FACULTY OF INTERNATIONAL BUSINESS BACHELOR’S THESIS THESIS TITLE: CROSS-BORDER E-COMMERCE: PROMOTING VIETNAMESE PRODUCTS TO THE GLOBAL MARKET Student’s name: Nguyen Ha Minh Hanh Clas
THEORETICAL BASIS OF CROSS-BORDER E-
BACKGROUND OF E-COMMERCE
E-commerce, a term first introduced in the 1960s, refers to the buying and selling of goods through data transmission, facilitated by electronic data interchange (James Morrish, 2020) Over the past fifty years, e-commerce has been extensively analyzed, leading to a comprehensive understanding of its various facets This article will explore the definition of e-commerce as provided by different organizations, its key characteristics, and the various classifications that define this dynamic sector.
E-commerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions E-commerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet (Shopify‟s Business encyclopedia)
E-business encompasses all facets of running an online business, while e-commerce specifically pertains to the buying and selling of goods and services Various organizations worldwide offer distinct definitions of e-commerce, highlighting its significance in the digital marketplace.
WTO: “Electronic commerce, or e-commerce, is defined as the "production, distribution, marketing, sale or delivery of goods and services by electronic means
A commercial transaction consists of three key stages: the advertising and searching stage, the ordering and payment stage, and the delivery stage Each of these stages can be conducted electronically, falling under the umbrella of electronic commerce E-commerce transactions can occur between various entities, including businesses, households, individuals, governments, and other public or private organizations.
On May 16, 2013, the Government of the Socialist Republic of Vietnam introduced Decree No 52/2013/ND-CP, which defines e-commerce as the process of conducting commercial activities, either partially or entirely, through electronic means linked to the Internet, mobile telecommunications networks, or other open networks.
E-commerce is fundamentally defined as the management and operation of commercial activities among market participants using electronic means and telecommunications networks This encompasses a diverse array of businesses that facilitate online retail, including payment networks and digital wallet services for secure payment processing, shipping and logistics companies for reliable package delivery, and online stores that effectively connect buyers with sellers.
E-commerce encompasses the activities of advertising, selling, and distributing products through electronic means, along with facilitating payment processes over the Internet Key characteristics of e-commerce include its ability to operate 24/7, a wide reach to global customers, reduced operational costs, and the convenience of online transactions.
E-commerce fundamentally differs from traditional commerce in that it relies on electronic technology for transactions, eliminating the need for direct contact between buyers and sellers While this automation streamlines processes, reduces time and travel costs, and accelerates transaction speed, it also poses a challenge: the lack of personal interaction can diminish trust between parties, potentially hindering successful transactions.
E-commerce transcends traditional trading by eliminating geographical boundaries, enabling online merchants to sell goods globally with ease This approach allows individuals from around the world to engage in trade with minimal transaction costs, thanks to reduced intermediaries For businesses with limited capital, e-commerce serves as an effective means to broaden their market reach both domestically and internationally In contrast, traditional commerce presents challenges, requiring direct interactions for negotiations, contract signing, and product purchases, often incurring fixed costs such as rental expenses for showrooms and marketing strategies.
In e-commerce, transactions involve at least three key participants: the buyer, the seller, and a third party, typically a network service provider or an authentication agency The authentication agency plays a crucial role in verifying the reliability of information exchanged in e-commerce, addressing the inherent "trust" issues and minimizing risks for all parties involved.
One key difference between traditional commerce and e-commerce is the timing of transactions; traditional commerce is limited to business hours, while e-commerce allows for buying and selling at any time E-commerce streamlines the sales process through digitization, benefiting multiple businesses within the ecosystem With e-commerce systems, departments can easily track order fulfillment without the need for cumbersome communication methods like emails or phone calls This simplification reduces the time spent on procedures compared to traditional transactions, which often require in-person negotiations, contract signings, or bank visits for money transfers.
E-commerce payment methods have become increasingly diverse, with popular options including payment cards, smart cards, electronic wallets, electronic money, mobile phone payments, electronic checks, and purchase cards.
In today's digital landscape, electronic payment methods such as electronic letters of credit and electronic fund transfers (EFT) are gaining traction; however, payment cards, particularly credit cards, remain the most widely used option in both the global market and Vietnam due to their convenience and widespread acceptance.
There are many criteria to classify types of e-commerce Three most popular criteria are transaction participants, goods for sale and revenue models
1.1.3.1 The types of e-commerce by the parties involved
There are three main participators involved in e-commerce transactions: Government (G), business(B), and individual customer (C) With the combination of each object, different business models are formed:
Table 1.1 The types of e-commerce by the parties involved
B2B and B2C represent the two primary forms of e-commerce today, serving as the foundational transaction models associated with online commerce In B2B, businesses engage in sales transactions with other businesses, while B2C describes the widely recognized model where merchants sell products directly to consumers, typically in smaller quantities.
1.1.3.2 The types of e-commerce by goods
This classification includes physical goods, digital goods and services This way of classifying is important as the product profile in e-commerce largely defines a seller‟s business plan
Physical products are tangible items that have remained dominant in eCommerce since its inception Categories like shoes, bags, baby clothes, and women's apparel continue to represent the majority of online sales Retailers display these physical goods online, allowing customers to conveniently add their desired items to virtual shopping carts.
BACKGROUND OF CROSS-BORDER E-COMMERCE
1.2.1 Definition of cross-border e-commerce
E-commerce, just like the Internet, is characterized by a lack of borders, thanks to which customers can do shopping via the Internet from the furthest corners of the world Although most customers who do shopping online still choose national Internet shops, purchases from shops located outside the country enjoy more and more popularity This is the so-called CBEC (Arkadiusz K & Wojciech Z., 2016)
The CBEC is not a big difference to the aforementioned term of e-commerce
The rise of internet access has broadened the concept of borderless commerce, particularly through Cross-Border E-Commerce (CBEC) Azoya International Ltd defines CBEC as the online acquisition of products from international merchants, often involving diverse jurisdictions, languages, and communication technologies over the past few decades.
1.2.2 Cross-border e-commerce channel options
This article provides an overview of the four primary e-commerce channels available for online sellers aiming to expand internationally It highlights key elements that could adversely affect the overall market-entry strategy, marked with "**."
Table 1.2 Cross-border e-commerce channel options
Selling from self-managed transactional website Leverage authenticity
Bypassing some market barriers Own the analytics
**no brand recognition/overseas traffic
Payment received in other currencies
Local after-sales service (depends)
**lack of control of customer data
**potential lack of control of pricing
Selling to In-Country Distributor - B2B Immediate purchase of product
Source: Thomas A.Cook & Kelly Raia (2017)
To successfully sell internationally, online sellers have several options: they can leverage social media platforms, operate their own self-managed websites, utilize online marketplaces, or partner with local distributors in their target markets.
