Sep 10, 2018 / 07:00

Vietnam authorities target e-commerce infrastructure development

The Hanoitimes - While Vietnam has huge potential for e-commerce development, the country’s infrastructure for the industry still lacks synchronization and connectivity.

The Vietnamese e-commerce market will reach US$10 billion in 2020
The Vietnamese e-commerce market will reach US$10 billion in 2020
According to Euromonitor, with annual growth rate of 30 percent in the next five years, the Vietnamese e-commerce market will reach US$10 billion in 2020. The country has the ingredients for a thriving e-commerce economy thanks to a young population, rising incomes, and growing internet and mobile adoption.
However, the scale of this industry is not just limited to sales activities and web design. For both customers and sellers, accelerating the speed of delivery is also increasingly important not inferior to what the quality of the product.
Dang Hoang Hai, director of the Ministry of Industry and Trade’s E-commerce and Digital Economy Agency, said Vietnam’s e-commerce is rapidly growing, but infrastructure for the industry, such as logistics, payment and e-invoice, is developing at a slower pace. As a result, 40 percent of customers complained about tardy and unprofessional delivery.
E-commerce companies also said that the Vietnamese e-commerce market is still in an early stage of development, so it poses challenges to players such as logistics infrastructure, high cash-on-delivery rates and lack of customer trust.
According to the companies, one of biggest challenges facing them is that they cannot manage the logistics and have to depend on the outsourced services from providers of third party logistics.
Costly logistics fees can easily eat up profits of e-commerce companies as traffic infrastructure and the logistics base in Vietnam are still poorly developed. While retailers in other countries often spend from 5 to 15 percent of the revenue for logistics, Vietnamese peers have to pay 30 percent of the revenue for the cost.
According to the report of the World Bank (WB), the cost of logistics in Vietnam is estimated at 25 percent of annual GDP, significantly higher than that in Thailand (19 percent) and Singapore (8 percent).
The main reason is that logistics companies in Vietnam have weak capacities as well as the lack of modern information systems while the legal framework and regulations on logistics are still difficult and complicated. These problems become more and more apparent as companies expand operations outside the big cities
Synchronous solutions
According to experts, to develop e-commerce, more work still needs to be done, especially in developing synchronously from legal infrastructure to technical infrastructure, human resources, as well as building trust among consumers.
As the market continues to grow, the long-term prospects of the Vietnamese e-commerce depend on the development of a system of logistics in order to create favorable conditions for the industry, they said.
Under the nation’s e-commerce development strategy, the legal infrastructure for e-commerce will be completed by 2020 aiming to catch up with the development of various e-commerce models and activities in society.
The network of transport services and delivery for e-commerce will cover all cities and provinces across the country.
Safety and security infrastructure for e-commerce will be developed with the establishment of management and monitoring systems, rating of e-commerce websites and the mechanism for solving disputes and violations in e-commerce trading.
In addition, authorities will continue to improve the national e-commerce payment system as well as integrate secure payment solutions to use widely for e-commerce models.
To support e-commerce transactions, Hai said that the Ministry of Industry and Trade is coordinating with concerned agencies to implement the e-commerce payment system Keypay, which has appropriate facilities and accords with conditions of Vietnamese enterprises.
Besides, the ministry is also focusing on building e-invoice solutions to be able to soon apply it widely in the market, helping the e-commerce industry develop sustainably in the time to come.