Boxme is a pioneer start-up that provides logistics solutions for e-commerce firms in Vietnam (Source: VNA) Hanoi (VNS/VNA) - As the pandemic brings opportunities to the e-commercesector, the local logistics industry also has a chance to grow.
According to a study by Jones Lang Lasalle Vietnam Co, Ltd (JLL),traditional brick-and-mortar retail outlets have suffered as countriesimplement stay-at-home and social distancing policies
“Certainly, the dependence on e-commerce will explode and will change thebehaviour of online consumers, so the logistics sector will play an extremelyimportant role,” general manager of JLL Vietnam Stephen Wyatt said, adding“China's supply chain disruptions in February and March are valuable lessonsfor future business plans.”
E-commerce platforms are racing to seize golden opportunities at this uniquetime. Grab, often considered Southeast Asia's super app, started testing itslatest GrabMart service for users in HCM City in March, while Tiki Vietnam reported receiving 4,000-5,000 ordersper minute at peak hours.
As the second fastest growing e-commerce market in Southeast Asia, afterIndonesia, Vietnam has set a target that the e-commerce industry would grow by25 percent per year to reach 35 billion USD with more than half of thepopulation shopping online by the end of 2025.
The Government targeted that 55 percent of the country’s population would doonline shopping by the end of 2025 and the average spending for online shoppingwould be about 600 USD per person per year.
According to the e-Commerce White Book 2019 by the Vietnam e-Commerce andDigital Economy Agency under the Ministry of Industry and Trade, e-commercerevenue jumped 30 percent from 6.2 billion USD in 2017 to 8.06 billion USD in2018. About 39.9 million people shopped online in 2018, up by 6.3 million peopleagainst the previous year. Average spending for online shopping was 202 USD perperson in 2018, 16 USD higher than in 2017.
At the same time, the e-Conomy SEA 2019 report by Google and Temasek predictedthat e-commerce in Vietnam would expand 43 percent per year in the 2015-25period, making Vietnam the fastest growing e-commerce market in the region.
Stephen said e-commerce logistics was labour-intensive in the past, however,now new technologies such as AI, machine learning, and IoT have allowed for greaterautomation and increases in productivity, as well as better utilisation ofspace.
The JLL leader said: “It is a driving force to reduce virus transmission,”adding that a lot of warehouse systems have recently employed robots toprocess, select and package goods as robots can work independently andefficiently for jobs of high volume and continuity.
Seeing the importance of using robots in logistics work, JLL does not see suchfacilities in many warehouses in Vietnam.
Xuan Pham, Marketing Director of JLL, said the local industry was still quitebackward compared to the growth rate of technology in Vietnam, adding: “It istime for stakeholders to conduct redevelopment and upgrade to have smart andhighly automated warehouses to meet growing consumer demand in the country.”
HanVan Loi, CEO of Boxme, a pioneer start-up that provides logistics solutions fore-commerce in Vietnam and other countries in Southeast Asia confirmed hisfirm’s revenue was still growing 45-50 per month during the pandemic.
With five years of operation in Southeast Asia and partnerships with China, theUS and Hong Kong, Loi said “Compared to the region and the world, we are stilllagging behind in terms of logistics technology.”
Loi added while the world has used the 5PL logistics service that managesall stakeholders in the distribution chain on e-commerce platforms for manyyears, the use of technology in Vietnam was still much lower.
The CEO said if local firms wanted to compete, they must make an effortthree to five times bigger especially after increasing e-commerce use after thepandemic.
He also mentioned the higher competition from foreign firms to Vietnam whenthey realise it as a "promising land" of e-commerce. With strengthsin capital and better technology, foreign firms could dominate the market.
Loi said: “Local firms will face the risk of being eliminated from thegame if they don’t develop well.”
The CEO said the local infrastructure system for logistics services hasnot received investment, or upgraded proportionately and in accordance with therequirements of fast and modern development, leading to expensive transportcosts and reducing competitiveness.
In this case, Xuan from JLL said: “Investing in automation will makesense in the long run because the cost of applying technology to warehouses isquite expensive. In the case of another contagious scenario in the future,factories with high technology will certainly overcome the challenge moresmoothly.”/.
VNA
