Risks in Online Shopping – Boon or Curse for Vietnam?by Ananya Mangwani Student Risk Committee Member (Vietnam), IRM India
Online shopping, also known as e-shopping, is a service allowing customers to purchase goods via the Internet. This contribution to e-commerce involves the elaborate act of buying a variety of services virtually through a web store (Jain 2015). Due to its convenience, ease, and comfort, it has become vastly popular among different kinds of audiences.
This paper is based on research collected from primary and secondary sources to discuss whether online shopping is a boon or a curse in the specific context of Vietnam.
E-shopping grants everyone access to different kinds of products in different parts of the world regardless of the geographic location of the buyer and seller.
The consumers can operate from the comfort of their own home.
Online shopping websites have varying delivery times. Some differ from 1 day to over a month of national and international delivery, making it an unreliable situation.
Consumers might be overcharged with some unavoidable high shipping costs for certain items.
Most services do not allow customers to test the product or service before purchase leading to buying faulty products.
Online shopping visitors do not have the luxury to ‘feel’ the actual product and looks can be deceiving.
As of 2020, Vietnam is the fastest-growing digital economy leading to opening up multiple opportunities for international businesses. It has attracted great attention and traffic from multiple investors (Linh 2020).
Vietnam has been on the receiving end of many large foreign investments followed by Singapore and Indonesia. Since 2016, US$1 billion has contributed to Vietnam’s market breaking all records in 2019. Tiki, Thegioididong, and Sendo have risen as top e-commerce players in the country (Linh 2020). These statistics show that although Vietnam lacks physical and digital infrastructure, it has shown to be a potential market with the help of young leadership, a high population of the middle class, and strong internet and smartphone usage.
Vietnamese E-commerce: A Blessing
Vietnam's two major cities: Ho Chi Minh City and Hanoi own 154,221 and 159,379 websites with .vn domain names contributing to 70% of the nation’s economy. Lazada, Shopee, Tiki, Thegioididong, and Sendo are some top websites with Shoppee holding 17% shares of web traffic and ranking in phone usage. Tiki follows as a close second. In regards with social media marketing, Lazada has taken number one on YouTube, Facebook, and Instagram. The entire credit goes to the massive inflow of funding by companies from Japan, Germany, the United States, Korea, China, and Singapore.
Figure 1.0 Vietnamese consumers’ demand for online shopping (VNA 2018)
Vietnam’s shopping audience consists of 71% of online transactions done via desktops, leaving 18% being done via mobile (EDI report 2019). Due to the recent economic growth, Average Vietnamese spend 7 hours a day plugged in and this increase in mobile traffic has strongly pushed the online shopping culture in Vietnam (Statista 2019).
From refrigerators to baby care products, Vietnamese have developed a strong habit of choosing online shopping over traditional shopping. Along with this logistical and delivery services have witnessed a strong 70% growth (World Bank 2019). This blessing of online commerce also resulted in an increase in funding and implementation of new technology like Vietnam Post and Viettel Post’s item sorting system. 70% of the population of Vietnam resides in rural areas and it is crucial to have a strong and efficient delivery network.
Several consumers abuse the platforms to cheat and sell fake, counterfeit goods, and violate intellectual property rights, and even the exchange of banned goods have raised an alarming level. The Vietnam E-commerce Report 2019 shows that up to 50% of respondents were dissatisfied with their online transactions (Vietnam Ecommerce Report 2019). There are cybersecurity threats, similarities in pricing between the same product from a physical and online store, fear of leaked card information, and the complications of cashless transactions, which prevent the growth of Online shopping in Vietnam.
To be sure, the e-commerce platforms in Vietnam are providing consumers with multiple payment options such as payment via bank transfer, COD, and payment via e-wallet. However, COD still accounts for the highest share of total transactions, hindering the transformation of the e-commerce market in Vietnam.
The relatively new and rapidly growing e-commerce sector has posed challenges to the government’s ability to create a conducive legal and policy framework. The legal guidelines in this area are not sufficiently comprehensive and robust, especially those related to cross-border e-commerce. The accelerated development of digital technologies has led to countless new e-commerce models. Online fraud such as stealing information, data, and bank accounts have made consumers dissatisfied with online transactions and commerce.
Vietnam has largely benefitted from the advent of online shopping and its inherent growth and domination in the market. Influenced by a youthful populace with high incomes, online shopping has been able to thrive in this environment. High conversion rate, increase in mobile engagement, and social media penetration increase profitability. Even with these factors, elements like low consumer confidence and limitations of logistics and delivery services and lack of a strong digital infrastructure as well a wide gap of digitalization in most areas of Vietnam. It is undeniable that there is a strong demand for online shopping in Vietnam. Although young customers prefer foreign American brands, there is still an understanding of consumer choices, needs, and desires.
World Bank. (2019). http://www.worldbank.org/en/country/vietnam/overview, and World Bank, Vietnam Ministry of Planning and Investment. (2016). Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy. Washington, DC: World Bank.
Statista. (2019). “Number of Internet Users in Vietnam from 2017 to 2023 (in millions)”. https://www.statista.com/statistics/369732/internet-users-vietnam/.
Hai Linh. (2019). “Không nương tay với buôn lậu và gian lận thương mại”. Thời Báo Tài Chính Việt Nam. http://thoibaotaichinhvietnam.vn/pages/nhip-song-tai-chinh/2019-07-31/khong- nuong-tay-voi-buon-lau-va-gian-lan-thuong-mai-74538.aspx
Student Risk Committee Member (Vietnam), IRM India
Created on Dec 18th 2020 04:53. Viewed 599 times.