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Vietnam Set for E-commerce Explosion, Despite Data and Forgery Issues

Value of country's e-commerce sector set to top US$1.3 billion by 2015, with local e-tailing platforms said to be outperforming global giants, such as Amazon and eBay. Despite this, consumers remain wary over transaction security.

Photo: 5giay.vn: Leading Vietnam’s e-commerce revolution.
5giay.vn: Leading Vietnam's e-commerce revolution.
Photo: 5giay.vn: Leading Vietnam’s e-commerce revolution.
5giay.vn: Leading Vietnam's e-commerce revolution.

According to the Vietnamese Department of Commerce and Information Technology, in 2013 some 57% of the country's Internet users made online transactions. Overall, some 43% of the country's businesses have websites, with 35% of the commercial sector now taking orders online. This is a dramatic increase on the 29% who were doing so in 2012.

The recently published Nielsen Global Survey of E-Commerce shows that some 50% of Vietnamese consumers search and shop online. These consumers however, have a greater propensity to buy than their contemporaries in other Southeast Asian countries, notably Malaysia and Thailand, where internet users tend to restrict their online activities to browsing.

As well as utilising a number of channels that are widely popular across Southeast Asia and beyond, including Zalora, Alibaba, eBay and Amazon, Vietnam has developed a significant number of local players. Highest profile among these are 5Giay, Chotot, 24h and Enbac.

All of these local players have developed their distinct niches and strengths. For instance, 5Giay is now one of the most significant shopping portals in Vietnam. Its well-designed site features a range of products from electronic items to clothing, shoes, cosmetics and accessories. It also enjoys a good word-of-mouth reputation for its quality of service.

One of the major competitors to 5Giay is Chotot. This is a relatively new e-commerce site and provides local vendors an online platform from which to sell their own merchandise. Overall, there is considerable overlap in terms of the goods offered on the two sites.

The two e-tailers also face a common problem with regard to customer concerns over product quality, particularly with regard to electronic goods. In a bid to allay this, both sites have recently introduced a facility that allows purchasers to pay for goods on delivery. This has only been partly successful, apparently, with several instances being recorded of deliverymen threatening customers who are unwilling to pay for unsatisfactory goods. Concerns about counterfeit items also remain widespread.

According to Nguyen Thanh Hung, Vice-President of the Vietnam E-Commerce Association (VECOM), the top five leading online retail websites in Vietnam are all local players – vatgia.com, 5giay.vn, muare.vn, nhommua.com and enbac.com. This is different to the situation in other Southeast Asian countries where the major global and regional players – notably Amazon, eBay and Alibaba – predominate.

Recognising the potential of the sector, the Vingroup Corporation, one of the largest players in the real estate, tourism, hospital and education industries in Vietnam, has invested more than 700 billion VND (US$33 million) in developing the Vin E-com e-commerce brand. This investment is now set to be increased to 735 billion VND.

Confirming the company's ambitions in the sector, a spokesman for Vingroup said: "The intention behind Vin E-com is to create an online retail channel that is truly reliable and professional. We intend it to be large enough in scale to offer not only all the products and services of Vingroup, but also those of its partners, including leaseholders in Vingroup Commerce Centres, as well as a number of external clients."

Photo: Vingroup: Investing hugely in digital Vietnam.
Vingroup: Investing hugely in digital Vietnam.
Photo: Vingroup: Investing hugely in digital Vietnam.
Vingroup: Investing hugely in digital Vietnam.

According to a report from the Vietnamese Industry and Commerce Department, electronic trading in Vietnam was worth around US$700 million in 2012. In light of this, the Vietnam E-Commerce and Information Technology Agency (VECITA), which falls under the Industry and Commerce Department, predicts that the sector will grow to be worth US$1.3 billion by 2015.

Despite the anticipated rise in the value of the sector, however, Vietnamese consumers remain concerned about many aspects of online shopping. In particular, there remain reservations with regard to the quality of products, the security of personal information and the prevalence of counterfeit goods.

Daniel Nguyen, a professional photographer based in Ho Chi Minh City, is typical of this cynical breed of consumers. Relating his own online shopping experiences, he said: "Most of the high quality accessories for good cameras have to be bought in from another country. We have to use a number of online channels, both international and national ones. If we are lucky, we can buy from Ho Chi Minh City. If not, then we have to incur high shipment fees".

Another consumer with distinct reservations is a Mr Nghe, a Director of the Printart Company in Ho Chi Minh City. He said: "We usually don't buy products online. In our experience, there are too many fake suppliers or the delivered products don't match the images shown on a company's website. Similarly, if I want to buy clothes, I like to go to a shop and see the products before I buy. We also ask friends to bring or ship electronic products from other countries."

To try and counter these concerns, last year VECITA, together with VECOM, introduced SafeWeb, a licensing system for electronic commerce websites.

Underlining the need for such a system, Mr Nguyen of VECOM said: "In order to build up the trust and confidence of consumers and businesses when buying and selling online, a trustworthy website accreditation system is clearly needed."

In order to protect the rights of consumers and promote e-business, Safeweb has established a number of best practice principles. These include provisions with regard to data security, retention of transaction information and a variety of quality guarantees. E-commerce businesses can obtain further information and register online at http://www.safeweb.vn.

The strength of Vietnam's young consumer sector makes it an ideal target for e-commerce entrepreneurs, although, as yet, the sector is still constrained by a number of public concerns. Some industry commentators, however, have compared the current stage of development of the Vietnamese e-commerce sector to that of China in 2009, with many now expecting similarly explosive growth over the next four to five years.

Pham Tuong Vi, Special Correspondent, Ho Chi Minh City

Content provided by Picture: HKTDC Research
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