THUONGMAI UNIVERSITY

----

DISCUSSION
Topic:
ADVANTAGES AND CHALLENGES OF
E-COMMERCE IN VIETNAM

Group :3

Class : 241_ENTI1011_44

Lecturer : Do Diep Linh

Hanoi – 2024
 TABLE OF MEMBERS

No Name Student code Task Assessment

1 Nguyễn Đức Du 22D300031 Challenges

2 Trần Đức Duy 22D300033 Solutions

3 Nguyễn Duy Đạt 22D300041 Advantages

Introduction
4 Dương Văn Đức 22D300044
- Conclusion

Trần Công Mạnh Đức Future trends and

5 20D170009
(Leader) opportunities

2
 TABLE OF CONTENTS
1. Introduction..............................................................................................................4
1.1. Definition of E-commerce...................................................................................4
1.2. Overview of E-commerce in Vietnam.................................................................4
2. Advantages of E-commerce in Vietnam..................................................................4
2.1. Growing internet and smartphone penetration.....................................................4
2.2. Convenience for customers..................................................................................5
2.3. Cost savings for businesses..................................................................................6
2.4. Improved payment solutions................................................................................6
2.5. Logistics advancements.......................................................................................7
3. Challenges of E-commerce in Vietnam and solutions...........................................7
3.1. Challenges of E-commerce in Vietnam...............................................................7
3.1.1. Human resources...........................................................................................7
3.1.2. Trust and consumer behavior........................................................................7
3.1.3. Fierce competition.........................................................................................8
3.1.4. Regulatory hurdles........................................................................................8
3.1.5. Cybersecurity risks........................................................................................8
3.2. Solutions..............................................................................................................8
3.2.1. Logistical issues in rural areas......................................................................8
3.2.2. Trust and consumer behavior........................................................................9
3.2.3. Fierce competition.........................................................................................9
3.2.4. Regulatory hurdles........................................................................................9
3.2.5. Cybersecurity risks........................................................................................9
4. Future trends and opportunities...........................................................................10
4.1. Adoption of AI and Automation in E-commerce...............................................10
4.2. Sustainability and Green Logistics....................................................................11
4.3. Cross-border E-commerce.................................................................................12
5. Conclusion...............................................................................................................13
REFERENCES...........................................................................................................15

3
1. Introduction
1.1. Definition of E-commerce
E-commerce (electronic commerce) refers to the buying and selling of goods and
services over the internet. It involves online transactions that allow consumers and
businesses to conduct purchases, payments, and exchanges electronically, often
through dedicated websites or mobile apps.
1.2. Overview of E-commerce in Vietnam
Vietnam has witnessed a rapid growth in its e-commerce sector over the past few
years, driven by increasing internet penetration, rising disposable income, and a
young, tech-savvy population.
Statistics on growth and market size
The Vietnamese e-commerce market has been experiencing steady growth,
marked by a significant increase in both the number of online shoppers and the total
value of transactions. This sector has shown impressive growth rates, outpacing
traditional retail in terms of expansion. A key driver of this growth has been the
widespread adoption of mobile devices, as a large portion of the population accesses
the internet primarily through smartphones, contributing to the rapid rise of mobile
commerce in the country.
Key platforms and players
Key players in the Vietnamese e-commerce market include several prominent
platforms, each with unique strengths. Shopee, one of the leading platforms, offers a
wide range of products and services, including online shopping, mobile games, and
digital payments. Lazada, another major player, is known for its diverse product
offerings and strong logistics network. Tiki, a homegrown Vietnamese platform, has
gained popularity for its focus on books, electronics, and consumer goods.
Additionally, Sendo, a Vietnamese online marketplace, has been gaining traction,
particularly in the fashion and electronics categories, contributing to the competitive
landscape of the e-commerce market in Vietnam.