Social selling refers to the practice of businesses promoting and selling their products directly on social media platforms By leveraging these platforms, companies can effectively engage with their target audience and facilitate sales, offering an alternative to traditional web page transactions.
Businesses can enhance their online presence by establishing self-managed transactional websites that facilitate complete end-to-end transactions These platforms enable customers to effortlessly search for, order, and pay for products online while also providing a direct line of communication for after-sales support.
Selling in marketplaces allows businesses to reach customers through hosted platforms that simplify transactions By participating in these sites, companies can efficiently find buyers without the cost of developing their own transactional websites Popular types of marketplaces include auction sites like eBay, artisan platforms such as Etsy, and wholesale and retail giants like Amazon and Alibaba.
Partnering with an established local business is a strategic approach for companies looking to enter foreign markets By collaborating with a partner that has an existing sales network and a tailored marketing strategy, businesses can leverage the local partner’s strong connections and resources This method not only facilitates smoother market entry but also enhances the potential for successful sales in the new region.
Businesses frequently develop static content websites to bolster their international sales efforts Unlike transactional sites that facilitate online purchases, static content sites aim to enhance corporate visibility and awareness Functioning similarly to a brochure, these sites offer essential information about products or services, along with contact details for potential buyers Additionally, because they are typically static and do not require complex software systems for transactions, they are generally more cost-effective to design and maintain compared to transactional websites.
BENEFITS OF CROSS-BORDER E-COMMERCE
CBEC provides significant benefits for both buyers and sellers, allowing sellers and brands to grow their businesses beyond saturated domestic markets and explore new opportunities By selling internationally, they can access diverse product ranges and enhance their revenue potential This approach not only facilitates international expansion but also maximizes market reach and profitability.
CBEC provides sellers with the chance to grow their businesses in emerging markets, allowing domestic e-commerce sellers to enhance their market reach and sell products globally This borderless marketplace minimizes the effort required for international expansion compared to establishing local operations E-commerce acts as an equalizer, empowering startups and small to medium-sized enterprises to access the global market Buyers benefit from increased competition, prompting domestic businesses to refine their strategies, ultimately enhancing the shopping experience Additionally, there is significant untapped potential in various categories, as evidenced by over 40% of Chinese consumers purchasing cross-border beauty and cosmetic products in search of higher quality and premium options unavailable locally.
CBEC allows sellers to access international markets, enhancing brand recognition and driving higher demand As merchants expand their audience globally, they can expect increased sales and revenue growth.
CBEC enhances sellers' brand awareness in the international market by allowing them to offer unique products tailored to their audience's needs This approach not only boosts brand recognition but also facilitates the creation of a global brand Additionally, CBEC provides opportunities for product customization to meet the diverse requirements of various markets.
Maximizes selling of low demand domestic e-Commerce products
Sometimes, products that lack popularity in domestic e-commerce can experience high demand in international markets Cross-Border E-Commerce (CBEC) serves as a platform for sellers to successfully market and sell these products globally, allowing them to capitalize on opportunities that may be overlooked in their local markets.
Increased access to end customers
Lowering the final selling price allows sellers to attract a larger customer base in the international market, previously dominated by distributors This strategy not only boosts sales but also increases the profit margin for sellers.
Building customer trust in a product leads to a strong relationship with the brand, fostering loyalty Offering genuine, high-quality products at competitive prices encourages repeat shopping Establishing trust is crucial for e-commerce growth, particularly in cross-border transactions, where fashion and electronics have historically been top sellers As customer satisfaction increases, so does demand for a wider variety of products This presents opportunities in underserved categories such as beauty, pet care, food and beverage, and sporting goods.
CBEC is an emerging global platform gaining recognition, allowing sellers to confidently establish their brands in the international market As awareness and popularity grow among customers, sellers can rest assured that their products will thrive in this expanding marketplace.
BARRIERS TO CROSS-BORDER TRANSACTIONS
Selling or buying merchandise internationally presents numerous challenges for online sellers, hindering their growth potential As highlighted by Bas van Heel et al (2016), these significant barriers include various logistical, regulatory, and cultural obstacles that complicate cross-border transactions.
Online stores frequently face challenges in determining which regulations govern cross-border transactions, such as when a Portuguese eCommerce platform sells products in France The ambiguity surrounding applicable consumer rights, licensing requirements, and product labeling raises questions about whether Portuguese or French laws take precedence For instance, online advertising regulations vary across EU countries, with some requiring compliance with the laws of the selling country while others consider the country of origin This lack of uniformity in customs practices leads to significant scheduling uncertainties for shippers, highlighting the need for harmonized customs regimes and more predictable timelines.
Online stores typically provide various payment options, such as debit and credit cards, as well as installment payments However, differing regulations across EU countries create challenges for online sellers in offering consistent payment methods throughout Europe Additionally, the complexity and fragmentation of the taxation system complicate cross-border transactions Despite a European VAT framework, VAT rates vary by country, impacting online transaction costs Furthermore, sellers may need to register in multiple EU countries if their sales volume exceeds specific thresholds, which differ from one country to another and involve varying registration processes These inconsistencies pose significant time and financial burdens for online retailers.
Many parcels lack tracking capabilities, and existing tracking information often lags behind actual delivery by approximately six hours, reducing its usefulness for short transit times This aspect of the delivery process is crucial for customer satisfaction, as it directly impacts their experience The challenges multiply in cross-border eCommerce, where a 2014 European Union study revealed that while 97% of national shipments were successfully delivered, only 48% of cross-border shipments succeeded The Swedish National Board of Trade identified key issues in cross-border deliveries, including a lack of transparency regarding services and pricing, high delivery costs, insufficient tracking mechanisms, and inadequate return procedures tailored for international shipments.
Unreliable and Lengthy Transit Times
Consumers want shorter, more precise, and more reliable delivery windows for both domestic and cross-border purchases
Complex and Ambiguous Return Processes
Fully tracked, easy-to-arrange returns should be a standard option on all e- commerce sites
Limited Ability to Alter Delivery Times and Locations
Currently, consumers are unable to modify delivery times or locations for internationally shipped goods once the parcel is in transit, unlike the flexibility offered with most domestic deliveries.
THE EXPORT CROSS-BORDER E-COMMERCE BUSINESS
1.5.1 The ecosystem structure of cross-border e-commerce exports
The CBEC ecosystem is comprised of three key components: subjects, environment, and relationships Unlike traditional business models, the CBEC ecosystem includes a diverse array of subjects such as suppliers, consumers, local wholesalers, sellers, service providers, cross-border public service platforms, government regulators, and trading platforms The environment encompasses the external conditions affecting these subjects, including policies, economic factors, cultural influences, and technological advancements Lastly, the relationships within the ecosystem are defined by the interactions among subjects, facilitated through the flow of logistics, capital, and information.
