With the pandemic seemingly under control, a shift in consumer behavior is evident. Shoppers relied exclusively on online retailers throughout the quarantine, but even when restrictions were lifted, consumers continued to shop online, perpetuating demand for e-commerce platforms.
Before the pandemic, e-commerce made up very little of the retail industry in Vietnam. Yet, as restrictions grew, the need and development of e-commerce accelerated. Many marketers have recognized the change and established an online presence.
With a new evolution of supply, demand and distribution channels, the current e-commerce sector in Vietnam has several key players, including Shopee, Lazada, Tiki and Sendo, and many new players are also looking to invest. This capital raise has positively advanced Vietnam’s e-commerce ecosystem, benefiting suppliers, merchants and consumers, especially as expedited delivery systems improve.
However, according to Nelson Wu, Managing Director of BEST Inc. Vietnam, “Vietnam has one of the highest cash on delivery (COD) ratios of 90%, a much more complex and time consuming system than any other method” .
The pandemic and subsequent social distancing have amplified the need for cashless electronic payments, increasing the popularity of e-wallet platforms like VNPAY and MoMo among consumers. E-wallets are the future of e-commerce, ultimately benefiting merchants and shoppers alike.
Speaking about his experience finding a warehouse, Wu said, “Four years ago when I came to Vietnam, I realized that there was a very limited supply of international quality warehouses. I spent several months looking for suitable warehouses in the north of the country. (Hanoi) and to the south (Ho Chi Minh City).”
Finding only traditional logistics warehouses, he spoke to several developers about his company’s request for a bespoke space.
“To my surprise, all of them refused to join together for fear that once built to our needs, we would no longer need the space and that they would have a hard time coming out with an atypical design. Luckily, we met BW Industrial, who agreed to partner with us and develop BEST Inc.’s first known automated warehouse in the country,” he recalls.
The first known automated warehouse of BEST Inc. in Vietnam developed by BW. Photo by BEST Inc. Vietnam
A long-term view has helped Best, Inc. Vietnam survive the lockdown period, even giving the company an edge. Recently, they were named “Most Inspirational Motivator” at the Shopee Brands and Partners 2022 conference.
Wu’s story is one of many, with countless international players choosing Vietnam to optimize business efficiency through improved automation and storage design. “The ecosystem cannot grow on its own. I think a lot more investment is going on,” said Lance Li, CEO of BW Industrial Development JSC.
Global players are optimizing business efficiency through storage design. Photo by J&T Express
For e-commerce platforms, investing in warehouse solutions is all the more critical as it improves user experience, especially during the height of shopping season. Previously, consumers were satisfied with delivery times of two to five days, but now the B2C and B2B segments demand same-day delivery, especially when it comes to fresh agricultural products.
To succeed, this sector will continue to need modern warehouse options to better meet its fulfillment and delivery requirements, including appropriate infrastructure, extensive storage systems and a strong network of warehouses across the country.