2. Advantages of E-commerce in Vietnam

2.1. Growing internet and smartphone penetration
E-commerce in Vietnam has experienced remarkable growth over the past
decade, with its market value projected to reach $32 billion by 2025. Boasting an
impressive annual growth rate of 20%, it also stands as one of the fastest-growing

4
sectors in Asia, outpacing traditional retail industries like supermarkets and
convenience stores.
Over the past decade, the Vietnamese consumer landscape has undergone a
significant transformation, marked by explosive growth in the middle class. This shift
has been largely driven by young, tech-savvy millennials and Gen Z individuals, who
are rapidly replacing previous generations as the primary drivers of online shopping.
A recent study revealed that 43% of Gen Z users in Vietnam accessed shopping
apps daily, highlighting the significant role of mobiles in their shopping habits.

Vietnam’s high internet penetration rate and widespread mobile usage form the
bedrock of its e-commerce growth. As of 2024, there are 78.44 million internet users
in the country, with an internet penetration rate of 79.1%.
This connectivity empowers consumers with the convenience of accessing a
wide range of e-commerce services from any location and at any time. On average,
Vietnamese users spend over six hours using the internet daily.
The rise of social commerce and influencer marketing has added a new
dimension to the e-commerce landscape. Vietnam is home to 72.70 million social
media users in 2024, making up 73.3% of the population.
2.2. Convenience for customers
In the context of e-commerce, convenience is particularly important. Online
shopping allows consumers to easily browse products and compare prices from the
comfort of their own homes, without the need to visit physical stores. Additionally, e-
commerce sites often offer features such as one-click ordering, fast shipping and easy
returns, all of which contribute to a more convenient shopping experience. This is

5
particularly beneficial for people with busy schedules or those in different time
zones.
E-commerce platforms often offer a larger variety of products compared to
physical stores, allowing consumers to compare different brands and models easily. E-
commerce makes it easy to compare prices across different platforms, helping
consumers find the best deals.
2.3. Cost savings for businesses
E-commerce has opened doors for small businesses to compete on a global scale.
With the advent of online shopping, local shops now have the power to reach
customers far beyond their physical location. This transition to e-commerce provides
small businesses with an affordable and scalable platform to grow and thrive.
One of the significant advantages of e-commerce is the reduction in overhead
costs. Traditional brick-and-mortar stores face expenses like rent, utilities, and a larger
workforce. In contrast, an online store can operate with fewer employees and does not
require a physical storefront, allowing businesses to save money and increase their
profit margins.
2.4. Improved payment solutions
E-commerce and digital payment systems are closely interconnected, with each
driving the other’s growth. The COVID-19 pandemic has further accelerated the shift
towards online shopping in Vietnam. With physical stores facing restrictions,
consumers turned to e-commerce as a safe and convenient alternative.

Even after the quarantine period ended and the country returned to normal, the
behavior of Vietnamese consumers has been permanently changed. In January 2024,
non-cash transactions surged by 63.3% in volume compared to the same period last
year. Therefore, Consumers in Vietnam have a variety of payment options, including

6
bank transfers, QR code scanning, and electronic wallets, making it faster and easier
to pay online shopping bills.
The market’s growth potential represents a golden opportunity for fintech
investors to establish collaborations with e-commerce platforms and provide a wide
range of innovative financial solutions for online consumers in Vietnam.
2.5. Logistics advancements
Customers expect rapid and seamless delivery procedures in today's fast-
changing online shopping market. What makes up the core of this experience is the
logistics of e-commerce. As digital marketplaces have adapted to consumers in recent
years, so have the complex logistics behind each "add to cart" click.
The logistics of e-commerce, which was once restricted to courier delivery
services, is now taking leaps. Technology advancements, such as local drop points and
real-time tracking, are no longer figments of the imagination. These developments are
fueled not only by technology advancements but also by shifting customer
expectations and the massive magnitude of online shopping.

