E-commerce expected to grow strongly in 2018
Vietnam is one of the world’s fastest growing e-commerce countries, according to Lai Viet Anh, Deputy Director of Vietnam E-commerce and Information Technology Agency (Vecita) under the Ministry of Industry and Trade. The country’s e-commerce is growing 35 percent per year, 2.5 times faster than Japan, he said.
The number of Vietnamese businesses capable of taking advantage of the internet and technology has grown 2.1 times faster than those with less use of the internet.
Small- and medium-sized enterprises (SMEs) that spend more than 30 percent of their budget on technological innovation are growing nine times faster than those spending less than 10 percent of their budget.
Photo for illustration. Source: thoibaonganhang.vn
Vietnam’s e-commerce retail sales growth in the 2016-20 period is estimated at 20 percent per year, and the country’s total retail e-commerce sales is expected to reach USD 10 billion by 2020, Anh said.
However, e-commerce has faced several barriers deterring its sustainable development, including low consumer trust in products and services, and worries over online payment security.
In addition, most Vietnamese e-commerce websites provide only basic services, such as information about products and modes of payment. Services such as digital marketing optimization and connecting online with offline sales need to be added.
Logistics is expected to be a game changer for the Vietnamese e-commerce market in 2018 as new entrants are coming in, and existing operators are expanding to improve their delivery services.
According to Kantar Worldpanel, a global expert in shoppers’ behavior, the percentage of e-commerce shoppers grew from 5.4 percent to 8.8 percent in the largest four cities last year alone.
In light of this trend, many foreign logistics providers and e-commerce operators are making efforts not to miss an opportunity to provide e-logistics and meet the rapidly growing demand.
As e-commerce is growing at a robust pace, logistics providers have to come up with new business models to deal with a soaring number of frequent and small-size orders. They are investing in technology and infrastructure to counter the challenges from traffic congestion to failed deliveries, as well as the higher logistical costs in rural areas.
These dynamics will fuel some of 2018’s most important trends including customer collection points, designed for customers to receive an order from a designated collection point. Such collection points allow customers to pick up their orders at any time, without being required to wait at home.
DHL e-commerce launched a nationwide network of service points in Vietnam last November, with a plan to expand up to over 1,000 outlets by the end of next year. Similar to the concept of customer collection points, the firm uses the shop-in-shop model by opening DHL e-commerce counters in grocery stores, minimarts, and coffee shops.
Giao Hang Nhanh Company (GHN) also plans to extend its network of customer collection points in local shops, convenience stores and buildings. The last-mile delivery startup plans to reach 1,500 outlets by the end of 2018.
In the third quarter of 2017, Lazada launched its first automated sorting center in HCM City, with its second center was opened in the first quarter of 2018 in Hanoi. Lazada will also upgrade its existing sorting center next year, tripling its sorting capacity.