Domestic, foreign firms eye online retail sector

Jun 20, 2017 | 11:35 AM GMT+7

Online retail is expected to continue increasing, as domestic and foreign retail companies are planning to invest heavily in this field.

Domestic, foreign firms eye online retail sector
Online retail is expected to continue increasing, as domestic and foreign retail companies are planning to invest heavily in this field. Photo: webtretho

A study conducted by Nielsen, a market research and global information company, showed that Viet Nam is one of the world’s most dynamic countries in hi-tech application and use, including online shopping.

The differences between traditional and online shoppers will create opportunities for both producers and retailers.

Up to 82 per cent of the traditional shoppers buy goods according to their plans, making it hard for companies to attract new consumers. Meanwhile, 52 per cent of the online shoppers compare different brands before buying an item.

As Vietnamese often travel by motorbikes, only 19 per cent of the consumers purchase goods in large volume. The figure is 44 per cent among online shoppers, according to Nielsen.

The vigorous growth of online retail has brought success to domestic enterprises, such as the Mobile World Investment Corporation (MWG) and the Viet Nam Dairy Products Joint Stock Company (Vinamilk).

MWG has invested heavily in online retail even though it has more than 1,390 stores in the chains of, Dien May Xanh and Bach Hoa Xanh.

It earned more than VND3.37 trillion (US$148 million) in revenues through online retail in 2016, a year-on-year surge of 104 per cent. Earlier this year, the firm also opened, an e-commerce website with 80 per cent of the goods provided by itself.

Despite being successful offline, Vinamilk also opened Vinamilk eShop, an online retail channel, in late 2016 to sell dairy products.

Apart from domestic businesses, foreign firms such as Aeon and Lotte, who have gained successes in the traditional retail model, also stepped up online retail recently.

Vu Hoang Lien, chairman of the Viet Nam Internet Association, said that despite the challenges caused by globalisation and technological development which facilitate cross-border online shopping, e-commerce in Viet Nam is still a promising market for domestic enterprises, including start-ups.

They should make use of cloud computing to run profitable business on the internet. They also need to build websites suitable for their business, he said.

However, according to the Viet Nam E-commerce and Information Technology Agency under the Ministry of Industry and Trade, in Việt Nam, only 20 per cent of the small- and medium-sized enterprises have websites to support online shopping, and 70 per cent of the online shoppers said they often find it difficult to access websites on mobile phones.

Pham Dinh Tri, CEO of the P.A Viet Nam Co Ltd, said that some firms only built their websites but information about their products was not updated regularly, and the customer care services via websites were not given enough attention.

Besides these, some businesses cheat customers by selling low-quality products but advertising the good ones, which affect negatively not only their prestige, but also the efficiency of e-commerce in general, Tri added.

Nguyen Ngoc Dung, vice chairman of the Viet Nam E-Commerce Association, said it was of utmost importance to ensure consistency in the online and offline information provided to the consumers to gain their trust, adding that opaque business activities on the internet would hamper brand development.

He noted that businesses, both domestic and foreign, enjoy equal opportunities when doing online business. He suggested that domestic retailers should capitalise on their advantages and explore niche markets to expand their activities.

E-commerce is a market with numerous opportunities for businesses in Việt Nam, recording an annual growth rate of 35 per cent — one of the fastest rates in the world.

The country’s e-commerce revenues reached US$4 billion in 2016. At the current growth rate, it is set to hit US$10 billion in 2020, accounting for 50 per cent of the total retail sales in Viet Nam, according to the Ministry of Industry and Trade.