Internet services lay ground for e-commerce growth

Wednesday, Dec 04, 2013 18:13

Chairman of the Viet Nam Internet Association (VIA), Vu Hoang Lien, said that Vietnamese users spend an average of US$120 for online shopping and enprises put more focus on online marketing and advertising. VNS Photo

 by Lan Dung

HA NOI (Biz Hub) — Enterprises are making the shift to online marketing and advertising, according to chairman of the Vietnam Internet Association (VIA), Vu Hoang Lien.

Speaking on the occasion of this year's Internet Day held on Wednesday in Ha Noi, Lien said that online marketing was having an increasingly significant impact on internet users, adding that advertising on traditional media remained dominant at this time.

"Each Vietnamese customer spends around US$120 per year on average for online shopping. Compared with other Asian countries, the number is still small but there is tremendous potential to develop e-commerce," he said.

"In Viet Nam, 48 per cent of e-commerce websites have payment tools with the weak payment tools limiting transactions. Domestic e-commerce does not yet have a reputation to attract foreign users."

According to VIA, 36 per cent of the population are using the internet. Users can access the internet in various ways, including through fixed broadband, Asymmetric Digital Subscriber Lines (ADSL), fibre optics and TV cables.

Currently, Viet Nam ranks 15th among countries with high-speed internet with the VIA expecting Viet Nam to have 35 million users by 2017.

"In recent times, we have seen internet use increase with the transformation of technology. Enhancing internet services means creating business opportunities for local enterprises in Viet Nam and abroad," Lien said.

Attending the conference, Le Thi Ngoc Mo, deputy director of the Ministry of Information and Communication's Telecommunications Department, said total revenues of internet service providers (ISP) in Viet Nam reached VND15 trillion (more than $714 million) last year, with VND5 trillion ($238 million) coming from 3G network services.

Despite dramatic growth occurring in the sector, the number of ISP licenses declined by 30 with only 55 licenses being granted. Among them, 47 firms said that they would carry out the service while 16 are still reporting to the department.

"Decree No 72 from the Vietnamese Government, which came into effect on July 15, has emphasised two goals: developing content services and creating a level playing field for domestic and international companies," she said.

"The ministry will try their best to complete the circulars regulating the rights and responsibilities of internet service providers, content providers and users to bring about equality and security."

Multi-channel business strategy

Le Hong Minh, chief executive officer of VNG Corporation, said that the growth of internet service revenue are on the rise and expects the total revenue of internet service and content will be $4.7 billion by 2018. Photo

Trinh Quang Chung, business solutions manager at Google Asia Pacific, said that eight out of ten users had found product information before deciding to buy them and 41 per cent believed that the search results were useful.

Showing two images of people watching TV in the past and in current times, Chung said that TV was still popular but that people's behaviours had changed.

"When people see an advertisement on TV, they will search for it on their mobile phone and buy it on their laptop. Product approach and information searches are a process relating to different courses of action," he said.

"Companies and organisations who want to approach customers need a business strategy. At Google, we call it multi-screen strategy when firms use various channels to attract consumers."

Chung said that some small-sized and medium enterprises only built their own websites yet did not create their mobile versions. "I have visited some websites and only see PC version without their mobile versions. It is regretful that they can not approach customers on mobile phones and do not take care of a strategy of turning website visitors be loyal customers," he said.

Le Hong Minh, chief executive officer of VNG Corporation, said his company, which conducts operations across all internet service areas, had noticed businesses in a wide range of fields moving online.

"Between 2009 and 2013, the number of internet users increased by 1.7 times but broadband capacities have climbed 7.5 times compared with the previous period (2005-09). It shows that the growth of service revenue has been on the rise because users have utilised different devices to access the internet," he said.

Minh expects that the number of internet users will reach 60 million and total revenues of internet services and content will be VND100 trillion ($4.7 billion) by 2018.

He said that internet services and content marketing were also due for rapid development and that the government's policies were not keeping pace. Despite the efforts of management authorities, advancements in use had outperformed expectations, he added.

"We should see over-the-top (OTT) services, which provide free web-based phone calls and text messages for mobile users, as a way of building a market for a Vietnamese mobile economy."

"We should not be focusing on how much telecommunications firms are losing and we should put aside how much money enterprises have invested in free services for internet users. What we should care about is the rising number of users," he said.

"I think that Google will continue to dominate search tools and advertising on the internet by 2018. However, remaining services such as social networks, mobile contents and online games provide opportunities for everyone." — VNS

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