E-Commerce - Solid Foundation for Cross-border Trade

10:51:30 AM | 10/3/2020

Cross-border business has become easier and more convenient, and brought significant revenue for individuals and businesses in recent years. Particularly, with manufacturing advantages, abundant labor force and developed e-commerce, cross-border business in Vietnam will be further developed.

Attractive business method

Industry and Trade Deputy Minister Do Thang Hai said that the e-commerce market has kept growing as high as 30% annually since 2015 and was expected to reach US$13 billion by 2020. E-commerce is a great opportunity to boost exports and promote Vietnamese products around the world.

According to the 2018 e-Conomy SEA Report by Google and Temasek, the size of Vietnam's e-commerce market was US$9 billion in 2018. The report also assessed the compound average growth rate (CAGR) of 25% in 2015 - 2018 and the market will reach US$33 billion by 2025. If this scenario plays out, the size of the Vietnamese e-commerce market will rank third in Southeast Asia in 2025, after Indonesia (US$100 billion) and Thailand (US$43 billion).

Needless to say, online marketing is now one of attractive, easy and effective business approaches.

Especially, in the past three years, based on the e-commerce platform, cross-border trade has boomed in Vietnam and engaged both individuals and smallholding businesses, but also giant ones.

Particularly, well-known names like MMO (Make Money Online) community, the dropshipping community, Amazon seller community, Print-on-demand T-shirt community opened up the trend and became popular in Vietnam to sell goods to consumers in US and European markets.

Explaining the appeal of cross-border trade, Ms. Hien Nguyen, Amazon Strategic Partner Development Manager in Vietnam, said, “Instead of using the traditional export model that takes so many stages, has difficulty controlling the market and lacks interactions to understand buyer behavior, the cross-border e-commerce model reduces steps and approaches to capture market trends.”

Moreover, by prepaying purchased items, international sales platforms such as Shopify, Amazon and eBay have facilitated sellers, minimized the chance of order cancellations, rejections and restricted risks to cross-border sellers.

Vietnam has great potential to develop cross-border trade

According to Amazon traders, Vietnam has great potential to develop cross-border e-commerce thanks to its manufacturing advantages and abundant labor supply plus many young talents and a large online shopper community.

According to the Vietnam E-Commerce Association, in 2018-2020, e-commerce delivery is estimated to grow 60%. Worst advancers may see the growth of 30% and best performers may enjoy up to 70% of growth.

By a long shot, boosted by a large number of internet users, e-commerce development is a solid foundation for booming cross-border trade in Vietnam.

Besides, Vietnam is becoming a potential market that many international sellers aim for. According to Google and Singapore Temasek Holdings, Southeast Asia e-commerce revenue will reach US$240 billion by 2025. Furthermore, the report also indicated that Southeast Asia has become one of the fastest growing internet regions in the world. This market has more than 600 million people while its e-commerce accounts for less than 4% of total retail sales (data from Maybank), making Southeast Asia a gold mine in the eyes of Alibaba Group and global investors. Vietnam is expected to rise to No. 3 in the region.

Ms. Susan Pointer, Vice President of International Public Policy & Government Affairs at Amazon, revealed that thousands of Vietnamese sellers have joined the Amazon platform and they have seen a lot of business potential in this fast-growing digital economy.

This is even more evident when Amazon Global Selling Vietnam was officially established and set up an office in Ho Chi Minh City in October 2019.

Mr. Bernard Tay, Director of Amazon Global Selling Southeast Asia, said, the Vietnamese sales support website has reached 50,000 visits every month since its launch, while Amazon Global Selling social networking site in Vietnamese also has 18,000 followers. This showed the great interest of sellers in Vietnam. After a year of implementation, Vietnam has been one of the fastest-growing countries in the region.

Besides, the Vietnamese government recognized advantages of cross-border trade and actively fostered cooperation with reputable international sellers. In 2020, the Vietnam Trade Promotion Agency (Vietrade) and Amazon will adopt closer and bigger cooperation programs by promoting export through e-commerce platforms and enhancing the performance of the business community. At the same time, it coordinated to recruit and support Vietnamese businesses exporting strategic products to establish a brand identity and product brand system on Amazon.

Mr. Do Thang Hai, Deputy Minister of Industry and Trade, through the cooperation with Amazon, the SME export support program via e-commerce attracted 105 businesses to join after six months of launch. As a result, about 50% of businesses have sold their goods on this platform.

Indeed, with the proper attention of authorities, a young dynamic labor force and a strong manufacturing industry, Vietnam has full potential to further develop cross-border trade in the future.

By Giang Tu, Vietnam Business Forum