E-commerce clicks, attracts foreign interest

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A woman ponders garment products listed on an e-commerce website. Photo by Tuan Anh

Tran Anh Thy works in an office from nine to five and has learnt to shop during the lunch break.

All it takes her are a couple of clicks of the mouse and the goods are delivered to her before she leaves for home.

"There is a diverse range of items on the Internet at reasonable prices," Thy said. "It is convenient and saves time. So I've been buying online often."

E-commerce has been picking up in Vietnam, which has one of the biggest Internet communities in the region, to the excitement of both local and foreign investors.

Figures from the Ministry of Industry and Trade's e-Commerce and Information Technology Department last month showed that more than 34 million out of the country's 90 million people use the Internet, and 18 million shopped online this year, spending an average of US$150, or $2.7 billion in total.

As shopping websites report rising sales, many brick-and-mortar retailers have also begun to offer online services.

Nguyen The Dong, managing director of leading shopping site 123mua.vn, which has been around since 2004, said traffic has jumped to 5.5-6 million hits a month.

The website has recently been adding around 2,000 new shops every month, and is now selling around 80,000 items, mostly fashion and hi-tech, to target young consumers, he said.

He said new shopping websites have been joining the market, but his business has not been affected since the number of smart-phone users has been rising at the same time.

The number of shoppers using mobile gadgets to access 123mua more than doubled to 30 percent between January and October, he said.

"The trend has caused 123mua vendors to change their strategies with regard to showcasing [their products] and customer service."

Tran Nhat Linh, e-commerce director of The Gioi Di Dong, the country's biggest mobile-phone retailer, said online sales have increased from 5 percent of total revenue last June to 7 percent now, and are expected to cross 10 percent by year end.

Linh said his chain makes around VND40-45 billion ($1.9-2.1 million) from online sales every month.

FPTShop, the online venue of the Hanoi-based telecom company FPT, also reported a five-fold revenue surge this year to VND10 billion last month.

Maturing market

Nguyen Ngoc Dung, head of the southern office of the Vietnam E-Commerce Association, told Thoi bao Kinh te Saigon newspaper that e-commerce has matured in Vietnam and there has been a major shift from traditional to online shopping.

Vietnam has the requisite conditions for e-commerce with widespread Internet and telecom facilities and online payment services, he said.

But the biggest advantage, according to Dung, is that business leaders have adopted an online shopping mindset and are willing to switch some of their focus from the traditional retail system to the Internet to reach their customers.

Online purchases have benefited from offers such as 3-10 percent discounts from major electronics retailer Thien Hoa and gift vouchers worth 10 percent of the purchase value from Nguyen Kim, the biggest electronics retailer in the country. 

Linh said his online customers are only required to pay when they are satisfied with the delivery, and those in Ho Chi Minh City get delivery in half an hour; replacements or refunds are made within a week.

But the ministry's survey also found that only 29 percent of customers were "satisfied" with the deal, while more than 60 percent rated their transactions as average.

Many customers complained about overstatement of quality, prices not being lower, limited delivery services, and complicated ordering procedures. They were also concerned about the safety of their personal information.

Insiders warned that with domestic online retailers barely gaining a foothold yet, the discontent can be a real challenge for them since foreign shopping websites are already in the market. 

Dung said websites like 123mua and Chodientu, despite being around for a decade, are facing the threat of closure instead of achieving international popularity like Amazon or Alibaba. Online shoppers spend $665 a person a year in India and $670 in China.

But some shopping websites have tied up with foreign partners. Japan's leading integrated trading company, Sumitomo Corporation, last August became a strategic investor in Tiki.vn after picking up a 30 percent stake. Tiki, which sells more than 40,000 items, including books, electronics, home appliances, fashion goods, and stationery, had earlier sold a stake to Japanese investment firm CyberAgent Ventures.

In April Hanoi-based PeaceSoft Solution Corporation sold a 50 percent stake in NganLuong.com, one of Vietnam's first digital wallets and online payment portals, to MOL Access Portal Sdn Berhad, the Malaysian unit of MOL Global, one of Southeast Asia's biggest Internet companies which handles more than 60 million transactions every year worth over $300 million.

MOL Global is expanding its connections by tying up with some 90 banks in 10 countries.

Ganesh Kumar Bangah, general director of MOL Global, said Vietnam is not only one of the fastest growing markets, but also has one of the biggest Internet communities in Southeast Asia.

The investment in NganLuong would buy the company a ticket to the big market and become the top e-commerce investor in Southeast Asia, he said.

Dung said foreigners have also set up shopping websites that are doing well in Vietnam - like the fashion portal Zalora and the electronics and home appliances seller Lazada.

Andreas Winiarski, global PR head at German-owned Rocket Internet, which has set up online food ordering site FoodPanda.vn, said e-commerce in Vietnam is picking up momentum and giving its business there a big boost.

Rocket's websites which also include Zalora and Lazada - have become popular with office workers as well as students, with each having hundreds of thousands of regular customers.

Dung said foreign companies are becoming strong competitors by making themselves customer-oriented, employing local staff and adjusting their models to suit local shopping needs.

Local websites are becoming aware of the foreign competition and trying to make themselves fit for the race.

123mua recently launched a survey to check if their customers also shop from Zalora or Lazada.

"If they don't try, they will lose right at home," Dung said.

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