Promoting E-Commerce and Digital Transformation for Sustainable Development

E-commerce and digital transformation are now not only a trend but also a need for businesses to survive and develop sustainably. In fact, businesses that have already applied digital transformation are more resilient, ready to adapt to live with the COVID-19 epidemic and able to capture opportunities to make breakthrough development.

COVID-19: Push for digital transformation

The complicated COVID-19 epidemic development has stalled production and business activities of enterprises and disrupted production and supply chains. In order to sustain and develop, many companies have quickly changed their business forms and accelerated digital transformation in production.

According to a recent report by the Massachusetts Institute of Technology, companies that quickly adopted digital transformation during the COVID-19 outbreak had revenue rise by over 9%, market share by 12% and profit by 26% compared to those without quick adoption of digital transformation.

In Vietnam, companies also quickly applied digital transformation as in the rest of the world to better respond to the COVID-19 epidemic. Many brands such as The Gioi Di Dong, FPT, Lazada and Tiki have quickly changed their business models, shifted strategies and managed digital platforms with great success. They have made impressive breakthrough development and achieved favorable long-term performance over competitors in the market.

The success of Amazon, Tesla and Alibaba in the market has encouraged digital transformation in many industries around the world, including Vietnam. Foreign e-commerce, logistics, technology and F&B companies are also a challenge for Vietnamese enterprises. To stay strong, Vietnamese companies must quickly adopt digital transformation and shift to omnichannel retail on e-commerce platforms in the context of the COVID-19 pandemic.

Although digital transformation is taking place universally, competition is mainly concentrated on large e-commerce platforms like Lazada, Tiki and Shopee with strong finance, technology, and a wide distribution network. Most of these sites have product quality assessing, checking and managing processes for sellers and buyers to improve service quality satisfaction. However, in terms of legal and personnel, quality control is still inconsistent, depending on strategic approaches to customer experiences to ensure long-term sustainability.

Except for giants like Vingroup, Masan and Vinamilk, other companies are just investing in online marketing systems with unclear long-term strategy, limited financial and human resources to create a new comprehensive business ecosystem. They have yet to create new business models to utilize big data and connect digital transformation to conduct research and development (R&D). They are just combining online and offline marketing to omnichannel commerce.

Enhancing e-commerce quality

Ms. Lai Viet Anh, Deputy Director of the Vietnam E-commerce and Digital Economy Agency (IDEA) under the Ministry of Industry and Trade, said the impacts of COVID-19 are creating a catalyst equal to 5-7 ordinary years in combination. However, besides opportunities, companies confront significant challenges in the digital economy. Specifically, they must ensure that quality commodities reach consumers. After making a brand name, they must protect it on the online environment, and this process is quite difficult for small and medium-sized enterprises.

From the perspective of an e-commerce company, Mr. Luong Tu Tuan, director of Chonve.vn e-commerce platform, said, 80% of ongoing purchasing processes are contactless for buyers and sellers from 2020 on. This is showing a more rapid shift in marketing processes in e-commerce. Creating a quality e-commerce environment requires the support, administration and supervision of authorities. Currently, regulations on e-commerce platforms are quite clear and appropriate. However, with the rapid change of businesses, e-commerce or fake e-commerce sites also appear a lot, requiring stricter sanctions and measures to deal with violations or fraud.

From the perspective of a consultant, Ngo Dinh Duc, Director of POCD Consulting, said that e-commerce will be inevitable but challenging to all businesses that want to be competitive and sustainable in a digital economy and digital environment which are developing very fast nowadays. However, digital transformation is not really a matter of technology or financial investment, but also a vision and mindset of business leaders in drawing a roadmap for digital transformation and e-commerce.

Therefore, he suggested that businesses now can access and connect a lot of ecosystems and digital marketing tools provided by many domestic and foreign firms. The issue is how the leadership needs to clearly outline goals and roadmaps to realize such goals within their competencies. For the time being, digital governance, innovation and digital tools can help many smaller businesses compete with many bigger players in the market.

On the other hand, when participating in e-commerce, businesses need to focus on controlling product and service quality to create more value for customers, reach more customers, and enable convenient interaction. Especially, they need to increase their capabilities of sales and after-sales services to effectively switch online channels, avoid selling products but not controlling the customer interaction process if they have interactions and connections with customers when they deliver services.

Ms. Nguyen Thai Hai Van, Managing Director, Grab Vietnam After almost two years since COVID-19 changed our reality, I believe that we have all experienced how technology has enabled us to retain some normalcy in our daily lives even as we live with the mobility and social distancing restrictions necessary to curb the spread of the pandemic. In addition, technology has provided a lifeline to Vietnamese micro, small and medium enterprises (MSMEs), enabling them to diversify their revenues and maintain some sales to mitigate the devastating financial impact of lockdowns. As a leading tech platform in Vietnam, Grab has launched many meaningful initiatives to support merchant- and driver-partners, communities and assist the government during these trying times. Some of them include GrabConnect project in June 2021; GrabMart platform; providing 50,000 hospital cash insurance policies to driver-partners nationwide and delivering 3,000 essential packages to driver-partners in need in HCM City and Hanoi. In the COVID-19 new normal, we believe that the digital economy can and must play a driving role in Vietnam’s next phase of economic growth, enabling Vietnamese consumers and MSMEs alike to access new innovative services and increase earning opportunities. We also need to ensure that as we go about expanding Vietnam’s digital economy, that there is inclusive, sustainable growth across all groups and that no one is left behind. To arrive at the right solutions for these challenges, we will need strong collaborative efforts between the Government and businesses, and in-depth dialogues amongst multiple stakeholders to help us understand the issues thoroughly and share knowledge and expertise.

By Vietnam Business Forum