3. Challenges of E-commerce in Vietnam and solutions

3.1. Challenges of E-commerce in Vietnam
3.1.1. Human resources
Vietnam is facing a shortage of high-quality human resources, especially in
information technology, telecommunications, and emerging technologies like artificial
intelligence (AI). The country's education system has not kept pace with the rapid
development of the digital economy and the Fourth Industrial Revolution. If this issue
is not addressed, it will be a significant obstacle to the development of e-commerce
and the digital economy in Vietnam.
3.1.2. Trust and consumer behavior
Consumer trust in online transactions remains low. Survey data from the
Department of E-commerce and Digital Economy shows that many consumers are still
hesitant to participate in this market. A significant portion of e-commerce transactions
in Vietnam still use the cash-on-delivery (COD) method. Although this has decreased
compared to 2019, COD payments still accounted for 78% of e-commerce
transactions in 2020. Statistics show that 30% of orders are returned due to products
not meeting expectations.

7
3.1.3. Fierce competition
Vietnamese e-commerce businesses have limited competitiveness. With over
97% of Vietnamese enterprises being micro, small, and medium-sized, the private
sector faces many challenges in seizing e-commerce opportunities. Notable challenges
include limited knowledge and skills, inadequate use and management of websites and
e-commerce platforms, product development, data management, digital marketing,
logistics, and electronic payments. Additionally, there is a lack of investment and IT
infrastructure to achieve a full-fledged business model.
3.1.4. Regulatory hurdles
The institutional and legal environment for e-commerce development in Vietnam
is still weak, inconsistent, and lacks transparency and a proactive approach. The rapid
development of science and technology, along with new business methods and
creative ideas, has made it difficult for government agencies to manage e-commerce
activities.
3.1.5. Cybersecurity risks
Cybersecurity and information security in Vietnam face numerous threats.
Vietnam is one of the most frequently cyberattacked countries and is vulnerable to
cyberattacks. According to Kaspersky, Vietnam has been among the top countries in
terms of cyberattacks in recent years. This indicates a significant gap in Vietnam's
cybersecurity and information security, which hinders the development of e-
commerce. According to the 2020 E-commerce White Paper, the second most
common reason for consumers not participating in online shopping is fear of personal
data leaks.
3.2. Solutions
3.2.1. Logistical issues in rural areas
One solution to address logistical challenges in Vietnam's rural areas, where lack
of infrastructure, limited access to transportation, and high shipping costs hinder e-
commerce development, is to invest in rural infrastructure. Developing road networks,
transportation hubs, and warehouses in these regions would improve the efficiency of
logistics operations. Additionally, e-commerce companies can partner with local
businesses, such as shops or post offices, to provide last-mile delivery services.
Exploring drone technology for efficient delivery in remote areas is another potential
solution. Moreover, encouraging community-based logistics initiatives for package
collection and delivery can further enhance accessibility and reduce costs, making e-
commerce more viable in rural areas.

8
3.2.2. Trust and consumer behavior
To address trust issues and concerns about consumer behavior in Vietnam’s e-
commerce market-such as product quality, online payment security, and scams-several
solutions can be implemented. First, introducing stronger consumer protection laws
with stricter regulations will help safeguard consumers' rights and reduce fraudulent
activities. Encouraging honest online reviews and ratings can also build trust among
shoppers by providing transparency. Offering cash-on-delivery as a payment option is
another effective way to alleviate concerns about online payment security.
Furthermore, e-commerce platforms should prioritize using reliable and secure
payment gateways to ensure safe transactions and enhance consumer confidence.
3.2.3. Fierce competition
To tackle the challenge of fierce competition in Vietnam’s e-commerce market-
driven by both domestic and international companies-businesses need to adopt a
multi-faceted strategy. Differentiation is key, as offering unique products, services, or
customer experiences can set businesses apart from competitors. Building a strong
brand identity is also essential to cultivate customer loyalty. Additionally, forming
strategic partnerships with other companies can help expand reach and resources.
Finally, focusing on cost-effective operations is crucial for maintaining competitive
pricing while sustaining profitability in a highly contested market.
3.2.4. Regulatory hurdles
To overcome regulatory hurdles in Vietnam’s e-commerce market, such as
complex and ever-changing regulations related to taxes, licensing, and cross-border
trade, several measures can be taken. Advocating for clear and consistent regulations
will create a more transparent business environment that supports e-commerce
growth. Additionally, offering businesses guidance and support to navigate regulatory
requirements can help them remain compliant and reduce operational challenges.
Digitalizing government services is another crucial step, as it can streamline
processes, reduce bureaucratic hurdles, and make it easier for businesses to fulfill their
regulatory obligations efficiently.
3.2.5. Cybersecurity risks
To address the increasing cybersecurity risks in Vietnam’s e-commerce market,
such as data breaches, cyberattacks, and fraud, implementing robust security measures
is crucial to protect customer data and prevent unauthorized access. Regular security
audits should be conducted to identify and rectify vulnerabilities in the system.
Employee training is also essential, as educating staff about cybersecurity best

