How can Vietnam’s e-commerce players foster greater market growth?
VIETNAM is one of Asia’s most promising e-commerce markets with profits from e-commerce set to reach US$15 billion this year.
Although neighboring countries like Indonesia, Singapore, Malaysia, and Thailand are leading the regional e-commerce market, Vietnam has proven to be a rising force to be reckoned with.
It is Southeast Asia’s third-largest e-commerce market, following Indonesia and Thailand. What’s more impressive is that such numbers are achieved despite the country’s relatively limited digital infrastructure.
A growing internet population, increasing user penetration, and at-scale foreign investments in local retail players like Tiki, Sendo, and Thegioididong are among the factors that made this milestone possible.
However, local consumers seem to favor foreign e-commerce retailers over the local ones – especially Amazon, who entered the market early last year.
According to a study, consumers’ concerns about the quality of products and delivery time are straining greater growth possibilities and will most probably contribute to a higher preference towards foreign retailers.
When consumers’ perceptions were surveyed, 30 percent revealed that the quality of e-commerce goods purchased is not exactly what they expect.
Twenty-six percent, on the other hand, cited limited choices of online goods compared to physical stores as well as poor delivery time to have affected their behaviors towards e-commerce.
This signals a need for local players to review their business models, operational efficiency, logistics capabilities, and proposed selling points to win back consumers.
Despite the huge foreign funding inflow in local e-commerce retailers and investment by the key retailers themselves, it is clear that the right business plans are not in place.
Local players must strive to understand the needs of the local market, the limitations of their journeys, and the flaws that are hindering greater user penetration.
Not to mention, local players must make greater efforts to diversify goods selection, improve the quality of products, offer transparency in the supply chain, and augment logistics efficiencies.
Building partnerships within the supply chain and leveraging the right technology can solve some of the challenges cited above.
Again, e-commerce players must understand what it means to be digital and what it takes to truly deliver on the promises of digital convenience and efficiency.
Of course, some may argue as to why a preference towards foreign retailers should be a worry. Well, for a developing country, it is highly critical for economic growth to be stimulated by local business activities in order to reduce poverty, increase employment, improve livelihood, and encourage greater digital efforts.
Nonetheless, Vietnam is a rising e-commerce tiger that will very soon catch up with neighboring markets and emerge as a flourishing economy – as long as local e-commerce players address their limitations.