Opportunities for businesses
E-commerce is becoming very popular in many countries around the world thanks to its advantages in areas such as time savings, convenient transactions, and cost optimisation while the traditional ways of introducing products can take a long time to reach the desired market, leading to higher costs and reduced quality. Therefore, the application of e-commerce in business activities is an indispensable and practical trend in Vietnam. It can be seen that e-commerce platforms have brought positive results to many enterprises, especially for those of small and medium sizes. It allows them to reach customers outside of their own geographic region.
Currently, it is easy to find popular e-commerce platforms in Vietnam such as Lazada.vn, Vatgia.vn, enbac.com, muare.vn, and nhommua.com with hundreds of thousands of page views per day. Many enterprises have selected these e-commerce platforms as an effective channel to introduce and sell their products. Businesses can quickly access customers regardless of space and time. With the benefits that such platforms bring, many experts say e-commerce can help small businesses compete on equal terms with major brands in the field of marketing and international trade.
According to Vu Vinh Phu, a retail specialist, e-commerce and digital technologies are opening up big opportunities for small and medium enterprises to bridge the gap with big enterprises thanks to greater fairness and flexibility in the digital business environment. Therefore, in order to compete in the dynamic, high technology environment of the digital economy, enterprises need innovative thinking and to build creative business models. It is also necessary to pay attention to enhancing the quality and quantity of products as well as establishing the trust and credibility of customers because with the online shopping form, prestige is the most important thing to develop and maintain a customer base. It is forecasted that in 2018, the retail market of Vietnam will continue to be an attractive destination for foreign companies, so in the coming time, in order to compete better, domestic retailers must continue to promote online sales.
Difficulties and challenges
According to the Vietnam E-commerce Association (VECOM), the growth rate of e-commerce in Vietnam in 2017 was more than 25% and such strong growth can be maintained during the 2018-2020 period. The information from thousands of e-commerce websites shows that the revenue growth rate for 2017 was 35%. A survey of a delivery service company shows that the growth rate increased from 62% in 2016 to 200% in 2017. As for the payment sector, according to information from the National Payment Corporation of Vietnam (NAPAS), in 2017, the number of domestic online card transactions increased by about 50% compared to 2016, while the transaction value increased by 75%.
In addition, the increasing number of smartphone users in Vietnam has also facilitated the development of e-commerce. Currently on average, every user in Vietnam is spending US$160 per year on e-commerce. It is estimated that about 30% of Vietnam’s population will engage in online shopping by 2020, with per capita purchasing value reaching US$350 per year. As a result, the market growth rate of e-commerce in Vietnam will increase to 22% per year and growth is predicted to reach 30-50% per year in the coming time. In the next five years, the size of Vietnam’s e-commerce market may reach US$10 billion.
The potential for e-commerce development in Vietnam is undeniable. However, there is a real inequity in cross-border online transactions between imports and export with individual customers. Vietnamese customers are buying online goods and services from abroad more than foreign customers are buying online products from Vietnam. The majority of Vietnamese consumers, especially younger generations, are now fond of shopping on websites such as Amazon.com, eBay.com, etc. According to VECOM President Nguyen Thanh Hung, this trend can be attributed to the fact that foreign goods are abundant, diversified, and suitable for consumers, especially the urban youth. In addition, global online merchants have established good reputations. The cost of completing orders for some contracts online from abroad is lower than that of purchases in Vietnam. The majority of Vietnamese enterprises, especially small and medium ones have not properly invested in researching foreign customers' tastes for direct selling, rather than through distributors. Meanwhile, the quality and design of Vietnam’s products are still lower than similar products of other countries. On the other hand, the awareness of the importance and benefits of e-commerce in many Vietnamese enterprises is not sufficient while the traditional way of purchasing with cash is still a major obstacle for the promotion of e-commerce.
In order to promote e-commerce in a sustainable manner, in the coming time, the Government should continue to review, amend, supplement, and promulgate the legal framework and mechanisms for e-payment. More attention should be paid to encourage and attract investment from society to develop the technical infrastructure for e-payment as well as to strengthen policies to encourage the development of potential markets for e-payment applications such as transportation, logistics, etc. Enterprises and e-commerce platforms also need to improve network and information security, and strengthen the process of product quality control as well as take measures to prevent and punish businesses selling counterfeit goods. VECOM and businesses in the field of e-commerce should study and propose amendments to policies that are no longer suitable for e-commerce development. At the same time, the Government and enterprises should cooperate with consumers to promote communication and education activities for guiding the population in making use of electronic payments systems as well as developing the human resources needed to meet the requirements of developing e-payment services in particular and e-commerce in general.
