Vietnam's e-commerce sector has been growing over the past several years and industry experts even predicted significant expansions in the coming years. However, poor consumer confidence and inadequacies in both infrastructure and logistics may block potential growth.
In an op-ed for the South China Morning Post, dean and senior lecturer of the Faculty of International Economics at the Diplomatic Academy of Vietnam Dang Hoang Linh noted that the Vietnamese online retail sector has legal, digital, and physical challenges.
One of the problems is low banking penetration in the country. Cash on delivery (COD) is still the most popular payment method in Vietnam even if other countries already offer credit card payments in e-commerce platforms.
On low consumer trust, the issue stemmed from several cases wherein merchants used local online retail platforms to sell fake products. Some have also been caught for infringing on intellectual property rights (IPR).
The unsafe general atmosphere in some domestic e-commerce sites has led consumers to be more careful of trusting startup platforms that pledge on honesty and data security.
Another issue that e-commerce companies in Vietnam face is a lack in proper infrastructure for operations. For instance, some providers have inadequate warehouse capacity. Some delivery processes are also slow, making it harder for Vietnamese consumers to find interest in making purchases online.
On the other hand, Vietnam has shown a lot of potential in its online shopping market. Analysts predicted that the sector could reach up to $15 billion in revenue this year, given that its current growth is retained.
The rising number of millennials and Gen-Z consumers who find online transactions more convenient is also playing a key role in driving growth. Foreign investors have also shown interest in betting on the Vietnamese e-commerce market.
By 2024, it was estimated that 76 million of Vietnam's expected 100 million in populations would be online. It is also expected that footwear, clothing, electronics, and baby products will continue to lead the pack in sales.
Last week, Vietnam's E-commerce and Digital Economy Agency (IDEA) said the logistics industry would continue to show growth this year, as e-commerce rises above its challenges. Furthermore, it is expected that delivery services will be on an uptrend in 2020.
According to Viet Nam News, delivery services are expected to post growth of around 30-40 percent this year as bigger companies seek to make larger shares in the market. Competition will still be tough but domestic providers are expected to be more vigilant this year.
Grab Express and Amazon are expected to be among the biggest rivals local delivery and e-commerce companies should be prepared for.
