Regulators urged to take action against online trading fee hikes

THE HANOI TIMES — With the impending increase in transaction fees on e-commerce platforms, regulators are being urged to take action to ensure the sustainable development of online markets, sellers, and buyers.

Shopee has announced that as of April 1, they will be increasing fees from 0.5% to 6% across different categories, with some categories going up to 10%.

TikTok Shop will raise the commission fee for regular sellers from an average of 3% to 4%. Sellers in the Shop Mall segment will face an increase in commission fee from the current maximum of 4.54% - 5.78% to a new rate of 6.05% - 7.7%.

In addition to increasing fixed fees, platforms are also cutting incentives and tightening support policies, putting more cost pressure on sellers.

According to a report on Vietnam's online retail in 2024 by research firm Metric, the total revenue of the top five e-commerce platforms in Vietnam (Shopee, Lazada, TikTok Shop, Tiki, and Sendo) grew 37% year-on-year to nearly VND320 trillion (US$12.5 billion).

However, the number of shops generating orders decreased by 20.25%, which means that about 165,000 shops withdrew from these platforms.

Tran My Hanh in Ha Dong District, Hanoi, who sells cosmetics on e-commerce platforms, said that the fee increases put a lot of pressure on her business, as previously all products sold on the platform were priced lower than in brick-and-mortar stores.

But now, with the new fees, many products on the platform are even more expensive than buying them in person, she said.

"If I raise the product prices, it will be difficult to compete, but if I don't, I won't make a profit. So I may have to switch to another sales channel," Hanh said.

Nguyen Hai Anh, a merchant who sells household goods on an e-commerce platform, said she faces two choices: cut profits or raise prices.

"After April 1, fixed fees and payment fees will increase to about 12-15% per order, compared to the current 9%, forcing merchants to either reduce profits or raise prices. At the current price, customers were already reluctant to buy," she said.

Nguyen Anh Tuan, who sells mother and baby products, said: "I currently spend more than 18% of my income on fees. If you include advertising, shipping, and withdrawal fees, the total is even higher. Increasing fees means I have to raise prices, which could drive away customers.

"In reality, selling on e-commerce platforms is not as easy as it used to be," Vu Ngoc Quan, a Shopee seller, told The Hanoi Times. "So sellers can completely rely on Facebook to sell." "This helps me save costs, avoids the need to report information to the platform, and allows me to interact directly with buyers to promote products. Other costs like operations and shipping remain within a 'bearable limit' for sellers." 

However, sellers need to invest in packaging, product design, and imagery, learn how to run ads, optimize operations, and accept certain risks when running their own sales sites.

Years ago, Nguyen Hoa Binh, founder and Chairman of NextTech Group, predicted that after spending billions of dollars to dominate the market, platforms would eventually have to raise fees and tighten policies to optimize profits.

According to him, this is an inevitable trend as platforms shift from rapid growth to profit optimization and sustainable development. This means that they will no longer subsidize prices as they have done in the past, but will instead maximize revenue from sellers.

Hoang Trung Dung, an expert in e-commerce sales strategy and management training, said that if fees are too high without corresponding benefits, many sellers will seek other platforms with better incentives to streamline their operating costs.

Dung was referring to platforms that enable direct-to-consumer (D2C) transactions through websites, social media, and physical stores, rather than relying solely on e-commerce platforms.

The omnichannel trend is growing in popularity because it helps sellers reduce dependence on a single e-commerce platform, minimize risk, expand market reach, and improve customer engagement, he added.

Platforms asked to explain fee hikes

The Department of E-commerce and Digital Economy under the Ministry of Industry and Trade will require platforms to report on transaction fee increases, said Deputy Director Hoang Ninh.

While the fee increases are beneficial to platforms, they put significant pressure on sellers, especially small businesses, individual sellers, and mom-and-pop shops.

Transaction fees vary among e-commerce platforms. If commission fees rise too high, product prices may be adjusted accordingly, directly affecting consumers' purchasing power, Ninh said. "Increases in commissions must be based on transparent information and applied uniformly to sellers. Fee increases must be announced to sellers before their effective date by the law." 

The deputy director added that under Decree 98, e-commerce platforms are required to publish and clarify their policies, including transaction fees.

Any policy changes that are not communicated in advance as required will constitute administrative violations and may result in fines ranging from VND20 million to VND40 million ($781 to $1,560).

"The department will work with relevant agencies, such as the National Competition Commission, to assess the impact of fee adjustments and require platforms to report on their fee structure to prevent market abuse," Ninh said. "The Department of E-commerce and Digital Economy encourages e-commerce platforms to fully disclose information on fee increases, consult with the business community, and strictly comply with e-commerce regulations." 

Nguyen Minh Phong, former Head of Economic Research at the Institute for Socio-Economic Development Studies in Hanoi, said any service in the market must have a cost, and that cost cannot remain fixed over time but must adjust to market conditions.

If fee increases are accompanied by better services and an improved shopping experience, the negative impact may not be significant, he said. "Increasing fees should go hand in hand with improving service quality to ensure balanced benefits for all parties involved."

For sustainable development, e-commerce platforms need to carefully calculate their fee structures while implementing appropriate support policies to maintain a stable and fair e-commerce ecosystem for both shoppers and merchants, Phong added.

The Vietnam Confederation of Commerce and Industry (VCCI), in a recent proposal to draft an e-commerce law, urged regulators to introduce measures to protect sellers on e-commerce platforms as most sellers on e-commerce platforms are small businesses and individuals, that are subjected to unfavorable policies and lack bargaining power, such as unwarranted changes in terms and conditions, suspensions or bans without valid reasons, and limited access to data.

These practices could hurt small business owners and dishearten them. Therefore, VCCI urged that policies should be designed to balance the interests of all parties, including regulations that protect small sellers on e-commerce platforms.

"Policies should focus on increasing transparency in the operation of e-commerce platforms, ensuring access to business data, and protecting merchants' right to negotiate," the organization said.