Buy and Sell in Vietnam: Explore the customer behavior in 2023 and consumption trend in 2024

Dive into the world of buying and selling in Vietnam. We'll share insights into how people shopped in 2023 – what they liked, and why. Readers also received a sneak peek into what's expected for shopping trends in 2024. It's a simple guide for foreign businesses to understand and adapt when entering the Vietnam market

1. Overview of Vietnam’s consumer market

1.1 Buy and sell behavior of the middle class

In Vietnam, the buy-and-sell landscape has witnessed significant transformations, fueled by the remarkable expansion and diversification of the middle class in recent years. Geographically widespread and increasingly diverse, this demographic has grown in both numbers and expectations. Projections suggest that by 2035, over half of Vietnam's population will join the global middle class, leading to a boost in disposable income and a substantial uptick in consumption.

The optimistic outlook of the middle-class consumers in Vietnam remains resilient, even in the face of economic challenges and a post-recession period. According to McKinsey's analysis, the economic future of Vietnam looks promising over the next decade, with anticipated GDP growth ranging from 2% to 7% between 2023 and 2030.

This economic surge is predominantly driven by Vietnam's thriving manufacturing sector, benefiting from one of the region's lowest wage rates. Additionally, the country's well-educated workforce contributes significantly to its economic strength

1.2. Economic challenges and inflation

Nevertheless, in the early months of 2023, Vietnam is confronted with economic difficulties that have the potential to affect the purchasing power of its citizens. Notably, there has been a decline in demand from crucial markets such as the United States and the European Union, leading to a projected decrease in the export value of Vietnam by 9-10%, as opposed to the 14% recorded in 2022.

Concurrently, it is anticipated that inflation will linger at approximately 3.8% throughout 2023. Despite already being relatively elevated, this inflation rate could pose a significant burden for individuals in lower income brackets. Consequently, the adverse impacts of inflation may be felt by the populace, potentially diminishing their purchasing capacity and putting strain on the mortgage market. Consequently, this leaves real estate developers vulnerable to liquidity pressures, which can have repercussions on overall wealth and consumer behavior.

1.3. The economic landscape  after COVID pandemic

Despite the challenges posed by the COVID-19 pandemic, Vietnamese consumers maintain exceptionally high levels of trust and optimism. According to the McKinsey Vietnam Consumer Pulse Survey conducted in 2022, more than 60% of respondents were optimistic about the country's economic recovery, anticipating robust growth similar to the pre-COVID-19 period within the next two to three months.

This positive outlook extends into 2023, with 70% of Vietnamese consumers intending to spend the same amount or even more during the Tet holidays compared to 2022. There is a notable inclination among consumers to indulge themselves, as over 70% of survey participants express their intention to increase spending on products and services they have been saving for over the past year and a half.

1.4. Consumer behavior in Vietnam

Despite their positive outlook, Vietnamese consumers are becoming more discerning and cost-conscious. They are expected to modify their spending patterns in response to economic challenges and a sense of instability. Over 90% of consumers express worry about escalating prices, especially in the context of inflation, fuel shortages, rising fuel costs, and higher interest rates.

This increased financial strain and uncertainty are pushing consumers towards more careful and well-researched shopping decisions, signaling a change in their purchasing behavior.

To address the evolving consumer landscape in Vietnam, businesses might want to consider adopting effective "buy and sell" strategies that align with the preferences of the discerning yet hopeful middle-class consumers.

Overview of consumer behavior in Vietnam: among the highest worldwide

Source: McKinsey COVID-19 Consumer Pulse Survey 2022, conducted in August (for Australia, China, India, Indonesia, Japan, and South Korea), October (Philippines), and December (Vietnam).

• Optimism: Potential recovery within 2-3 months and stronger post-pandemic development.
• Economic impact over 6-12 months, followed by stabilization or slow growth.
• Pessimism: Long-term pandemic effects on the economy, predicting prolonged decline or recession.

McKinsey's research indicates no significant shift in consumer attitudes toward COVID-19 from August to December, except in China, where positive changes are expected due to the government lifting COVID-19 restrictions.

Vietnamese consumers exhibit the highest income reduction, consumption, and savings behavior in the Asia-Pacific region.

Question: How has the COVID-19 pandemic affected the following factors? 

Source: McKinsey COVID-19 Consumer Pulse.

Vietnamese consumers are becoming more discerning and seem to be evolving in four key directions:

• They prioritize value.
• They prefer omni-channel platforms.
• They need to be more brand and store-loyal.
• They seek purpose in their shopping.

They aim to maximize the value of certain items but may be more extravagant in others.

Across categories, inflation, and consumer preferences, the shift to premium brands seems to drive higher spending. At the same time, a reduction in the number of items purchased seems to contribute to decreased expenditure.

• Firstly, there is a trend toward increased consumption in most categories, except for fresh food and fuel. Consumers are willing to spend more on household and personal care items, although less on outdoor activities. Categories like vitamins, over-the-counter medications, fitness products, and personal health care items are also on the rise.
• Secondly, increased spending on premium-priced items or "better value for money" packages can be expected. Meanwhile, products at average price points may face the risk of inventory buildup.

