A young population, rising incomes, growing internet and mobile adoption – Vietnam has the ingredients of a thriving e-commerce economy.
By Thomas Harris, Managing Director, DHL eCommerce Vietnam.
Vietnam’s huge, untapped potential and expected high growth makes e-commerce especially attractive. It’s a very exciting place to be right now and I am absolutely positive of the growth opportunities this amazing country has to offer.
According to Euromonitor, the Vietnamese e-commerce market is expected to grow in revenue from US$1 billion in 2016 to US$2.3 billion in 2020 – that’s double in merely four years – no other industry comes close to such solid growth rates.
Right now, the country is witnessing unprecedented levels of investment particularly in the e-commerce sector – the most recent being JD.com’s investment into Tiki.vn. It is also awash with delivery companies. Increased competition will work wonders for creating greater value and improving the experience for customers across the board.
Right now, the country is witnessing unprecedented levels of investment particularly in the e-commerce sector.
A gap in the market for high-quality logistics
Last year proved a pivotal year for Vietnam in terms of investment. It was also the year we saw best fit to enter the market. As part of the world’s leading logistics company, , we saw an opportunity to provide Vietnam with a high-quality delivery service with global solutions tailored for the local market such as tracking, visibility, API integration and secure cash-on-delivery.
Today’s online shoppers, whether they are in Vietnam or anywhere else, expect their delivery experience to be convenient, intuitive and seamless. Likewise, e-tailers want to be able to sync their orders from click to delivery, tracking shipments on their mobiles and, if necessary, be able to inform and update customers about the delivery progress.
To improve last-mile deliveries, DHL eCommerce Vietnam started rolling out ServicePoints across the country at the end of last year. Set to number thousands, we’re establishing these in conjunction with retailer partners such as cafes, small shops and convenience stores. Radically improving choice, convenience and flexibility for buyers and sellers alike, DHL ServicePoints will provide alternate pick-up and delivery points to our customers as well as offer our local partners an alternate source of income.
DHL ServicePoints will provide alternate pick-up and delivery points to our customers as well as offer our local partners an alternate source of income.
Challenges and solutions
Nevertheless, like some other Southeast Asian markets, Vietnam also poses a few challenges such as traffic congestion and the higher logistical costs associated with rural areas or failed deliveries, which can all impact growth.
In some of these areas such as transport infrastructure, robust IT networks, secure data security and privacy, the government can do a lot. Thankfully, the Vietnamese government is totally on board with this and lending its full support to developing the industry.
In other areas though, the industry needs to make all the moves. With the growth of online shopping, the volume of packages that need to be picked, packed and shipped expands exponentially. Logistics companies, therefore, need to deliver large volumes of packages quickly, sometimes even within a specific or narrow delivery time window.
Given the higher volume of e-commerce transactions, logistics providers also need to manage a corresponding volume of returned, exchanged and damaged goods. Coupled with bad addresses, rural areas and failed delivery attempts, all these pose significant challenges for e-commerce logistics.
Given the higher volume of e-commerce transactions, logistics providers also need to manage a corresponding volume of returned, exchanged and damaged goods.
That’s where technology comes in. With the right infrastructure in place, pre-delivery alerts, such as SMS and calls to notify recipients and help lower the number of failed delivery attempts. Elsewhere, dynamic re-routing can prompt couriers to change their route if the recipient is not at home, while alternate delivery/collection points along with GPS tracking can help resolve the problems associated with bad addresses or rural areas.
More growth for Vietnam
In the near future, I foresee a very forward, very savvy Vietnam: a nation that is not only technologically advanced, but a young and highly-driven population that will make waves in global arena.
The growing millennial population will also be super passionate about contributing to the environment and society. Leading my team in Vietnam, I have personally witnessed how motivated they are when they know that their job contributes to the wider society. Through our DHL GoTeach, GoGreen and GoHelp programs, my team is able to help contribute to supporting education for the less privileged; contribute towards our Group-wide goal to reduce all logistics emissions to zero by 2050; and provide logistics support after a natural disaster through our GoHelp program.
The knock-on effect will be more growth and a more prosperous future in Vietnam.
This article originally appeared in Vietnam Investment Review.
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