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Vietnam: Online shopping spurs e-commerce logistics
A boom in online shopping and increasing numbers of internet and smartphone users have contributed to the growth of e-commerce logistics in Asia-Pacific, including Viet Nam.
At the same time, the region’s strong development of e-commerce logistics has also helped create breakthroughs in cross-border e-commerce.
The “E-Commerce Logistics Market by Service and Geography – Forecast and Analysis 2021-25” report by Technavio expects the market to grow to US$356 billion by 2025.
The market grew 16.4 per cent in 2021 and is expected to expand at an annual growth rate of 20.4 per cent during the 2020-25 period, according to the report.
“The e-commerce logistics market is fragmented. The major vendors in the market compete on various parameters, such as providing innovative solutions like fulfillment centres closer to the customer location. Some of the major vendors are also focusing on M&A to increase their competitive advantage and improve their market position,” it said.
Despite the increase in cross-border e-commerce activities, the rise in social commerce, and the growth of e-commerce startups offering immense growth opportunities, high logistics costs, infrastructural issues in emerging economies, and stringent regulations for e-commerce logistics will challenge the growth of market participants, the report said.
Meanwhile, market researcher Mordor Intelligence said Southeast Asia’s cross-border e-commerce accounts for more than 40 per cent of total e-commerce in the region.
“Southeast Asia is the emerging hub of the e-commerce market due to the already high and yet growing population, rising disposable income, increasing access to the internet, smartphone penetration, and developing transport infrastructure leading to efficient logistics services with faster and last mile delivery options.
“The e-commerce market in Southeast Asia is made up of several players and has been an area of significant and great interest for the behemoth Chinese online marketplaces and e-commerce enterprises,” Mordor Intelligence said.
It cited the unavailability of products domestically, affordable costs, consumer-focused targeting by market players, and higher quality of goods, as the main reasons for an increase in demand for cross-border e-commerce.
Moreover, cross-border e-commerce offers a lot of advantages for small and medium-sized enterprises to expand their businesses and become multinational, and it also presents an opportunity for original equipment manufacturers to sell their products directly to consumers, relieving them from complex supply chains.
Apart from the advantages that it offers, cross-border e-commerce also faces some challenges, such as high delivery costs and tight delivery deadline requirements, currency conversions, and language, Mordor Intelligence said, adding that the absence of a bank account in some villages is also a factor that hinders online payment.
In Southeast Asia, cross-border e-commerce has experienced outstanding development, and is expected to rake in nearly $90 billion in 2022, doubling that of 2021.
According to experts, the fast growing delivery and shipping segment is expected to have the largest share in the cross-border e-commerce market of Southeast Asia in the next four years. Thus, providing more added value services would be a key for express delivery businesses to become the first choice of customers and partners.
In order to deploy added value services, experts suggested firms have an infrastructure platform and transit centres across Viet Nam. — VNS