In addition, the ecosystem structure of CBEC exports includes three communities: service community, trading community and supporting community, which is shown below:
Figure 1.1 The ecosystem structure of cross-border e-commerce exports
Source: Yanan Zuo (2019) in IOP Conference
The CBEC trading community is composed of various entities, including suppliers, purchasers, and CBEC platforms, with the latter serving as the vital link that connects supply and demand These cross-border platforms exhibit diverse business models and facilitate essential trading activities such as payment processing, settlement, logistics management, customs clearance, and tax rebates, all crucial for successful cross-border export transactions.
CBEC export platform Foreign customers
Customs clearance service Supporting Community
CBEC public service platform Government regulatory agency needs to cooperate with the service community and obtain the strong support of the supporting community
The CBEC service community plays a crucial role in supporting CBEC businesses by offering a range of essential services This includes integrated service enterprises that deliver comprehensive solutions for trading operations, logistics companies specializing in cross-border logistics, and payment providers facilitating various cross-border payment methods Additionally, financial institutions offer solutions to address financial challenges, while insurance companies provide coverage for cross-border import and export activities Together, these service enterprises and platforms create a cohesive service community that enables effective logistics and capital flows between the service and trading communities.
The CBEC support community is essential for the development of Cross-Border E-Commerce (CBEC), as it effectively integrates logistics, capital flow, and information flow within the trading and service communities This integration facilitates seamless online information verification and offline cargo clearance for regulatory authorities.
The symbiotic relationship within the community is characterized by a collaborative internal division of labor, where enterprises work together to fulfill the needs of buyers and sellers, ultimately enhancing their mutual benefits The service community plays a crucial role by providing logistics, information flow, and capital flow services to the trading community, which in turn increases business volume and profit sources for the service community This interdependence is evident as the service community supplies logistics and payment order information, while the trading community offers transaction order information Furthermore, the supporting community facilitates customs clearance services for the trading community, enabling seamless cross-border trade This interconnected ecosystem fosters a continuous flow of information and materials, promoting healthy and stable development within the community.
1.5.2.1 Model of value chain logistics
Under the model of value chain logistics, the operation principle of CBEC export logistics is shown in Figure 1.2:
Figure 1.2 Export logistics process of CBEC under the Mode of value chain logistics
Source: Zhao, X (2019), Open Journal of Business and Management
Zhao, X (2019) also lists the step-by-step process of logistics in CBEC as below:
When the domestic CBEC site processes foreign customer orders, it promptly notifies the logistics service integrator with the order details, enabling efficient organization of the shipment.
(2) The logistics service integrator makes logistics operation plans according to the information on the order, such as the attributes of goods, volume and
CBEC platform Foreign customers supply demand online sales online purchase and payment
International transport and customs clearance
Domestic distribution in destination country
1 Means cargo flow; Means Forward and reverse cargo flow;
2 Means information flow; Means Reverse cargo flow exporting countries, and select the appropriate logistics enterprises to form the value chain
The logistics plan outlines the collection of goods from suppliers via domestic transportation to a logistics center, ensuring that items requiring customs clearance are prepared in advance Subsequently, the logistics service integrator selects the appropriate international transport mode based on the delivery timelines specified by foreign customers to efficiently ship the goods to their destination country.
Once the goods reach the destination country, a local partner is responsible for customs clearance and the final distribution phase For larger shipments, items may be stored in overseas warehouses before the last-mile delivery is executed based on customer instructions This highlights the importance for logistics service integrators to establish or lease strategically located warehouses abroad to meet the specific logistical requirements of their clients.
(5) When foreign customers need to return and exchange goods, through the above logistics channels to achieve the reverse logistics
Benedict Leong (2020) outlines two logistics options for Cross-Border E-Commerce (CBEC): cross-border shipping and local distribution models Cross-border shipping involves direct-to-consumer shipments via postal or courier services, where goods are transported from one country to another without being stored in the destination country This process includes customs clearance, and import duties may apply based on trade agreements and de minimis values In CBEC, cross-border shipping is initiated only after a sale is completed.
Figure 1.3 The cross-border shipping model
Creating a local distribution model as an alternative to cross-border shipping involves establishing warehouses and managing delivery fleets within the destination country Businesses can send goods in bulk for storage until sold, utilizing local fulfillment services or third-party logistics (3PL) for efficient inventory management This approach significantly reduces shipping costs and delivery times, but requires partnering with an importer or distributor to handle stock, local registration, labeling requirements, and import duties.
Merchant‟s Country of origin (e.g Indonesia)
Time taken to establish supply chain
Handling charges Cost incurred by merchant $
Figure 1.4 The local distribution model
In B2C transactions, payments are processed through third-party payment gateways like PayPal or marketplace tools such as AmazonPay, depending on the e-commerce channel utilized by sellers.
Credit cards are the most popular online payment method, particularly in developed nations, but they also pose risks such as client drawbacks and fraud A 2018 Paypal cross-border consumer research study highlights that security and convenience significantly influence the choice of payment methods for international shopping To ensure secure payment authorization on e-commerce platforms, implementing a reliable payment gateway is essential.
Merchant‟s Country of origin (e.g Indonesia)
Time taken to establish supply chain 3-6 months
Inventory Held in Origin and destination Country
A payment gateway is a software application integrated into an e-commerce platform that facilitates transactions for customers and businesses directly from the website It manages the payment methods chosen by sellers, ensuring secure processing of financial information According to Ajinkya Rao (2019), the payment gateway operates through a series of essential steps that enable seamless online transactions.
Step 1: A customer will place an order on the website that they visit by submitting the order, checkout from the cart or any equivalent button
Step 2: Merchant securely transfers order information to the payment gateway Customer will pay with their preferred payment method The transaction is then routed to the issuing bank or the 3D secure page to request transaction authentication
Step 3: After the authentication process is successful, the transaction is then authorized or declined (depending on funds available in the customer‟s account) by the issuing bank or card (VISA, MASTER, MAESTRO, American Express)
LESSONS FROM THE UNITED STATES AND CHINA’S CROSS-
The United States and China are two of the largest economies and superpowers in online sales, with the U.S being a pioneer in e-commerce and cross-border trade, while China excels in creating business-friendly policies that support cross-border e-commerce (CBEC) By analyzing the strengths and weaknesses of both nations' CBEC practices, valuable insights can be gained that could benefit Vietnam's emerging e-commerce sector.