9
practices and potential risks can significantly reduce the chances of human error
leading to security breaches. Additionally, businesses can consider investing in
cybersecurity insurance to mitigate financial losses and recover more effectively in the
event of a security incident.

4. Future trends and opportunities

4.1. Adoption of AI and Automation in E-commerce
These trends include the growth of mobile commerce, sustainability as a key
consideration, the emergence of new payment methods, cross-border e-commerce,
augmented reality (AR) and virtual reality (VR) enhancements, personalisation and
customer engagement, enhanced customer service with chatbots and AI assistants, and
data analytics and insights.
Among these trends, voice commerce is emerging as a dominant trend in the e-
commerce landscape due to the widespread adoption of smart speakers and voice
assistants. Consumers are increasingly using voice commands to make purchases,
order groceries, and search for products online.
Another important trend is the growth of mobile commerce, which has been
steadily rising and is expected to account for over 70 per cent of e-commerce sales by
the last of 2024.
To remain competitive, e-commerce companies must prioritise enhancing their
mobile websites and apps to provide a seamless shopping experience on smaller
screens.
Cross-border e-commerce is also set to experience significant growth, as
consumers become more comfortable purchasing products from international markets.
In addition, personalisation has become a key driver of customer satisfaction and
loyalty in the e-commerce industry.
Experts say businesses can use customer data and AI algorithms to deliver
personalized product recommendations and promotions tailored to individual
preferences.
They recommended engaging with customers through social media and
personalised campaigns to help build stronger relationships and drive repeat
purchases.

10
 They recommended that businesses leverage these trends to enhance the
customer experience, drive sales, and remain competitive in the evolving e-commerce
landscape.
4.2. Sustainability and Green Logistics
In recent years, the growth rate of e-commerce in Vietnam has always been
among the top countries in the region and the world, contributing greatly to the
country's economic development.
However, this "hot" development also entails negative consequences for the
environment from logistics services such as packaging processes using plastic, nylon,
etc., or goods delivery causing high CO2 emissions.
In the context of the entire economy striving to promote green and sustainable
growth, the requirements for e-commerce development are no exception. Specifically,
greening logistics in e-commerce plays an important role in protecting the
environment and moving towards sustainable development.
Le Hoang Oanh, Director of the Department of E-commerce and Digital
Economy under the Ministry of Industry and Trade, noted that despite rapid growth, e-
commerce in Vietnam is facing sustainability challenges, particularly in logistics. The
online retail sector significantly impacts the environment through delivery and
packaging processes. Each product shipped from an online store is individually
packaged using materials like cardboard, nylon, foam, and disposable plastics, leading
to substantial waste. Daily delivery activities, involving trucks, cars, and motorbikes,
generate a large amount of carbon emissions, especially with express delivery
services. According to Nguyen Thanh Hung, Chairman of the Senior Advisory
Council of the Vietnam E-commerce Association (VECOM), e-commerce in Vietnam
used 332,000 tonnes of packaging in 2023, with plastic packaging accounting for
171,000 tonnes. Given the annual growth rate of 20-25%, the e-commerce market size
is expected to quadruple by 2030. Without significant changes to packaging practices,
the amount of plastic waste could reach approximately 800,000 tonnes by then.
Logistics activities play a crucial role in the e-commerce supply chain but are
also a significant source of greenhouse gas emissions and environmental pollution,
making "greening" logistics a necessity for sustainable development. Green logistics
involves managing the supply chain and transporting goods in ways that minimize
environmental impact, such as optimizing vehicle use, reducing empty vehicle trips,
and using eco-friendly materials in product packaging. Implementing green logistics

