According to Google, Vietnam is ranked the second fastest growing e-commerce market, following Indonesia. It is also forecast that the country’s e-commerce market will hit US$15 billion by 2025. Thus, it is no surprise that the demand of e-commerce in Vietnam has soared and it’s expected to achieve a 42% growth annually until 2022. In 2018, for example, the e-commerce logistics industry reached US$203 million valuation.
Thriving E-commerce Market in Vietnam
There are important players entering the Vietnamese e-commerce market recently. In 2017, aeoneshop.com and lotte.vn got into the market in 2017. Amazon also joined the scene in 2018 to export goods for SMEs in Vietnam.
As a result, in addition to product quality, the delivery speed of products is of significant importance for e-commerce. In order to support the continuous expansion of the e-commerce market in the long run, it is obvious that a comprehensive and effective logistics system is inevitable, especially the last-mile connectivity. Nowadays, customers want reliable and fast delivery to their doorsteps.
Some e-commerce giants in Vietnam including Tiki, Lazada and Grab, have their own logistics sector: warehousing, packing, and shipping. However, most e-commerce companies in Vietnam such as Shopee and Sendo are still not able to do the logistics on their own and they opt for the third-party logistics (3PLs). This, it creates a great opportunities and market for e-commerce logistics.
Major Players of E-commerce Logistics in Vietnam
Approximately 20-25% of GDP is contributed by the e-commerce logistics sector in Vietnam, according to a survey conducted by the Vietnam Logistics Business Association.
This sector is also expected to grow by about 12% annually. This means that the e-commerce, particularly in logistic services and express delivery focusing on e-commerce, is now a prospering sector that investors are flooding into and successful cases have been seen over the years.
To grab a piece of pie in this fertile sector, ITL Corp’s Speedlink have started to provide express delivery in Vietnam with its operation spreading across 50 cities and provinces in the country. Indo Tran Logistics also tapped in the express delivery service field.
Another example is Giao Hang Nhanh, an e-commerce logistic and delivery company serving 800 online stores including large B2C e-commerce site Tiki. Through Giao Hang Nhanh efficient logistic service, a greater e-commerce experience can be achieved for both online merchants and consumers.
Recently 4PL (4th party) logistics providers have also entered the market offering more custom solutions to customers who need more flexibility in their shipping needs. Such firms include CBIP Logistics, out of Hong Kong and Kuehne-nagel out of Switzerland.
Grab and Uber are both big players that have gained immense profits in Vietnam for closing the gaps in Vietnamese logistic networks. Grab even went through a rebranding by expanding their services to include GrabExpress, a delivery service for documents, parcels and gifts.
E-commerce Logistics: The Future in Vietnam
Just like any markets, e-commerce logistics in Vietnam have its own shares of challenges as well. These challenges include higher operational costs due to the cash- based economy in Vietnam, and heavy traffic in cities such as Hanoi and Ho Chi Minh City. Also, last-mile delivery is more challenging in rural areas in Vietnam.
Despite the challenges, it is certain that the future of e-commerce logistics in Vietnam is highly positive. This is because the signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union Free Trade Agreement (EVFTA) will bring more foreign investments into the country’s information and infrastructure system.
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