1.6.1 The strengths and limitations of China’s cross-border e-commerce
1.6.1.1 The strengths of China’s cross-border e-commerce
There is no doubt that China‟s CBEC has large scale and rapid growth in export transactions According to Statista, the market share of the Chinese export
In 2016, CBEC players represented approximately 82% of the total e-commerce cross-border trading market, highlighting the rapid growth of China's export CBEC This expansion has been significantly influenced by favorable national policies and the active participation of key market players, underscoring the increasing importance of CBEC in import-export trade.
Firstly, China has issued many preferential policies for e-commerce Since
In 2012, the Chinese Government designated 13 comprehensive test cities for Cross-Border E-Commerce (CBEC) to streamline the customs process The policies aim to minimize both the inspection time and volume of goods, establishing dedicated quality control agencies for cross-border e-commerce Additionally, China implements preferential inspection policies and tax incentives, including tax exemptions for products with rates below 50 yuan and reduced value-added tax for goods traded through e-commerce channels, to facilitate smoother customs clearance.
International demand for Chinese commodities remains robust, supported by a progressively maturing export cross-border e-commerce (CBEC) platform Recent advancements, fueled by national policies and innovative efforts from e-commerce participants, have transformed China's export CBEC into a comprehensive network marketing system that integrates transactions, payment, logistics, and services This platform facilitates global sales of Chinese products, utilizing not only global payment methods like Visa but also over 30 other international online payment tools, enhancing convenience for consumers worldwide while simultaneously lowering operational costs Additionally, the streamlined supply chain associated with cross-border online shopping significantly reduces transaction costs compared to traditional foreign trade.
Thirdly, the model commonly used in China is the electronic port model
Customs clearance support services are facilitated by a cross-border public service platform, while logistics and payment solutions are offered by market-oriented enterprises that integrate with this platform for data support The public service platform efficiently transmits order, logistics, and payment documents to customs and national inspection authorities Once customs clearance is completed, goods are released from the point of supervision.
1.6.1.2 The limitations of China’s cross-border e-commerce
China‟s CBEC seems to be perfect, however, there are still some drawbacks which can impede its development as follows:
The first limitation is bad credit environment The market economy in
China's credit system is still underdeveloped compared to Western nations, lacking robust credit standards and a mature market economy As highlighted by Yu Wang and colleagues, both the real and virtual economies require a solid business credit environment for stability Despite having established a market economy, China's commercial credit environment and social credit system remain relatively outdated The rapid growth of Cross-Border E-Commerce (CBEC) underscores the urgent need for an improved business credit environment to support this expansion.
China's cross-border e-commerce (CBEC) faces significant challenges due to its imperfect payment system Currently, online transactions primarily rely on bank card payments, with alternatives like electronic cash and checks also in use The market access mechanism for third-party payment institutions, which manage foreign exchange revenue and expenditure while enforcing national policies, is not standardized This lack of regulation hampers effective oversight of market transactions Therefore, it is crucial to establish standardized regulations for third-party cross-border payment institutions in China, as there are currently no existing qualifications for these agencies.
1.6.2 The strengths and limitations of the United States’ cross-border e- commerce
1.6.2.1 The strengths of United States’ cross-border e-commerce
Research by UNCTAD reveals that the United States is the leading force in cross-border e-commerce (CBEC), with annual e-commerce sales abroad totaling $102 billion, the highest of any surveyed nation This growth trend is expected to continue despite trade disputes Several strengths contribute to the success of the U.S in the CBEC landscape.
The United States leads in technological innovations and quick adoption among businesses, providing online sellers with numerous marketing opportunities through social media and apps Retailers are increasingly investing in technology solutions to streamline operations, with a NAPCO Research survey revealing that 53% have invested in supply chain software and 45% are exploring automated solutions for calculating customs duties and import taxes.
U.S sellers are increasingly relying on skilled personnel to tackle challenges in cross-border e-commerce (CBEC), with 55% of respondents hiring staff specialized in this area Additionally, 39% are collaborating with consultants or third-party experts, such as customs brokers and logistics providers, to navigate CBEC complexities Furthermore, 22% of respondents are enhancing their knowledge by attending conferences and events dedicated to cross-border selling (NAPCO Research, 2018).
The United States boasts a highly efficient rail network, advanced air traffic system, and well-connected highways, contributing to a robust logistics market with strategically located centers Additionally, it is home to top international shipping companies like FedEx, UPS, and USPS, ensuring reliable delivery services.
Fourthly, the US has created trade policy governing CBEC transactions largely through recent free trade agreements (FTAs) Since 2000, every FTA the
The United States has included a chapter on e-commerce in its agreements, featuring key protections for the digital economy, such as the prohibition of taxes on digital goods, regulatory transparency, and the free flow of information In its diplomatic efforts, the U.S has also finalized several bilateral statements with various countries to promote global e-commerce This innovative strategy aims to create a consensus among trading partners regarding fundamental U.S policy positions and principles related to the evolving governance and development of the Internet.
1.6.2.2 Limitations of the United States’ cross-border e-commerce
The United States boasts many beloved brands, yet only 36% of U.S merchants engage in cross-border selling, a stark contrast to competitors in other major markets This reluctance is attributed to various challenges that U.S merchants face when attempting to expand internationally.
Payment issues often stem from a lack of understanding of local payment cultures, leading merchants to struggle in providing preferred payment methods for customers In the US, merchants tend to offer a more limited selection of payment options to international customers compared to domestic ones; for example, 73% of US merchants accept PayPal for local consumers, while only 69% extend this option to foreign buyers In Eastern Europe, particularly in Russia and some post-Soviet states, over 20 million people rely on the e-wallet QIWI, which is not accepted by US or Western European merchants Without offering QIWI, US sellers risk losing significant business opportunities from this large consumer base.
US sellers often face significant challenges with fraudulent activities due to the lack of security and compliance in the country’s Cross-Border E-Commerce (CBEC) landscape Unlike their European counterparts, US sellers typically have lower consumer authentication measures in place, making them more vulnerable to fraud Most fraudulent transactions targeting US purchases originate from abroad, and North America is identified as the region where merchants are least likely to implement effective consumer authentication practices.
1.6.3 Lessons for Vietnam’s cross-border e-commerce
THE CURRENT SITUATION OF USING CROSS-BORDER E-
INSIGHT ON VIETNAM’S E-COMMERCE
This section offers an overview of Vietnam's e-commerce landscape, focusing on the legal framework and the adoption of e-commerce, including aspects such as specialized labor, procurement processes, equipment usage, and the application of information technology.
