Hanoi (VNA) – Vietnam’s e-commerce industry has seen booming, at an annual average growth of about 30 – 35 percent, in recent years but incompatible development of logistics, payment and support services may lead to many businesses missing opportunities.

Vietnam among top Southeast Asian nations in e-commerce

Statistics show that Vietnam is among 78 percent of the countries around the world recording e-transactions, 45 percent having data privacy protection policies and 75 percent having a cyber security law.

The country currently has over 60 million Internet users and 57 percent of the population has a social network account. A Vietnamese spends an average of three hours and 12 minutes daily on the Internet on mobile devices such as smartphones.

Google estimated that 3.2 million Vietnamese users annually shop online.

Last year, the size of the business-to-consumer e-commerce industry in Vietnam was worth about 8.06 billion USD, accounting for 4.2 percent of the country’s total retail and service sales, according to the Ministry of Industry and Trade.

According to the e-Conomy Southeast Asia report for 2019 by Google and Temasek, Vietnam’s digital economy is the second fastest-growing market in Southeast Asia after Indonesia.

Indonesia and Vietnam led the region with a growth rate of more than 40 percent this year, while Singapore, Malaysia, Thailand, and the Philippines registered 20 – 30 percent growth.

Vietnam's digital economy is expected to top 12 billion USD this year and surge to 43 billion USD by 2025, with e-commerce, online tourism, online communications and media, and ride-hailing being among the driving forces.

Vietnam has become the third largest destination in the region for digital investment, with 600 million USD flowing in 2018 and the first half of 2019, thanks to Hanoi and HCM City, which are among the seven major internet economy developing cities in the region.
Vietnamese sites make up half of top 10 regional e-retailers

A report released by price comparison platform iPrice Group named five Vietnamese e-commerce platforms among the ten most visited sites in Southeast Asia in the first half of this year.

The report says Tiki, Sendo, Thegioididong, Dienmayxanh and FPT Shop of Vietnam ranked sixth, seventh, eighth, ninth and tenth, respectively, by average monthly web traffic.

The five others in the top ten were Shopee (first) and Lazada (second), which were also conducting business in Vietnam, and three unicorns from Indonesia – Tokopedia, Bukalapak and Blibli.

The presence of the five Vietnamese companies in the top ten has proven the size of the e-commerce market in Vietnam. 

With an annual growth of 25-27 percent, Vietnam’s e-commerce market has been becoming more attractive to foreign investors.

If the industry’s growth rate is sustained at 30 percent in 2019 and 2020, the market size will hit 13 billion USD next year – higher than the 10 billion USD goal set in the master plan for the e-commerce development, according to the Vietnam E-commerce Association (VECOM).

Challenges remain ahead

The e-commerce sector has seen remarkable growth in recent years, but a lack of uniformity in delivery and payment methods may lead to many businesses missing opportunities.

Shipping is considered the backbone of e-commerce, but the current logistics infrastructure in Vietnam is struggling to keep up with other countries.

A recent survey by Sendo JSC shows that more than 40 percent of consumers respond on the speed of delivery, while the cost of delivery is high as compared to the average price of the goods that consumers are buying.

Director of Lazada Express Vu Duc Thinh said that logistics costs in Vietnam account for 30 percent of all e-commerce revenue, which is above that in other countries such as India, where the rate is no more than 15 percent.

Moreover, he said that the development of the country’s logistics sector had not yet met the requirements of e-commerce development.

With the number of orders topping hundreds of thousands of transactions per day, businesses cannot develop enough of supply chain of drivers to deliver goods across the country. Motorbikes are a common vehicle used for delivering orders, while the cost of investing in transportation by cars is high and causes traffic congestion, he said.

It can be seen that the lack of collaboration between e-commerce and logistics enterprises may result in lost opportunities for them.

Meanwhile, a study showed that 80 percent of the respondents preferred COD (Cash on Delivery) when shopping online. One of the main reasons online shoppers use cash is that they want to see the goods before they pay. It reflects a reality that buyers’ trust remains low on sellers while on the other hand, sellers can suffer revenue losses if buyers keep denying to receive the goods on delivery.

“There has also been trade fraud, counterfeit goods and violations of intellectual property rights,” said Dang Hoang An, Deputy Minister of Industry and Trade. “This is a challenge for management agencies to have measures to protect consumers.”

According to the Ministry of Industry and Trade (MoIT)’s Vietnam eCommerce and Digital Economy Agency, it was focusing on creating a legal framework for e-commerce activities, as well as solutions to stop the trade of fake goods.

“E-commerce operates like a normal market. If we want to check goods sold on e-commerce platforms, we need to have inspection measures like those for regular sales,” Nguyen Huu Tuan, head of the agency’s e-commerce management division, said.

In order to limit counterfeit goods, the MoIT will focus on several key areas, including amending Decree 52 to create a legal corridor protecting consumers.

The agency will work closely with customs authorities, market watchdogs and police to thoroughly eliminate poor quality goods sold online.

The MoIT is working with the National Steering Committee for Smuggling, Trade Fraud and Counterfeited Goods (National Steering Committee 389) to develop a master plan on preventing the trade of counterfeit and smuggled goods on e-commerce sites./.