Dec 7, 2012

Vietnam - E-commerce: skipping Beta, marching towards 2.0

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VietNamNet Bridge - A series of investment projects in e-commerce have been kicked off, seemingly promising to heat up the market which remains cool despite the presence of the giant eBay.

Economists say, if comparing the competition among the rivals in the e-commerce market with a hurdle, the current stage of the race is not tough for enterprises with very few barriers. Therefore, the enterprises need to choose the solutions which allowing them running faster than the rivals.

VNG nurturing the 123 dream

In late October, VNG quietly set up a new business division –, an e-commerce website that operates under the mode of B2C (business to customer). Just several days later, the upgraded version of, a website operating under the mode of C2C (customer to customer), initially established in 2006, was also launched.

The move by VNG has been described as a general deployment by VNG in the e-commerce battlefield, the one which once witnessed the failure of many enterprises, including VNG.

When asked about the prospect of the e-commerce division, Deputy General Director of VNG Nguyen Hoanh Tien said in the past, enterprises had to cope with too many obstacles, but the barriers have been removed already.

Tien said that Vietnamese customers have changed their consumption habits and have got familiar to online shopping, which should be seen as the greatest advantage for e-commerce services to develop.

Not only office workers or students, who regularly work on computers, small merchants have begun learning about trade on Internet and seeking opportunities on e-commerce websites.

Meanwhile, in the current difficult conditions, businesses now tend to pay bigger attention to online distribution channels to cut down expenses. This gives one more reason to e-commerce businesses to hope about the development of the e-commerce market.

“E-commerce would be one of the three biggest components of our business in 2013. The total investment in the type of business would be 2.5 times higher than that in 2011,” Tien said.

On the launching of SohayPay, a payment instrument, both VC Corp and Techcombank said that e-commerce has been developing very strongly in Vietnam in recent years. About 1/3 of the 1700 surveyed businesses have turnover from e-commerce, making up 15 percent of the total revenue.

Hoang Ngoc Vy, General Director of Vien Thong A, a high technology production distribution chain, said the online distribution channel brings 10 percent of the chain’s total revenue.

Vy said Vien Thong A is making heavier investment in e-commerce, hoping that the revenue from online channels would increase by 50 percent in 2013, which means that 15 percent of total revenue would come from e-commerce.

Some years ago, eBay and Chodientu were the only two names in the e-commerce market. Meanwhile, there are numerous online markets which have been set up recently.

IDG Ventures Vietnam has announced the merger of two IT firms Nhom Mua ( and Dia Diem ( into MJ Group. The merger has been associated with the agreement on the 60 million dollar investment deal of IGD Ventures Vietnam, Rebate Networks, ru – Net Global into MJ Group in a plan to turn MJ into a big e-commerce group in Vietnam.

Sources say that though VC Corp owns six big e-commerce channels in Vietnam, it still plans to launch some 10 more products in the time to come.

A Cimigo’s report showed that 31 percent of Vietnamese people use Internet and 95 percent of them are aged between 15-24, who will be the main clients of the e-commerce market in the near future.

Investors have poured money into the e-commerce market, a very promising type of business. However, they would have to encounter big difficulties.

When deciding to spend money to develop online distribution channels, enterprises believe that the current conditions have become favorable enough to begin investments.

Ngo Quoc Dung, Director of Jodric, an advertisement firm, which is developing a series of e-commerce projects, including, said thanks to the boom of groupon websites, Vietnam’s e-commerce has made a big leap so far, while the habit of shopping online has been created.

However, there are always two sides of a coin. While groupon websites have made people get familiar with online shopping channels, they have made people believe that online distribution channels mostly launch “sale-up” campaigns. People also believe that the products sold on online channels do not have high quality, and people buy products on them because of the only reason that they are cheap.

Experts say the thought would put big difficulties for e-commerce enterprises in doing their business.

A common thing of all the e-commerce websites so far is that they have been run by small or medium enterprises. With the limited capability, the enterprises cannot scale up their investment to create a professional e-commerce environment.

Most of the enterprises still cannot join forces with others to provide relevant services, including forwarding services. Therefore, they still have to deliver goods themselves.

Everything we can see now shows the signs of the booming of e-commerce in the near future. Therefore, big enterprises have poured their money into e-commerce projects as a step to wait in front for the boom.

“It means that investors spend money now to get benefits later. Meanwhile, it is now still not the right time to reap fruits, even though Vietnam sewed the seed 10 years ago already,” Tien said.

The players in the market, who are they?

Experts believe that the in the immediate time, the market would be the playing field of the big names such as, Lazada, Zalora, Cho Dien Tu/eBay and is still in the starting period, while Lazada and Zalora have cemented their positions in the market.

In February 2012, Gio Giai Lao Company Ltd was established, officially bringing Lazada and Zalora, the well-known online sale brands in South East Asia, into Vietnam.

Founded by the leading online retail group from Germany, Lazada (the domain name in Vietnam is, which has its own “formulas” to conquer the international market, has to apply specific methods to get adapted to the Vietnamese market.

Pham Que Anh, Brand Director of Lazada Vietnam, said the online retailer has been following a special way to conquer Vietnamese customers.

A survey by PayPal showed that 43 percent of polled Vietnamese consumers said they would not buy products online for fear of risks.

In general, Vietnamese people would not buy products until they can see with their eyes the products to have assessments about their quality. Meanwhile, the habit of making payment in cash remains an obstacle to e-commerce.

Therefore, Lazada Vietnam decided to go its way: it provides all the information about products, advertise products on Internet environment, but still allows customers to make payment after they receive products.

If customers are not satisfied with the products after they see them, would take back the products and charge no fee to customers.

The policy applied by which allows customers changing products within 14 days has helped persuade customers that they still can check the products with their eyes, like they do when making traditional shopping, while they do not have to spend too much time to go to shops.


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