2.1.1 Adoption of e-commerce in Vietnam
To successfully promote Vietnamese products in the global e-commerce market, sellers must not only offer high-quality goods but also adapt to the rapidly evolving digital economy A study by the Global Business Center of Tufts University ranks Vietnam 48th out of 60 countries in digital transformation speed and 22nd in digital growth (Tran Thi Hang, Nguyen Thi Minh Hien, 2020) This indicates that Vietnam is actively participating in the digital economy, presenting significant opportunities for growth in the e-commerce sector.
The digital economy plays a crucial role in shaping the economic structure amid the Industrial Revolution 4.0 However, Vietnam's digital economy infrastructure, including electronic payment systems, distribution networks, and skilled human resources in e-commerce and IT, still faces significant challenges (Dang Hoang Hai, 2019) Furthermore, many Vietnamese enterprises, particularly in the e-commerce sector, have not fully recognized or responded to the rapid technological advancements, as highlighted in the Vietnam e-business index 2019 report by VECOM.
In 2018, the percentage of enterprises with specialized labor in e-commerce remained relatively stable, with 28% reporting such workers, a slight decline from the previous year Large enterprises significantly outpaced small and medium businesses in employing specialized e-commerce labor Surveys indicated that around 30% of businesses faced challenges in hiring skilled workers in e-commerce and IT, with 28% citing recruitment difficulties in 2018, compared to 31% in 2017 and 29% in 2016 Notably, the ability to utilize e-commerce applications was the most sought-after skill, with 49% of enterprises struggling to find qualified candidates for this role.
Recent surveys, including the Vietnam E-business Index 2019 report, reveal that many businesses prioritize investing in hardware infrastructure over other critical areas, with 39% of total investment costs in 2018 allocated to this sector This trend has remained consistent in previous years, indicating a concerning focus on infrastructure at the expense of essential software development and skilled human resources The lack of proper investment in these areas undermines the potential for e-commerce growth, as companies overlook the importance of specialized personnel in their long-term strategies.
In recent years, Vietnam has implemented several key regulations to manage e-commerce transactions, including the Law on E-commerce Transactions (2005), Decree No 52/2013/ND-CP, and Decree No 72/2013/ND-CP, which address e-commerce and internet services Additionally, the Cyber Security Law (2018) is being supported by a forthcoming decree from the Ministry of Public Security Other significant legal frameworks include the Law on the State Bank of Vietnam and the Tax Administration Law (2019) These regulations collectively form the foundational legal structure for e-commerce activities and cross-border e-commerce (CBEC) development in Vietnam.
According to General Department of Vietnam Customs (2019), export of goods via e-commerce in Vietnam are often carried out as follows:
When organizations make bulk purchases, e-commerce platforms facilitate the electronic signing of contracts Specifically, delivery companies and e-commerce websites manage the export of goods in accordance with the regulations outlined in the relevant Circular.
Circular No 38/2015/TT-BTC outlines the regulations for customs procedures, supervision, and inspection, as well as the management of export and import taxes This circular has been amended and supplemented by the Ministry of Finance's Circular No 39/2018/TT-BTC, issued in April.
When individual buyers purchase goods in small quantities, e-commerce platforms and websites collaborate with express delivery companies to ship products to customers abroad These transactions are conducted in accordance with the regulations outlined in Circular No 49/2015/TT-BTC and Circular No 191/2015/TT-BTC issued by the Ministry of Finance.
Stakeholders in Cross-Border E-Commerce (CBEC) must navigate various documents since Vietnam lacks a distinct management policy for goods traded through e-commerce Although there are numerous regulations governing e-commerce, state agencies treat imported and exported goods similarly to conventional goods Recognizing this challenge, steps were taken in August to address the issue.
On December 19, 2019, the General Department of Vietnam Customs proposed scheme no 5295/TCHQ-GSQL to enhance the management of cross-border e-commerce (CBEC) activities This initiative aims to ensure comprehensive state oversight in e-commerce while simplifying customs procedures to support the growth of CBEC and protect the interests of Vietnamese businesses and consumers Concurrently, the Vietnamese government is drafting a new decree to regulate CBEC, gathering feedback from e-commerce platforms, logistics providers, and commercial banks The decree introduces new regulations to streamline customs requirements and foreign exchange management Additionally, amendments to Decree No 52 on E-commerce are underway, reflecting the government's commitment to facilitating the efficient movement of e-commerce goods in and out of Vietnam, thereby accelerating the country's CBEC development.
THE ECOSYSTEM OF CROSS-BORDER E-COMMERCE IN
2.2.1 The ecosystem structure of cross-border e-commerce exports
Chapter 1 outlines the ecosystem structure of Cross-Border E-Commerce (CBEC) exports, which comprises three key communities: the service community, trading community, and supporting community This subsection will delve into the specifics of these communities within the context of Vietnam.
Vietnam's cross-border e-commerce (CBEC) community consists of local sellers, international buyers, and various CBEC platforms, including both Vietnamese-managed websites and global marketplaces like Amazon and Alibaba Currently, Vietnam lacks dedicated marketplaces to support export transactions, leading most export-focused enterprises to rely on international platforms Only a limited number of businesses have opted to create their own websites for direct sales to foreign markets.
The CBEC service community in Vietnam comprises four key categories of logistics enterprises: global express companies, traditional postal services, national logistics firms, and fulfillment service providers, which will be discussed in detail in the following subsection Additionally, there are various payment enterprises involved in this ecosystem.
Vietnam has 49 operating banks and 32 licensed non-bank organizations offering various payment services, including electronic payment portals, cash collection, electronic money transfers, and e-wallets While most banks can act as acquiring banks for cross-border e-commerce (CBEC) transactions, only a limited number of non-bank entities participate in this space Additionally, specialized financial services for CBEC, such as cross-border matchmaking and big data financing, remain underutilized, forcing Vietnamese businesses to rely on conventional export financing options provided by local banks.
The CBEC support community in Vietnam is still developing, lacking a government-established public service platform that facilitates collaboration with supervision departments, overseas merchants, and logistics firms According to the Ministry of Finance, there is no distinct management policy for goods traded through e-commerce, resulting in e-commerce transactions undergoing the same specialized inspection, customs procedures, and tax policies as traditional imports and exports This situation creates significant obstacles and complicates the state's ability to collect statistics and manage risks effectively.
Vietnamese manufacturers are increasingly leveraging global e-commerce platforms to sell their products directly, including a variety of agricultural goods, textiles, and footwear (Pham & Lee, 2019) The logistics sector for e-commerce is rapidly developing, transitioning from traditional methods to more modern logistics solutions, despite being relatively nascent (Zhu et al., 2019) Notably, Vietnam made significant strides in the World Bank's logistics performance index, improving from 64th to 39th place between 2016 and 2018 While most Vietnamese companies focus on domestic logistics services—such as transportation, airport and seaport operations, and cargo handling—there remains a limited number of firms offering international logistics services as agents for foreign businesses.
