Vietnam: Fastest growing e-commerce market in the world
Cross-border e-commerce is expected to be the top trend in the coming years, which will become the driving force for the global economy.
According to report of the DHL, total transaction value of cross-border e-commerce will increase from 300 billion USD in 2015 to over 900 billion USD in 2020, contributing to 22% total value of e-commerce. As such, by 2020 it is expected that there will be more than 900 million users from all over the world to purchase goods online and become global customers.
As such, Vietnam is considered one of the fastest growing e-commerce market in the world, with the average growth rate of 35% annually, and is 2.5 times higher than Japan. This is also prerequisite condition to develop cross-border e-commerce, as Vietnamese consumers are more and more interested in purchasing goods from abroad. Nowadays, customers can go to websites such as Amazon, Ebay, Alibaba to choose from billions of products produced by suppliers all over the world. Products are diversified from the latest electronic devices to textbooks, foods and production chain. With this being said, people can now buy goods in internet only with one click. On special occasions such as Black Friday, the US’s National Day, or Single Day in China (November 11), sellers often offer large promotional events and discount to stimulate sells and attract customers. Therefore, these events will be opportunities for customers to buy products at a significantly cheaper price than before.
For enterprises, cross-border e-commerce is a feasible way for them to access restricted markets with technical barriers and high requirements for imported goods. Instead of spending large amount of money to promote trade and looking for ways to access market, selling goods through e-commerce websites is the fastest and cheapest way for small and medium enterprises (SMEs) to connect with customers, looking for new markets and increasing revenue from export. This kind of business model will not only reduce operating costs, but also helps to distribute goods to end user at multiple markets without having to go through intermediaries.
In addition to difficulties in logistics, issues related to language barrier, cultural differences and different payment method are biggest hurdles to Vietnamese customers and enterprises taking part in cross-border e-commerce. As of present, Vietnamese customers take the habit of pay cash when receiving goods. Bearing this in mind, the necessity of customers having to pay 100% in advanced to an unknown partner through internet remains a major concern. On the other hand, the rate of Vietnamese customers has visa card and master card is very low, as users have not had trust in privacy and security of international payment. Moreover, in case of not having experience in choosing credible partners, buyers can face multiple risks such as losing money and low product quality.
Another issue in relation with buying goods online is to control and identify the origin of goods in internet. Moreover, for enterprises selling goods in international websites, the biggest issues is not having sufficient understandings of the local law, with no appropriate business strategy for the current consumption trend in each market, not mentioning the gap in diversity and quality between Vietnamese goods and goods from other countries. Therefore, despite the massive benefits of e-commerce, not many Vietnamese enterprises have taken interests in cross-border e-commerce.
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