A report carried out by the Ministry of Industry and Trade shows that the Vietnamese market had great potential for developing mobile e-commerce. With a growing number of users accessing to the internet on mobile devices, it is expected to boom this year. — Photo ictnews.vn

Lan Dung

HA NOI (Biz Hub) — The Vietnamese market showed great potential for developing mobile e-commerce in 2014, making local and international companies race for a market share with several new business plans.

This has been observed in a report entitled "Vietnam Mobile E- commerce Report 2014", issued recently by the Vietnam E-commerce and Information Technology Agency (VECITA), under the Ministry of Industry and Trade.

According to the report, top retail companies in Viet Nam were proactive in popularising their brands and products and in carrying out promotion programmes on the mobile shopping environment. The retailers also invested in designing mobile applications for their brands. Their investment in mobile infrastructure made up 68 per cent of the total investment in building new technology infrastructure. However, communication activities accounted for 73 per cent of the sector's focus, while investment in technology was just 27 per cent.

Regarding business-to-consumer (B2C) activities, statistics from enterprises and transactions showed that 28 per cent of the consumers accessed information on their smartphones and tablets. Nevertheless, the number of transactions made via mobile devices accounted for just 13 per cent.

The report also illustrates that just 20 per cent of the Vietnamese people use smartphones. Of them, 58 per cent said that they use smartphones to order products.

The report indicates that e-commerce trading floors have transformed and invested in mobile infrastructure. "Mobile e-commerce is at the early stage of the development process, with lots of positive signs. With great potential, the trend will be exploited by investors, app developers, and local and foreign companies. This is a huge opportunity for app developers and enterprises to expand their markets and raise the service quality. However, it also puts pressure on them to catch up with the trend of e-commerce," the report pointed out.

Nguyen Thanh Hung, vice chairman of the Vietnam E-commerce Association (VECOM), said that the remarkable development of cloud computing, big data and mobiles in recent years has contributed a lot to new types of e-commerce, especially mobile e-commerce. He added that these changes require adjustments in the legal environment to ensure the interests of all sides and fair competition.

"Foreign e-commerce companies have advantages of capital, technology and management capacity, but local firms have their own strong points. For example, domestic enterprises can understand consumer psychology better than international ones, or are more convenient in terms of co-operation and partnership with other businesses," he pointed out.

At the moment, consumers still have a habit of purchasing products on their computers. However, the number of users buying products on their mobile devices is projected to increase in the coming years. — Photo vietnamnet.vn

Tran Hai Linh, CEO of Vietnamese e-commerce trading floor Sendo.vn, agreed with the report. He said that 2015 will continue to see significant growth of the e-commerce market in Viet Nam and the great development of mobile e-commerce.

"At the moment, more than 50 per cent of the accesses to Sendo.vn come from mobile devices, not computers. The rate is expected to continue to rise. Existing companies will invest more in their businesses and new firms will enter the market. Therefore, the ecosystem for e-commerce supporting companies on advertising networks, social marketing and shipping will develop very fast," he said.

Linh pointed out that the investment boost provided by foreign investors in the e-commerce sector in Viet Nam is a good sign. It showed that the world highly appreciates the current development speed of Vietnamese e-commerce and sees great potential in the coming years, he added.

"International investors bring us updates on technology and modern e-commerce professional knowledge. This is beneficial for the development of the market," he said.

Online Friday boosts Vietnamese e-commerce market

Viet Nam organised the first-ever online shopping day, known as Online Friday, on December 5, 2014, achieving positive results.

As many as 1,000 enterprises participated in the event with 3,226 promotional products. The total value of the sales was expected to reach VND154 billion (US$7.3 million), a 2.48 per cent increase compared with the sales registered on an average day of the year. A total of 160,055 orders were made, a 3.18 per cent increase compared with the orders received on an average day.

The best-selling products were gadgets, fashion items and home appliances, accounting for more than 80 per cent of the total orders. The aviation sector attracted a lot of consumer attention, with air tickets sold by local carriers Jetstar and VietJet making up four per cent of the total orders.

VECITA and VECOM, the organisers of Online Friday, recognised the great potential of e-commerce in Viet Nam and expected that the annual event will help the development of enterprises.

CEO Linh said that the number of orders on Sendo.vn, launched in September 2012, increased by more than 100 per cent on Online Friday. "There were lots of new customers purchasing on the trading floor for the first time. Since then, they have returned and bought products on Sendo.vn," he added.

FPT Corporation's Sendo.vn acquired 123mua.vn of VNG Corporation, one of the largest and oldest e-commerce floors in Viet Nam along with vatgia.com and chodientu.vn, for an undisclosed amount last July. At the moment, there are more than 70,000 stores on the two sites, with approximately two million products.

Le Minh Thuy from Lingo.vn also said that the firm was surprised at the impact of the event. Their orders increased by 500 per cent on Online Friday, and the number of visitors to their website increased, compared with the days before the event.

The first-ever online shopping day in Viet Nam, held on December 5 last year, showed positive results. With a total of 160,055 orders made, the total value of the sales was expected to reach VND154 billion (US$7.3 million). — Photo nld.com.vn

Existing concerns

There are still a few issues to be considered following the online shopping day. A recent VECOM report, entitled "Vietnam e-Business Index 2014", said that there were complaints that enterprises sold products that didn't show the place of origin, low-quality goods and made fake promotions in the event. Hung said that the organisers will ask enterprises to be accountable for the complaints, and will issue strict solutions if the claims of malpractice are proved right.

The report also pointed out that there were huge gaps among cities and provinces in terms of e-commerce application in 2014. Large cities such as Ha Noi, HCM City and Da Nang topped the index, while rural provinces such as Lao Cai were in the bottom group. The association predicts that the gap will continue to widen in the coming years.

"Narrowing of the gap requires great efforts by government management agencies and enterprises. For instance, the development of e-commerce works with the completion of orders, including shipping. However, shipping depends on different factors such as transport infrastructure. Therefore, the costs for completing an online order are very different in large cities and remote areas. On the other hand, e-commerce needs consumers to have technology skills and know about online payment, how to protect personal information, and so on," Hung said.

"The resources in large cities, especially Ha Noi and HCM City, are appropriate for online shopping, while most provinces will need several years to have enough resources to meet the aforementioned requirements."

On May 11 last year, the prime minister issued Decision No 689/QD-TTg, approving a national programme for e-commerce development in the 2014-20 period. It aims to build basic infrastructure, as well as carry out solutions and activities to support the development of e-commerce in Viet Nam, contributing to raising the competitiveness of the country and enterprises, and boosting the industrialisation and modernisation process.

This shows the government's determination in developing e-commerce in Viet Nam. Challenges exist, but there is great potential in the market. — VNS