Online shopping increases sharply amid the COVID-19 pandemic (Photo: tinnhanhchungkhoan.vn) HCM City (VNS/VNA) -Eighty-three percent of companies in the physical value chain in Vietnam havebeen suffering from supply issues over the past two months due to the impact ofthe COVID-19 pandemic, a recent survey by CEL Vietnam, a supply chainconsulting and training firm, has found.
Of them, 47 percent had issuesspecifically with China supplies and a large majority involved raw materials,it said.
Julien Brun, managing partnerat CEL, said the pandemic is affecting every single country regardless of theirlevel of development.
However, in Vietnam, there werecategories where demand clearly surged, such as packaged food (up 26 percent),dairy (up 10 percent) and personal care (29 percent), he said.
This surge in demand lookedlike a “just in case” purchase decision, a stock-up behaviour, and not ahealthy increase in consumption, he explained.
But the reality is that theactual demand is at a low, with sales of beverages, fashion goods, electronics,vehicles, agricultural products, furniture, footwear, and many other productscoming to a halt both locally and globally, he said.
“As we speak, in Vietnam andelsewhere, manufacturers and retailers’ current sales volumes are too low toabsorb [even] fixed costs, leaving thousands of businesses with negative marginsand thin reserves of cash.
“Export dependent companies areseeing orders cancelled every day, particularly from the EU and the US. As aconsequence, the global transport sector is also being affected and freightforwarders in Vietnam are seeing their volume drop by 25 to 70 percent.”
A number of SMEs have alreadydeclared bankruptcy, and for others the impact on human resources, the mainadjustment variable, is being felt strongly and unemployment is threateningmultiple industries, he said.
CEL also found that companiesoperating in retail, distribution and logistics services (excluding e-commerceand last mile delivery) reported a loss of revenue of 25 percent in the firstquarter and do not expect to recover this loss this year.
Urban consumers seek convenientand safe shopping alternatives for their daily family needs amid the COVID-19threats, and e-commerce and home delivery services have become central to thisevolution, it said.
Brun said: “Figures are stillnot officially published in Vietnam, but Lazada reported a 300 percent increasein the number of orders in Singapore and Grab delivery surged by 200 percent inBangkok. We can assume that comparable growth is being seen in the main citiesin Vietnam.”
So a large volume has shiftedfrom offline to online distribution channels and last mile delivery companiesare barely able to cope with the surge in delivery orders, he said.
One of the main challenges thisshift creates is the ability to transfer goods over long distances, such asbetween the north and the south, since air and rail transport are constrained,he said. Long-haul trucks have become scarce and the lack of transport capacitygenerates delays and extra disruptions, he said.
As people startgetting accustomed to more systematic online purchase and home deliveries,it is likely that this becomes a habit, and it is likely that the post-crisissituation would still benefit the e-commerce and delivery sector while theoffline retail sector slowly recovers, he predicted.
“This is certainly afundamental new trend in the consumer goods industry that we have to keep inmind. The crisis will also further accelerate the e-government initiative,allowing the population to fulfill their administrative duties online and thusavoiding long physical queues. Once the crisis ends, it is likely that theimplementation of digital solutions for consumers and citizens will increasedrastically.”/.
Of them, 47 percent had issuesspecifically with China supplies and a large majority involved raw materials,it said.
Julien Brun, managing partnerat CEL, said the pandemic is affecting every single country regardless of theirlevel of development.
However, in Vietnam, there werecategories where demand clearly surged, such as packaged food (up 26 percent),dairy (up 10 percent) and personal care (29 percent), he said.
This surge in demand lookedlike a “just in case” purchase decision, a stock-up behaviour, and not ahealthy increase in consumption, he explained.
But the reality is that theactual demand is at a low, with sales of beverages, fashion goods, electronics,vehicles, agricultural products, furniture, footwear, and many other productscoming to a halt both locally and globally, he said.
“As we speak, in Vietnam andelsewhere, manufacturers and retailers’ current sales volumes are too low toabsorb [even] fixed costs, leaving thousands of businesses with negative marginsand thin reserves of cash.
“Export dependent companies areseeing orders cancelled every day, particularly from the EU and the US. As aconsequence, the global transport sector is also being affected and freightforwarders in Vietnam are seeing their volume drop by 25 to 70 percent.”
A number of SMEs have alreadydeclared bankruptcy, and for others the impact on human resources, the mainadjustment variable, is being felt strongly and unemployment is threateningmultiple industries, he said.
CEL also found that companiesoperating in retail, distribution and logistics services (excluding e-commerceand last mile delivery) reported a loss of revenue of 25 percent in the firstquarter and do not expect to recover this loss this year.
Urban consumers seek convenientand safe shopping alternatives for their daily family needs amid the COVID-19threats, and e-commerce and home delivery services have become central to thisevolution, it said.
Brun said: “Figures are stillnot officially published in Vietnam, but Lazada reported a 300 percent increasein the number of orders in Singapore and Grab delivery surged by 200 percent inBangkok. We can assume that comparable growth is being seen in the main citiesin Vietnam.”
So a large volume has shiftedfrom offline to online distribution channels and last mile delivery companiesare barely able to cope with the surge in delivery orders, he said.
One of the main challenges thisshift creates is the ability to transfer goods over long distances, such asbetween the north and the south, since air and rail transport are constrained,he said. Long-haul trucks have become scarce and the lack of transport capacitygenerates delays and extra disruptions, he said.
As people startgetting accustomed to more systematic online purchase and home deliveries,it is likely that this becomes a habit, and it is likely that the post-crisissituation would still benefit the e-commerce and delivery sector while theoffline retail sector slowly recovers, he predicted.
“This is certainly afundamental new trend in the consumer goods industry that we have to keep inmind. The crisis will also further accelerate the e-government initiative,allowing the population to fulfill their administrative duties online and thusavoiding long physical queues. Once the crisis ends, it is likely that theimplementation of digital solutions for consumers and citizens will increasedrastically.”/.
VNA