2. Buy and Sell in Vietnam's trends in the fourth quarter of 2023

Consumer trends in the last quarter of 2023, particularly those related to buying and selling in Vietnam, are influenced by various factors, as highlighted in the 2023 Global Consumer Trends Report by Qualtricss:

2.1 Embracing smart technology:

Vietnamese consumers are integrating smart technology into their daily lives, utilizing not only smartphones for communication, work, and entertainment but also incorporating other smart devices like watches, headphones, speakers, cameras, and smart TVs. This tech-savvy approach aims to enhance overall quality of life. Additionally, there is a growing inclination towards using smart applications for swift and convenient transactions, bookings, and payments.

2.2 E-commerce and online shopping experience:

As the year-end marks a significant shopping period, online shopping gains popularity among Vietnamese consumers due to its convenience, diverse product offerings, and competitive prices. Cimigo reports a notable 19.8% increase in retail sales and service revenue in 2022 compared to 2019. The internet economy in Vietnam is projected to surge from 23 billion USD in 2022 to an estimated 52 billion USD by 2025. Consumers in Vietnam are also seeking an omnichannel experience, desiring a seamless integration of both online and offline shopping channels.l experience when shopping online, meaning they can combine online and offline channels

2.3 Sustainable consumption

With an increasing awareness of environmental, social, and health issues, Vietnamese consumers are prioritizing products with transparent origins that are eco-friendly and safe. There is a growing inclination towards choosing products and services that have minimal negative impacts on both the environment and human health. Cimigo reveals that 67% of Vietnamese consumers express a preference for products with green labels or sustainable certifications. Moreover, businesses are expected to adopt socially responsible practices and maintain transparency regarding the sourcing and composition of their products

3. 5 key factors for successful Buying and Selling in Vietnam

3.1. Creatively adapt international products for local consumers

Tailoring international products to the preferences of local consumers is crucial for businesses involved in buying and selling in Vietnam. This not only helps meet consumer needs but also involves the strategic creation of genuine value for customers.

3.2. Prioritize revenue growth with a customer-centric approach

Success in the realm of buying and selling in Vietnam requires a focus on revenue growth. It's not just about selling more products; it's about delivering quality products and excellent service that truly add value to the customers' experience.

3.3. Optimize investments by strategic saving and spending

Efficiently managing investment capital is vital for businesses engaged in buying and selling in Vietnam. This involves smart saving strategies and targeted spending in key areas to ensure that costs are utilized effectively.

3.4. Stay agile by adapting operating models

Being adaptable is a key trait for consumer goods businesses in Vietnam. The ability to adjust operating models based on evolving customer and market needs is crucial. This demands a combination of creativity and discipline in business management to operate with speed and flexibility.

3.5. Foster growth through innovative business models

Embracing new business models is essential for continued growth in the Vietnamese market. As consumers become more sophisticated and connected, innovative approaches, such as investing in media-retail networks or developing digital ecosystems, can generate more value and provide a more thoughtful and effective onboarding experience for consumers.

4. Predictions for Buying and Selling trends in Vietnam in 2024

Based on current consumer trends and future influencing factors, we have forecast some consumer market trends in 2024 as follows:

4.1 Embracing green and sustainable choices:

As a response to the environmental impact of natural disasters in 2022 and 2023, there is a noticeable surge in people's consciousness about environmental protection and green living.

Consumers are gradually transitioning towards a sustainable lifestyle, opting for clean, green foods that promote ecosystem protection over industrially produced items that harm the environment. A report from UNFPA emphasizes Vietnam's recognition of the pressing need to shift consumption patterns towards sustainability for environmental preservation and proactive climate change response.

This shift is reflected in Vietnamese consumer behavior, where 80% are willing to pay more for products committed to "green" and "clean" values, particularly those produced using environmentally friendly raw materials.

In 2024, expect a thriving market for green products such as organic fruits and vegetables, vegetarian food, seltzers, biological preservation, and renewable energy. These products are likely to capture the attention of consumers who are increasingly inclined towards sustainable choices.

4.2 Catering to the aging population:

According to a UNFPA report, Vietnam is experiencing one of the fastest rates of population aging globally. The percentage of elderly individuals (60 years and older) in the total population has risen from 9.9% in 2011 to 12% in 2021, with a projected increase to 17.9% by 2030.

While this demographic shift presents challenges, it also opens up opportunities for businesses operating in the health care and elderly care sectors. The elderly population represents a potential customer segment with stable income, ample free time, and heightened consumer awareness.

In 2024, anticipate the market for products and services catering to the elderly to witness increased innovation and diversity. The trend of developing products and services meeting the needs of the elderly, focusing on healthcare, safety, and convenience, is expected to continue its upward trajectory. Businesses can tap into this growing market by addressing the unique requirements of an aging population.

5. Conclusion

Vietnam is a potential market for foreign businesses that want to invest or expand their business. To be successful in this market, businesses need to grasp and meet the new consumption trends of Vietnamese people.

In order to assist non-native merchants who want to expand their business in Vietnam, Ezbuy provides a service named “Sell in Vietnam”. This service provides end-to-end support for foreign sellers when doing business in Vietnam, from import products, storage, fulfillment and last-mile delivery.

If you encounter any trouble when selling in Vietnam, don’t hesitate to contact us via [email protected]