The tasks to tackle in global e-commerce

In Southeast Asia, Vietnam is the leading country of online shopping pace. Vietnam is also among 10 countries with the highest e-commerce growth rate in the world, likely to reach 18-20 per cent in 2024.

Tran Tuan Minh, director, Vietnam-ASEAN Trade and Investment Promotion Centre

It is expected that in 2025, Vietnam’s business-to-consumer (B2C) e-commerce revenue will increase by 25 per cent per year with a $35 billion market size, accounting for 10 per cent of total revenue of the service and retail industry nationwide, and 55 per cent of Vietnam’s population will participate in online shopping with an average shopping value per person per year of $600.

The impressive figures of Vietnam’s e-commerce market have a significant contribution from cross-border export e-commerce. This market has recently received great attention from the government with a series of policies, regulations, and documents to support this market’s development, in which the major contents are to support enterprises in digital transformation, do business on e-commerce platforms, and train and enhance capacity for e-commerce enterprises.

With the support of the government and the efforts of enterprises, the results that cross-border export e-commerce has achieved during recent times as well as expected in the near future are very positive.

With the B2C retail export turnover via e-commerce in Vietnam reaching about $3.5 billion in 2022, accounting for only 1 per cent of total export turnover, that figure is expected to reach $5.5 billion in 2027 with an annual growth rate of about 9 per cent.

Besides the common benefits that cross-border export e-commerce brings to Vietnamese enterprises such as expanding the market and customer network, increasing business efficiency, and improving business capacity, it is also especially attractive to Vietnamese enterprises to participate in two aspects: the considerable opportunities for new enterprises and the development potential for enterprises that have participated, and the high expected growth rate in the upcoming years

However, along with the opportunities, Vietnamese enterprises will face significant challenges.

Currently, enterprises carrying out cross-border export e-commerce activities in Vietnam are mostly small and medium-sized, and the market focuses mainly on China, Southeast Asia, Japan, South Korea, and the United States. Besides the Southeast Asian market, which is relatively easygoing and has many similarities with Vietnam, other markets are very demanding with strict import criteria for goods in general and e-commerce goods in particular, while most Vietnamese enterprises have not yet mastered these criteria.

While legal documents cannot go into detail and e-commerce platforms cannot clearly resolve all issues related to export activities, in order to survive and develop, businesses must equip themselves with knowledge as well as a team of qualified personnel to handle export issues.

However, there is currently a shortage of qualified human resources operating in the current market, and human resource costs are very high compared to the affordability of small and medium-sized enterprises. Therefore, Vietnamese enterprises need to be proactive and flexible to handle problems in doing cross-border e-commerce business.

In recent times, although Vietnam’s infrastructure has been improved a lot, such results are not enough compared to the growth rate of e-commerce. In addition, Vietnam’s infrastructure is still lacking in synchronisation. For example, infrastructure between central cities and border provinces of Vietnam is not synchronised. Infrastructure in border provinces is relatively small and does not meet the needs of storing and exporting e-commerce goods. Moreover, compared to countries developed in e-commerce, Vietnam does not have the infrastructure models that some others have.

In order to promote the export of e-commerce goods, countries have policies to support the development of cross-border export e-commerce as well as measures to limit e-commerce goods from abroad. While countries such as Thailand and Malaysia often use barriers such as tariffs to limit foreign online goods, the Chinese government has strong measures to support the export of e-commerce goods. In recent times, a lot of e-commerce warehouses at the Vietnam-China border serving the export of goods to Vietnam have been built with the function of collecting, distributing and selling.

The diversity of products similar to those produced in Vietnam with very competitive prices and the positive impacts, especially on logistics costs, creates great competitive advantages for goods from China and becomes a dominant challenge for Vietnamese goods wanting to export to this huge market.

In addition, to improve competitiveness, foreign enterprises actively advance product quality along with reduce costs and promote e-commerce sales methods by applying technologies popular with users such as livestream. Those also create challenges for Vietnamese firms.

E-commerce names going automated The e-commerce warehousing sector is undergoing a significant transformation with the ongoing infrastructure expansion and the application of automation technology.

Thai government urged to tighten oversight on e-commerce The government of Thailand is intensifying its oversight of foreign e-commerce platforms, with Prime Minister Srettha Thavisin instructing the Revenue Department and the Ministry of Digital Economy and Society to ensure that the Chinese online retailer Temu adheres to Thai laws and tax regulations.

Cross-border e-commerce to be boosted Commodities export through cross-border sites is expected to create booming development for Vietnam’s e-commerce business.

Stakeholders see potential in cross-border e-commerce Realising the expectation of achieving over $11 billion in e-commerce exports by 2027 is a long-term challenge and requires timely support policies from platforms as well as state management agencies.

Citi hosts E-Commerce and Technology Summit 2024 Citi held the E-commerce and Technology Summit 2024 on August 21 in Ho Chi Minh City, focusing on sector growth in Southeast Asia.