11
not only benefits the environment but also reduces costs, as transportation expenses
constitute 60-80% of total logistics costs for retail businesses. Transitioning to green
logistics is both a trend and an essential step for sustainable growth, requiring
collaboration among businesses, the government, and consumers to create an effective
green logistics ecosystem. Businesses should invest in technology, optimize
operations, and adopt environmentally friendly packaging, while the government can
support the transition through policies and infrastructure development. Consumers can
contribute by choosing eco-conscious companies and products, helping protect the
environment through sustainable consumption.
4.3. Cross-border E-commerce
According to Amazon Global Selling Vietnam, cross-border e-commerce is
expected to grow 2.3 times faster than traditional e-commerce from 2022 to 2025,
with annual growth rates projected at 28% until 2027. In the past 12 months, over 17
million products from Vietnamese sellers have been sold globally, indicating that
Vietnamese businesses, especially small and medium-sized enterprises (SMEs), are
effectively leveraging this opportunity to expand their markets. Tran Bich Ngoc,
Deputy Chief of Office at the Vietnam E-commerce and Digital Economy Agency
(iDEA), highlighted that Vietnam’s e-commerce sector is growing at an annual rate of
20% and is the third largest in Southeast Asia. By 2027, the export value of Vietnam’s
e-commerce activities is expected to reach VND 300 trillion ($12 billion),
demonstrating the immense potential of the country's cross-border e-commerce market
and the opportunities it offers for small and micro enterprises.
Rising regional trend
E-commerce is transforming global retail and driving cross-border trade growth,
especially in Southeast Asia, where the top 8 platforms generated $114.6 billion in
2023, a 15% increase. Cross-border e-commerce simplifies supply chains by enabling
direct shipments from manufacturers to consumers, reducing costs and delivery times.
Despite economic challenges, the region’s e-commerce market has doubled in size
since 2020. Vietnam and Thailand are the fastest-growing markets, with Vietnam now
the third-largest e-commerce market in Southeast Asia. Shopee leads with $55.1
billion GMV, while TikTok Shop, the second-largest platform, saw its GMV surge to
$16.3 billion. Key trends include the influence of Key Opinion Leaders (KOLs), AI
adoption, and logistics challenges. According to Momentum Works, innovation and
adaptability are driving the continued growth of Southeast Asia’s e-commerce sector.
Promoting shared growth in ASEAN
12
 Boosting cross-border e-commerce has become a key focus for economic
development among ASEAN members, with Vietnam being a leader in this initiative,
ranking in the top 10 countries for participation, with around 300 enterprises involved
annually. Despite minimal growth in Vietnam’s overall retail market in the first half of
2024, e-commerce grew by 54%, indicating a shift towards digital commerce. TikTok
Vietnam, with about 3 million people earning income through its platform, aims to
connect producers directly with consumers across borders. Technological
advancements, especially AI, are expected to help overcome language barriers in
cross-border trade. Businesses like Trung Nguyen Legend and MizuMi are using e-
commerce to promote “Made-in-Vietnam” products and expand internationally,
highlighting the sector’s potential for growth and global reach.
Barriers to break through
While cross-border e-commerce offers significant growth opportunities and
increased export revenue in Southeast Asia, the region faces challenges that hinder
smooth operations. According to Cube Asia, logistics and infrastructure remain major
issues due to varying quality across countries, affecting shipping costs and delivery
timelines. Regulatory inconsistencies further complicate compliance, with diverse
legal, tax, and customs frameworks creating additional barriers. Vietnamese
businesses encounter specific obstacles like information gaps, cost burdens, and
regulatory complexities. An Amazon report revealed that 80% of businesses struggle
with foreign market regulations, and 85% face intense competition. SMEs particularly
lack resources for international payments, logistics, and currency management. To
support e-commerce adoption, the Vietnamese government has implemented policies
like Decree No. 80/2021/ND-CP, providing subsidies for storefront establishment on
e-commerce platforms. Experts suggest that a coordinated government strategy is
essential to boost cross-border e-commerce, focusing on consumer protection,
regional connectivity, and sustainable development.

