E-commerce logistics industry faces harsh competition

The rapid growth of freight forwarders in Viet Nam has put pressure on e-commerce businesses to seek new avenues for development.

Figures from the Ministry of Industry and Trade show that by 2022 e-commerce sales turnover will grow by 150 per cent annually, to US$10 billion per year, thanks to the popularity of smartphones and Facebook.

The e-commerce logistics industry has been active in establishing rapid delivery services, most of which have been founded by students.

Nguyen Thanh Binh, a third-year student at HCM City Foreign Trade University, established a website with an interface for rapid delivery 24 hours a day, seven days a week.

Binh is a member of a trade association for online businesses.

“Our business does not require high investment. What we need are motorbikes, handphones, good health, serious and punctual working attitude and good communication skills,” he said.

However, since 2015, his business has been facing harsh competition as hundreds of freight forwarders (cargo agents) have been established in the country.

To survive the competition, Binh has had to lower his prices and deliver cargo at any time of the day.

Tran Cong Tham, who delivers cargo, said he can earn from VND150,000 to VND200,000 per day for 10 deliveries.

Alexandre Danly, CEO of Lazada Viet Nam, said the company has seen robust growth.

Its website, which has one million products from 5,000 suppliers, has had 30 million page views per month.

The firm receives an order every two seconds, with 70 per cent of them coming from mobile phones, he said.

E-commerce is now popular in urban as well as rural areas.

In addition to well-known cargo agents such as VNPost, Viettel Post, Tin Thanh Kerry, giaohangnhanh, giaohangso1 and shipchung, new delivery services have opened recently, including GrabExpress Giao Hang, Sship and Sapo.

Facebook is also considered a popular tool for e-commerce in Viet Nam.

Experts warn that e-commerce firms will face harsh competition when newcomers join the market in the near future.

Trends

Offering fast delivery services is the trend of the future, but it remains a big challenge for cargo agents who face human resource shortages.

A recent survey conducted by Temando Pty Ltd, which operates a multi-carrier shipping platform for e-commerce, shows that 80 per cent of online customers want their goods to be delivered on the same day, while 61 per cent want even delivery within one to three hours.

CEO of Lazada Viet Nam, Alexandre Dardy, said the company has prepared its development plans, focussing on quick delivery services, especially within one day.

Cargo agents are also targeting the same time frame, aiming to become delivery partners for Lazada.

Luong Duy Hoai, CEO of Giaohangnhanh.vn, said that cargo delivery and COD (cash on delivery) services remain the domain of professional cargo agents.

He said online companies want high quality cargo delivery services at low costs.

His company provides around 10,000 cargo delivery services and collects about VND2 billion of COD per day.

The figures show that after nearly four years in operation, e-commerce firms have become more professional, as delivery speed has become the decisive factor among competitors.

Source VNA