In Vietnam, four main types of CBEC logistics providers are illustrated below:
Global express companies focused primarily on logistics, rather than e-commerce, are increasingly entering the terminal logistics market Notable players include DHL e-Commerce, Kuehne Nagel, and Kerry Logistics For instance, DHL and regional operators like Kerry Logistics are offering logistics services for cross-border e-commerce (CBEC), while DHL e-Commerce specifically targets high-volume shipment services for B2B clients.
B2C service for lower-value items Additionally, Vietnamese merchants can compare the price of international delivery services provided by foreign courier companies by going to the page Lota.vn
Traditional postal companies in Vietnam, such as Vietnam Post Corporation (VN Post) and Telecommunications Corporation (Viettel), offer parcel-post services for shipping goods to recipients both domestically and internationally within the Universal Postal Union (UPU) Vietnamese sellers have the option to utilize direct delivery services provided by VN Post or Viettel Post, or they can opt for agency services for their shipping needs.
The third group consists of national logistics companies that collaborate with international operators for last-mile delivery and invest in network expansion, utilizing advanced IT solutions Notably, Speedlink.vn exemplifies this model by offering international delivery services through a global network, with headquarters in 11 countries and partnerships extending to over 100 cities worldwide.
The fourth group consists of companies specializing in fulfillment services, such as Boxme, a leading e-logistics provider in Southeast Asia Vietnamese sellers can leverage Boxme's expertise to expand into new markets like Indonesia and Thailand, as well as benefit from global shipping solutions By storing goods in Boxme's order processing centers located in Southeast Asia, China, or the USA, sellers can optimize shipping costs Upon receiving an order, Boxme ensures high-standard packing at a warehouse close to the buyer and assists with tax and customs procedures during the import process In contrast, while Amazon FBA offers a centralized fulfillment network, it requires sellers to send their products directly to Amazon's warehouses in the United States or engage a logistics company for assistance.
The logistics sector is poised for a promising future, particularly due to Vietnam's free trade agreements The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), effective since 2019, alongside the upcoming ratification of the European Union-Vietnam Free Trade Agreement (EVFTA) in the latter half of this year, is expected to enhance foreign direct investment (FDI) in Vietnam's infrastructure and stimulate growth in the logistics industry.
Vietnam offers a variety of payment options, including cash, digital banking, payment cards, and e-wallets, with popular e-commerce players like Nganluong, Mobivi, Momo, Baokim, VTCPay, and 123Pay However, the digital payment sector has not fully kept pace with the rapid growth of e-commerce, as only 17% of e-commerce websites currently support e-payment, according to the Vietnam Ministry of Industry and Trade This gap presents significant opportunities for both local and foreign investors, especially with the emergence of new platforms like Vimo, Alepay, 1Pay, and TopPay Currently, there are 32 e-wallet and intermediary payment service providers in Vietnam, but when selling internationally, Vietnamese sellers often rely on foreign payment gateways such as PayPal, Paydollar, and 2Checkout PayPal is particularly favored for its ability to streamline access to global funding methods and enhance customer trust, as 81% of international shoppers prefer merchants that offer PayPal's Buyer Protection policy In contrast, services like MOLPay and VTC Pay facilitate digital payments through net banking, a method popular in many Western nations and emerging markets like Brazil and India.
Currently, there is no Vietnamese marketplace that facilitates international sales for merchants, forcing them to rely on overseas platforms like Amazon, Alibaba, and Etsy Each of these marketplaces provides distinct payment options: Alibaba supports bank transfers, its secure payment system that releases funds to suppliers only after buyer confirmation, and payment links, while Amazon primarily accepts credit and debit cards along with Amazon Pay.
ANALYSIS OF SOME CASE STUDIES OF VIETNAM’S CROSS-
In Chapter 1, four options for international e-commerce sales were outlined, but due to the underdevelopment of selling through in-country partners in Vietnam, this article will concentrate on three prevalent methods: social media sales, self-managed websites, and online marketplaces The following sections will explore the current landscape of Vietnamese products being marketed through these channels.
2.3.1 Exporting products over the world through marketplaces
2.3.1.1 The current situation of Vietnamese merchants selling goods through marketplaces
As of 2019, there are 65 global marketplaces for selling products, with Amazon, Alibaba.com, and Etsy gaining significant traction among Vietnamese sellers looking to promote their products internationally This analysis will explore the current landscape of Vietnamese products on these three platforms, focusing on the unique characteristics of each marketplace, relevant statistics, and available support programs.
Launched in 1999, Alibaba.com is the leading global wholesale trade platform, operating in over 190 countries and offering 40 product categories The site connects businesses with suppliers worldwide without directly engaging in sales, allowing sellers to manage orders and payments through email or Alibaba's chat feature Notably, Alibaba.com does not charge sellers any commissions or transaction fees, and they can list products for free or opt for a Gold Supplier membership at $2,999 annually, which provides additional benefits such as enhanced visibility, unlimited listings, and support services Unlike Amazon, Alibaba does not hold inventory or own warehouses, instead focusing on software solutions that facilitate the exchange of goods and services.
According to the Ministry of Industry and Trade, approximately 100,000 Vietnamese businesses are registered on Alibaba, but only around 2,000 actively invest in the platform Of these, about 1,000 companies pay annual fees ranging from 30 million to 135 million dong to achieve Gold Supplier status Vietnamese suppliers have listed 600,000 products on Alibaba.com, generating an average of 50,000 global inquiries every month Notably, key sectors such as food and beverage, home and garden, and construction have experienced significant growth on the platform.
In 2020, Vietnamese seafood exporters increasingly turned to e-commerce platforms like Alibaba.com to reach global markets Alongside traditional exports such as pepper, coffee, and textiles, products like pangasius, frozen shrimp, dried shrimp, frozen squid, ocean tuna, and canned tuna are now prominently featured, highlighting the growing trend of online sales in the seafood sector.
In general, products which are exported through Alibaba.com are quite similar to those exported by traditional ways (Tran Xuan Thuy, 2017)
Currently, five Vietnamese authorized partners are supporting small and medium enterprises in Vietnam with their online export business through Alibaba.com These partners include OSB, ASL, and Fado, facilitating global trade opportunities for local businesses.
In response to the challenges posed by the SARS-CoV-2 outbreak, Alibaba.com introduced the "Together We Can - Alibaba.com Seller Accelerator E-Course," an exclusive online training program designed to support SMEs This customized training session aims to equip small and medium-sized enterprises with the necessary skills and knowledge to navigate these unprecedented times effectively.
