The way for Vietnamese goods in the e-commerce race

Livestream selling "OCOP Market" on the TikTok Shop e-commerce platform. Photo: Provided by DN

High competitive pressure

Google statistics show that Vietnam's e-commerce grew by about 18% last year. In the third quarter of 2024, the platforms also recorded growth of about 18%. However, to succeed on e-commerce platforms, Vietnamese goods have had to face many challenges.

Speaking at the recent workshop "Supporting Vietnamese goods on e-commerce platforms", Mr. Nguyen Ngoc Dung, Chairman of the Vietnam E-commerce Association (VECOM), said that to successfully bring Vietnamese goods to e-commerce platforms, a big challenge is the issue of funding.

In particular, the entry of cross-border e-commerce platforms such as Temu, Shein, Taobao… with competitive advantages in price, design and shipping increases the competitive pressure on domestic enterprises. For example, the story of the e-commerce platform Temu is dominating. They have succeeded in conquering the large Chinese market and from there continue to promote goods to other countries, including Vietnam.

When entering Vietnam, Temu spent a lot of money on advertising on all platforms, which made people curious and made them order products. Therefore, this e-commerce platform quickly had users, although it is not certain that the prices of products on this platform are cheaper and of better quality than domestic products, Mr. Dung said.

Mr. Truong Gia Bao, Vice President of the Vietnam Advertising Association, said that users are spending more hours online, so advertising budgets are also following this trend. Advertising spending in the Vietnamese advertising market is expected to reach USD 2,763 million by 2024. With the current growing digital trend, it is expected that by 2029, up to 60% of total advertising spending will come from digital sources.

However, currently, advertising budgets mainly come from foreign businesses, with "huge" amounts of money, proactive approaches and domination of the domestic online market, and the phenomenon of transferring revenue across borders. Meanwhile, Vietnamese businesses have not focused on their marketing strategies. Businesses are also not proactive in technology, mostly through intermediaries, so costs are increased and it is difficult to capture customer data.

Especially the problem of logistics and delivery is a big barrier for Vietnamese businesses, causing businesses to lose right at home.

The keyword of Vietnamese e-commerce is "logistics"

Mr. Nguyen Thanh Trung, Director of Logistics Technology Solutions Company Limited (LTS) said that logistics is still a weakness that makes it difficult for Vietnamese businesses to compete, not only with foreign rivals but also in the domestic market.

Chinese enterprises have effectively taken advantage of Vietnamese consumption trends to build warehouses close to the border while optimizing the supply chain by concentrating goods at locations near the largest consumption areas. Thanks to that, delivery speed is significantly shortened, creating an outstanding competitive advantage. Especially in the Ho Chi Minh City market, there is outstanding potential to become a regional logistics center. According to the current project, Ho Chi Minh City plans to build 8 logistics centers, thereby shortening the time to transport goods in the region.

On the other hand, according to Mr. Truong Gia Bao, Vietnam currently has bonded warehouses for foreign parties to enter the domestic market, but we do not have bonded warehouses for export goods abroad to increase competitiveness in cross-border e-commerce activities. While the domestic market is quite easily invaded by cheap, low-quality goods to mid-range goods, even high-end goods are easily invaded by foreign units.

For example, Temu - a new player and Chinese e-commerce giant is entering Vietnam with a large volume of goods, taken from factories and sold directly to Vietnamese consumers through bonded warehouses located at the border, now even in the heart of Ho Chi Minh City. There are bonded warehouses where goods can be deposited for up to 6 months and then renewed once, meaning the goods stay there for a whole year. This makes it difficult for Vietnamese businesses to compete in terms of delivery speed and price.

According to experts, speed and cost are two key factors in the logistics sector. Although domestic enterprises have met domestic demand well, to expand regionally and internationally, they need to improve their operating processes and apply technology. Therefore, Vietnam needs to build more closely linked logistics systems. This will not only support domestic e-commerce but also help Vietnamese goods access international markets quickly and effectively.

In addition, Vietnamese logistics enterprises need to change their management thinking and increase investment in technology. Applying modern logistics models, inspired by large e-commerce corporations, will be a feasible direction for Vietnam to compete with regional logistics centers. Current Vietnamese enterprises can provide good domestic services, but still need breakthroughs to become a regional logistics center.