livestreams shopping prefer direct messaging for one-on-one interactions with sellers, a recent report by think tank Decision Lab found.

In Da Nang, Tung has about 10,000 followers for his dried-seafood shop on Facebook. It is his preferred channel to reach customers as far as Hanoi, as he can communicate with them directly, he said. 

At Hanoi’s wet markets that sell fresh produce, sellers offer updates and promotions via the Zalo messaging app, Tran Thi Kieu Thanh Ha, a project manager at HealthBridge, a Canadian nonprofit, told Rest of World.

Ha, who is working to preserve wet markets in Vietnam, is supportive of efforts to help sellers join e-commerce sites. But from a preservation standpoint, “if all sellers move online, what happens to the markets?”

Nguyen Phuong Anh, a 22-year old student in Ho Chi Minh City, stopped going to her local wet market last year, and prefers to order all her groceries online. “I got busier, and it’s hot,” she told Rest of World. But when she craves a traditional meal, she goes to the wet market to shop for local ingredients. “They have more variety,” she said. “For instance, only wet markets sell green eggplant.”

But wholesale marketplaces like Dong Xuan cannot compete against e-commerce platforms unless merchants offer unique products or personalized customer service, Thanh said.

At the Dong Xuan Market, beyond ubiquitous QR codes for bank transfers and shops’ Zalo numbers, there is little indication that sellers have embraced e-commerce. Hung, the clothing merchant, has not signed up for e-commerce training. His more immediate concern is the dwindling number of suppliers, and his operational costs, he said.

“We are old, we don’t have the ability to sell [on e-commerce sites],” Hung said. “We can’t even make ends meet. How can we?”