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Last updated: Tuesday, March 19, 2019


E-commerce Market: Room for Growth Available but Gaps still Wide

Posted: Monday, April 09, 2018

Vietnam’s e-commerce expanded over 25 per cent in 2017, according to a report by Nielsen Vietnam. This is a strong growth for a fledging market like Vietnam.

Potential market
Vietnamese e-commerce has been growing strongly for the past two decades since the internet first came to the country, securing an annual growth of over 20 per cent. In particular, in 2017, it expanded by 25 per cent, among the world’s fastest growth rates. This growth rate or higher is expected to be seen from 2018 to 2020, according to some experts.

Vietnam’s e-commerce is considered very potential, driven by a rising number of internet users. Currently, 45 per cent of Vietnam's population has access to the internet. It is noteworthy that the rate in big cities such as Hanoi and Ho Chi Minh City is much higher. This has facilitated e-commerce development in Vietnam. Smartphones account for over 70 per cent on average. Even, the rate is over 50 per cent in rural areas.

In addition, the presence of world-leading e-commerce platforms makes the market more exciting. Such superstars as Alibaba and Amazon also quickly confirmed their presence in Vietnam. Google already became a member of the Vietnam E-commerce Association and expects to earn US$30 million each year from this market. Alibaba and eBay were also quick enough to seek official presence.

According to the National Payment Corporation of Vietnam (NAPAS), in 2017, domestic online card transactions increased by 50 per cent over 2016, while the transaction value jumped 75 per cent. In online marketing field, some affiliate marketing companies recorded a growth rate 100 - 200 per cent in 2017.

In addition, according to the Vietnam Online Business Forum (VOBF) 2018 recently held in Hanoi, the Government’s macro-economic and investment policies are also acting as an important leverage for online business development.

Typical policies include the plan for improving competitiveness and developing logistics services to 2025; the strategy for e-commerce development for the 2016 - 2020 period with the goal of achieving online sales of US$10 billion in 2020 and having 30 per cent of population go shopping online, and 50 per cent of households and individuals in big cities perform cashless payment for online shopping.

Gaps remain
Although the e-commerce market is relatively potential, there are still a plenty of wide gaps in e-commerce in Vietnam, including low consumer confidence in online shopping, unpopular online payment, and slower-than-expected delivery service and order settlement.

In reality, online users have increased in number but cash users still greatly outnumber them. Moreover, lower quality relative to advertising is also a major obstacle. Shoppers are always afraid of being cheated or defrauded in relation to advertisements. Nowadays, businesses are involved in online services sector but they have seemingly not grown up. A majority of Vietnamese enterprises, especially small and medium-sized enterprises (SMEs), have not invested properly in e-commerce.

Furthermore, although the smartphone coverage is quite high, the quality and speed of connection is still weak. To deal with this restraint, the Government should first focus on building infrastructure, facilitating access to the internet and ensuring network quality and mobile network quality in order to eliminate digital divides among communities. Legal documents on online commerce are also very much needed to create a legal framework for enterprises and users to join e-commerce.

Thus, experts recommended that Vietnam develop the national e-payment system; build up online brands; promote human resource training; improve the legal environment; secure e-commerce transactions; develop public services for e-commerce; and further strengthen regional and international cooperation in e-commerce development among other actions.

Although there are still challenges, e-commerce in Vietnam remains a potential land for domestic enterprises, including start-ups, according to experts.

Do Trong Thang, People's Police Academy

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