Amazon is a leading online marketplace that caters to individuals and businesses across 16 different global marketplaces, making it accessible to Vietnamese merchants Over 40% of products sold on the platform are from independent sellers, primarily in categories like technology, fashion, cosmetics, books, and functional foods Renowned for its disruptive innovation and efficient services, Amazon offers two types of seller accounts: Individual and Professional While the Professional account, costing $39.99 per month, provides numerous advantages, Individual accounts are free but incur a $0.99 fee per sold item plus referral fees Sellers can choose between two fulfillment methods: Fulfillment by Amazon (FBA), which allows merchants to leverage Amazon’s logistics and customer service, and Fulfillment by Merchant (FBM) Utilizing FBA enhances product visibility to Amazon Prime members, who typically spend more on the platform.
As of mid-2019, over 200 Vietnamese businesses were successfully selling products on Amazon, amidst approximately 700,000 operating businesses in Vietnam (Tran Manh, 2019) The Vietnamese items that are popular on the platform are simple, everyday products familiar to many households, including brooms, conical hats, rattan bags, and frying pans Despite their simplicity, these products command high prices, with brooms priced at $12 each, conical hats exceeding $17, G7 coffee packages at $21, coffee filters over $9, and frying pans also fetching a premium.
Vietnamese products, priced at $25 each, are categorized into five main groups: healthcare and beauty items, handicrafts, kitchen utensils, collectibles, and traditional cultural goods According to TK (2019), these products are well-regarded by international buyers, with Amazon ratings for items like coffee filters and brooms averaging between 4.5 and 5 stars.
In recent years, Amazon has collaborated with VECOM to enhance e-commerce services and provide valuable guidance to Vietnamese businesses The official launch of Amazon Global Selling in Vietnam aims to help local merchants access international markets Since its inception, the Vietnamese sales support website has garnered over 50,000 monthly visits, while the Amazon Global Selling Facebook page in Vietnam has attracted 22,000 followers, indicating strong interest from Vietnamese sellers Moving forward, Amazon plans to partner with key organizations in Vietnam, such as VIETRADE, T&T Group, IDEA, and VECOM, to highlight top-selling and reputable Vietnamese products on its platform This collaboration will focus on developing strategies for the fourth industrial revolution and aiding Vietnamese enterprises in exporting through e-commerce and banking systems.
In addition to major platforms like Amazon and Alibaba, Vietnamese sellers can leverage various marketplaces to boost international sales Etsy is particularly well-suited for those selling handmade, vintage items, and craft supplies, offering a diverse range of categories such as jewelry, clothing, home décor, and art Initially designed as a C2C e-marketplace, Etsy also features products from manufacturers, allowing Vietnamese merchants to price their unique items higher and achieve significant profit margins While creating a shop on Etsy is free, listing an item costs $0.20, along with a 5% transaction fee on sales.
Etsy currently features 33,628 items from Vietnam, with 7,023 priced between $25 and $50, 5,351 between $50 and $100, and 5,318 over $100 The most popular categories include clothing, jewelry, and home decor Many Vietnamese sellers provide free shipping and customizable options to meet buyers' preferences Notable Vietnamese shops on Etsy with over 10,000 total sales and numerous 5-star reviews include QueCraft, specializing in buffalo horn and lacquer jewelry; SpringFineArt, offering earrings and ear cuffs; HeartsandFound, known for vintage clothing; and smARTpatches, which sells creative hats and patches.
Currently, Vietnamese merchants lack support programs when selling on Etsy, unlike the assistance available from platforms such as Amazon and Alibaba As a result, these sellers must independently navigate the process of selling on Etsy and manage their businesses through a step-by-step learning approach.
2.3.1.2 Analyze some case studies of Vietnamese sellers through marketplaces
This section examines two case studies of successful Vietnamese merchants who have effectively sold their products internationally via major marketplaces, Amazon and Alibaba It provides an overview of each company's background, highlights their product offerings, and summarizes the sales strategies employed, ultimately presenting an evaluation of their success in the global market.
EVALUATE THE CURRENT SITUATION OF UTILIZING CROSS-
2.4 EVALUATING THE CURRENT SITUATION OF UTILIZING CROSS- BORDER E-COMMERCE IN PROMOTING VIETNAMESE PRODUCTS
Firstly, the Government and state management agencies are paying more attention to policy development and implementation to facilitate CBEC activities
The Ministry of Finance of Vietnam has introduced a draft decree aimed at regulating the management of exported and imported goods in cross-border e-commerce (CBEC) This initiative not only seeks to establish favorable policies for the e-commerce sector but also emphasizes administrative reforms to facilitate enterprise participation in international exhibitions, fairs, and forums Concurrently, the Department of E-commerce and Digital Economy has launched an e-commerce portal designed to assist Vietnamese exporters in navigating the global market.
The rise of Vietnamese businesses engaging in international marketplaces is noteworthy, with e-commerce giants like Amazon and Alibaba increasingly focusing on Vietnam as a key supply market This trend highlights the potential for Vietnamese products to reach global markets, supported by collaborations between Amazon, VECOM, and VIETRADE, which have led to a surge in Vietnamese sellers on Amazon, including manufacturers, brand owners, and startups Experts predict significant growth in this sector, given Vietnam's status as a major exporter of agricultural products, food, and furniture Additionally, Vietnamese merchants are actively seeking new business channels and adapting to the current cross-border e-commerce (CBEC) trend, as evidenced by their growing interest in Amazon Global Selling Many merchants have successfully revitalized struggling businesses and expanded their operations by leveraging platforms like Amazon and Alibaba.
Vietnamese businesses are increasingly enhancing their self-managed websites to facilitate international sales These platforms not only promote products to foreign customers but also allow for secure payments, preferred shipping options, and post-sale support To achieve this, Vietnamese merchants are building a vibrant community focused on international selling through popular platforms like Shopify, WordPress, and Magento For instance, the "Vietnamese Shopify Users" group boasts 14,800 members and generates over 50 posts weekly, while "Magento Vietnam" has 2,300 members with 15 weekly posts, fostering collaboration and sharing of strategies to attract foreign customers.
The quality of products promoted through Cross-Border E-Commerce (CBEC) in Vietnam has significantly improved, as many sellers shift their focus from price competition to enhancing product quality and packaging design This commitment aims to meet international technical standards and cater to the needs of foreign customers Notably, numerous agricultural products are now certified Global Gap, EU Organic, and USDA Organic Additionally, Vietnamese businesses are dedicated to sourcing the best materials and technologies to create environmentally friendly products.
