Partnership with SHB expected to aid for Amazon in Vietnam

Amazon shakes hands with T&T Group and SHB to boost cross-border e-commerce in Vietnam

At the cross-border e-commerce workshop titled “Reaching the ocean” early this month, the United States' Amazon Global Selling officially announced its partnership with T&T Group and local bank SHB.

However, there have been few recent days when SHB's stock closed higher than it began – on the contrary, it has been falling significantly. As of the end of the session on December 9, SHB was at VND6,100 ($0.26), lower than the VND6,800 ($0.3) in late June.

Amazon started carrying out cross-border e-commerce in the market a few months ago by supporting local SMEs in improving their export performance. Specifically, on October 16, Amazon Global Selling was officially launched in Vietnam, offering offering many training courses on export activities for local firms.

Cross-border trade is very promising due to the huge demand for purchasing overseas goods. Before the appearance of cross-border e-commerce platforms, the demand was shown by the large interest in parallel imports, according to Nguyen Xuan Hung, northern managing director of Fado JSC.

A representative of Amazon Global Selling told VIR that besides traditional exports, cross-border trade now rises strongly and plays an important role in Vietnam’s international trade, citing data from the Ministry of Industry and Trade that the nation’s exports increased by 2.51 times, from $96.91 billion in 2011 to $243.48 billion in 2018.

Nonetheless, Amazon was not the first to recognise the potential, Tiki and Lazada have begun integrating cross-border trading features into their platforms more than a year ago, but the channel does not perform as expected yet.

Despite having a strong preference for overseas goods, local purchases may not be very high due to pricing and payment issues. According to VIR’s observations of activities on Tiki and Lazada, local items gather more feedback than overseas ones, which sometimes do not even receive a single comment.

Overseas products require non-cash payments that still occupy a small proportion in Vietnam – about 14 per cent, according to information published at the State Bank of Vietnam’s workshop in June.

Hung from Fado, the operator of the cross-border trading platform fado.vn, also admitted that cashless payments are an obstacle to cross-border e-commerce. However, he was of the opinion that the lack of investment in developing cross-border sales channels is an even bigger challenge. According to Amazon Global Selling, the challenge comes from logistics, customer service, and cross-border payments.

These unfavourable conditions may curb the enthusiasm of other e-commerce platforms to expand to international markets.