5. Conclusion
E-commerce in Vietnam offers many advantages, such as the rise of the Internet
and smartphones, convenience for consumers, cost savings for businesses, improved
payment solutions and logistics advances. However, it also faces challenges in terms
of human resources, consumer trust and behavior, fierce competition, regulatory
barriers and cybersecurity risks. To fully benefit from e-commerce, Vietnam needs to

13
overcome these challenges so that the country can continue to develop its e-commerce
market and consolidate its role in the digital economy.
Potential growth
Vietnam has the potential to become one of the largest e-commerce markets in
Southeast Asia. With its rapid growth, the e-commerce market is expected to reach
$39 billion by 2025. Factors such as steady economic growth, a young population, and
high internet penetration will continue to fuel this market.
The development of digital payment technologies, modern logistics platforms,
and government support policies will further create favorable conditions for e-
commerce to thrive.
Overcoming challenges
Logistics: Vietnam's logistics infrastructure needs to be upgraded to meet the
demands for faster and more efficient delivery. Investments in transportation
networks, warehouses, and smart delivery solutions will help reduce shipping times
and costs.
Online Payments: While cashless payments are increasing, many Vietnamese
consumers still prefer cash on delivery. Businesses should promote cashless
transactions through incentives and build consumer trust to encourage more online
payments.
Data Security: Data security and consumer privacy issues must be addressed. E-
commerce platforms need to enhance cybersecurity measures to protect customers
from fraud and data breaches.
Call to action
For Businesses: Companies need to adapt proactively to changes in consumer
behavior and seize opportunities from the e-commerce boom. Implementing new
technologies, optimizing customer service, and investing in fast delivery systems will
give businesses a competitive edge.
For Policy Makers: The government and policymakers should create a more
conducive environment for e-commerce. This includes improving digital
infrastructure, promoting cashless payments, and ensuring a legal framework that
supports businesses in protecting consumer rights and driving the digital economy.

14
 Vietnam has a significant opportunity to become a leading e-commerce hub in
the region, but this requires close cooperation between the government, businesses,
and consumers.

15
 REFERENCES
1. AI continues to revolutionise e-commerce industry: forum. (n.d.). vietnamnews.vn.
https://vietnamnews.vn/economy/1654490/ai-continues-to-revolutionise-e-commerce-
industry-forum.html
2. Buxhoidt, T. (2024, March 14). How to Reduce Ecommerce Business Expenses.
parcelLab. https://parcellab.com/blog/how-to-reduce-ecommerce-business-expenses/
#:~:text=Implement%20automated%20processes,operations%2C%20translating
%20into%20cost%20savings
3. Hoang A. (2024, September 2). Opportunities for cross-border e-commerce. Nhịp
Sống Kinh Tế Việt Nam & Thế Giới. https://vneconomy.vn/opportunities-for-cross-
border-e-commerce.htm#:~:text=According%20to%20Amazon%20Global
%20Selling,per%20cent%20anticipated%20until%202027.
4. Keener, L. (2023, May 22). How convenience shapes e-commerce. Quikly.
https://hq.quikly.com/blog/how-convenience-shapes-e-
commerce#:~:text=Convenience%20is%20the%20core%20of,ability%20to%20easily
%20navigate%20experiences
5. Linh, T. (2024, September 2). Green logistics towards sustainable e-commerce.
Nhan Dan Online. https://en.nhandan.vn/green-logistics-towards-sustainable-e-
commerce-post138873.html
6. marketingadmin. (2024, July 25). E-commerce In Vietnam For 2024: Top Business
Opportunities. JDI Group. https://jdi.group/e-commerce-in-vietnam-top-business-
opportunities/#:~:text=Vietnam%27s%20high%20internet%20penetration
%20rate,internet%20penetration%20rate%20of%2079.1%25

16