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COVER STORY
According to Vinshop, Vietnam’s retail
market is still on a strong growth trajec- IMPORTANCE OF E-COMMERCE IN PRODUCTION
tory, with total sales to reach $100 billion AND BUSINESS ACTIVITIES OF ENTERPRISES
by 2025, which makes it a market of some 50% 47%
potential. Vietnam’s young population
and its ability to rapidly transform digitally 40% 36%
and update tech applications quickly
makes it easier for OMD to change cus- 30%
tomer habits and behavior. The country’s 20%
retail market remains fragmented in the 9%
field of FMCG, with more than 70 per 10% 8%
cent of goods distributed on traditional
channels through more than 1 million 0
grocery stores nationwide, providing the Not important Relatively Important Very important
conditions for the application of technology important
to develop B2B2C models. Source: Vietnam E-Business Index (EBI) 2022 Report, released by Vietnam E-commerce Association (VECOM) in May
Similarly, Mr. Trung said that like e-
B2C, e-B2B also enjoys advantages from
the very characteristics of the Vietnamese According to Kilo’s observations, Viet- OMD is changing stakeholder perceptions
market, such as broad internet access, rapid nam is ahead of the curve in several respects. and habits about transformation and inno-
economic growth, and high population It has seen software engineers wanting to vation. “This is especially challenging for a
density. According to a survey by Statista, join the startup to resolve problems facing traditional market that has been operating
the majority of retail activities in the country local businesses. “This is different to other and growing for the past 20 years,” said
are still dependent on traditional channels, markets, where software engineers only Mr. Tung. “However, OMD has been grad-
at up to 85 per cent in smaller cities and want to work with international compa- ually proving to partners both the benefits
towns. For retail stores, imports are still nies,” Mr. Narayan noted. “Vietnam also and values it brings to parties throughout
done in traditional ways through wholesale has a young, entrepreneurial, and intel- the supply chain when applying technology
markets, where regional distributors or lectually-curious population. This mindset and data and transforming the entire retail
agents transport goods themselves. “In that is a significant advantage when it comes value chain.”
context, by applying technology, Loship to e-B2B as a business model of the future.” According to Mr. Kurokawa, the chal-
can offer better solutions to this problem,” lenges include a familiarity with traditional
Mr. Trung noted. “It understands that this OVERCOMING CHALLENGES buying methods. Older customers in par-
is a huge challenge but can also be seen as The e-B2B model is still quite new in ticular are hesitant to change their behavior.
an opportunity for it to participate in the Vietnam, so there will be challenges for Also, most major enterprises have a huge
market and help the commercial activities businesses in implementation. As with all sales team that closely communicate with
of traditional shops and grocery stores new models, given the ultimate goal of the customers. Thus, few buyers feel the need
become more convenient and efficient.” B2B2C model, the greatest challenge for to switch to digital just yet. “Other than
the cost benefits generated from a reduction
in middle-men, buyers don’t feel the benefit
of e-B2B as yet,” he said.
The challenges of running a tech start-
up in Vietnam are actually no different
from elsewhere. “There is significant
competition for talent, and employees
PHOTOS: VIET TUAN
want a productive and constructive work-
ing environment and expect to work
towards outcomes that create a positive
impact,” Mr. Narayan said. “Our cus-
tomers have told us that costs associated
with transportation and logistics are a
significant pain point. We are working
on several solutions to provide our cus-
tomers with better visibility and a higher
level of service.”
For Vietnamese startups like Loship,
the greatest challenge comes from having
to optimize working capital in the context
of a gloomy financial market and its own
limited financial resources. “However,
the potential of the market and the level
of customer acceptance is very good, and
Loship is confident that it will soon over-
come the initial difficulties and help pro-
mote the development of the e-B2B model
and contribute to overall growth in Viet-
nam,” Mr. Trung believes. %

www.en.vneconomy.vn JUNE 2022 | VIETNAM ECONOMIC TIMES | 17