Vietnam's e-commerce landscape showcases a diverse range of products beyond its traditional key exports like electrical machinery, footwear, and clothing Vietnamese merchants are now offering an array of items online, including keycaps, eyelashes, rice straws, patches, and pull-up bars This shift demonstrates that both manufactured and handmade products, even in limited quantities, can reach a global audience through e-commerce Additionally, unique Vietnamese products such as Golden Star Balm and Golden Star Medicated Oil further highlight the country's rich offerings in the online marketplace.
“Gac” oil, Thai duong shampoo, “Ao dai”, “Non la” (Conical hat), etc are being sold on Amazon, Alibaba or Etsy at a much higher price compared with that in Vietnam
Vietnam's cross-border e-commerce (CBEC) is experiencing significant growth, yet it faces several challenges that must be addressed to enhance the efficiency of promoting Vietnamese products in the global market.
Firstly, the legal guidelines in e-commerce are not sufficiently comprehensive and robust, especially those related to cross- border e-commerce
The highest legal document for E-commerce is Decree 52, which was issued in
Since its establishment in 2013, the legal framework for e-commerce in Vietnam has been pivotal for its growth; however, as it is merely a Decree, it falls short of creating a conducive environment for e-commerce, which remains constrained by regulations intended for traditional business models Furthermore, Vietnam lacks a dedicated management policy for goods traded through e-commerce, leading state agencies to treat these transactions as ordinary imports and exports Consequently, e-commerce goods are subjected to the same specialized inspections, customs procedures, and tax regulations as traditional goods Additionally, the ambiguity surrounding payment activities poses significant challenges that hinder the progress of e-commerce in the country.
Vietnam faces significant challenges in its e-commerce workforce, with a critical shortage in both quantity and quality Although many graduates possess e-commerce skills, they often lack practical experience, trading knowledge, and proficiency in foreign languages As a result, the specialized human resources available in e-commerce meet only 0.1% of the market demand (Doan Thi My Hanh, 2019) This deficiency poses a major obstacle for businesses aiming to promote Vietnamese products on a global scale through e-commerce.
Vietnamese businesses are not adequately investing in cross-border e-commerce (CBEC), as evidenced by a growing number of companies creating accounts on international marketplaces However, only a limited number are willing to invest in additional features that could significantly enhance their performance The response rate to customer inquiries is notably low compared to competitors, indicating a lack of engagement Moreover, many merchants still do not prioritize maintaining customer interactions while implementing a multichannel strategy.
Fourthly, the number of Vietnamese businesses having their own website in foreign language is limited Only 42% of exporting enterprises have websites and
A significant 58% of businesses utilize foreign languages to reach international customers While they have the option to sell abroad through international marketplaces, establishing their own statistics-driven content site is essential for facilitating communication with foreign clients.
Vietnamese enterprises currently have a limited range of delivery options, typically offering only 1 to 3 terms, in contrast to their global competitors who provide greater flexibility Additionally, many Vietnamese businesses do not accept Letters of Credit (L/C), which are considered the least risky payment method for exporters, particularly when dealing with unfamiliar partners or new trade relationships.
The rapidly expanding e-commerce sector presents significant challenges for governments striving to establish effective legal and policy frameworks The swift advancement of digital technologies has introduced numerous e-commerce models and a variety of complex issues Additionally, the increasing frequency of cross-border transactions adds to the complexity, involving diverse participants and operational intricacies Consequently, it requires time for governments to gather and analyze information from stakeholders to formulate appropriate regulations for cross-border e-commerce (CBEC).
There is a limited number of universities offering specialized degrees in e-commerce, with most institutions treating it as a single subject within broader programs As a result, students often receive a theoretical education that lacks practical insights, primarily influenced by foreign curricula In Vietnam, the concept of Cross-Border E-Commerce (CBEC) is relatively new, making it challenging for students to access relevant resources and documents on the topic.
A significant portion of Vietnamese enterprises, comprising 97.21% as small and medium-sized enterprises (SMEs), often struggle with limited resources in the competitive digital landscape The monthly subscription fee of $39.99 for a professional seller account on Amazon, along with the annual membership fee ranging from $2,399 to $4,399 to become a Gold Supplier on Alibaba, can be prohibitively expensive for many small businesses in Vietnam.
Many businesses struggle to manage online customer service due to insufficient human resources, leading some to abandon their efforts after investing significant time and money in platforms like Amazon or Alibaba without achieving desired results.
AND RECOMMENDATIONS TO PROMOTE
VIEWPOINTS ON DEVELOPING E-COMMERCE IN VIETNAM
The Master Plan for E-commerce Development (Decision No 1563/QD-TTg) for the 2016-2020 period highlights e-commerce as a crucial infrastructure component for both the commerce sector and the information society in Vietnam It serves as a vital tool for Vietnamese enterprises to expand their domestic market, enhance export and import activities, and engage in the global supply chain, thereby boosting national competitiveness in the context of international integration Additionally, e-commerce plays a significant role in Vietnam's industrialization and modernization efforts While enterprises are the driving forces behind this development, the government is responsible for managing and facilitating the growth of e-commerce.
By 2020, key objectives include finalizing e-commerce legislation, establishing a national e-payment system, restructuring the logistics network to enhance profitability and service quality, improving the safety and security of e-commerce infrastructure, and prioritizing the development of e-commerce human resources.
The targets for the market size of CBEC and the application of e-commerce services in enterprises by 2020 to be reached are:
Regarding e-commerce market size of CBEC: CBEC grows rapidly, practically serving the import and export B2B e-commerce transaction is accounted for 30% of the turnover of import-export by 2020
Regarding the application of e-commerce in enterprises:
Forming large and credible e-commerce enterprises
Encouraging enterprises and individuals to startup e-commerce businesses
Forming and developing credible cross-border e-marketplace
Cooperate with other countries to promote CBEC and non-paper trade
The National Program on E-commerce Development (Decision No 689/QD-TTg) introduces key initiatives aimed at enhancing the e-commerce landscape It focuses on increasing awareness of e-commerce, developing innovative e-commerce solutions, providing consultation for designing e-commerce application plans, and improving the management and organizational capacity for e-commerce development activities.
OPPORTUNITIES AND THREATS OF VIETNAM’S CROSS-
3.2.1 Opportunities of Vietnam’s cross-border e-commerce
Firstly, the signature of FTAs benefits Vietnamese businesses in terms of policy initiative After EVFTA (EU- Vietnam Free Trade Agreement) and CPTPP
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has heightened the demand for e-commerce, particularly Cross-Border E-Commerce (CBEC), presenting a significant opportunity for Vietnamese businesses to enhance their exports to the EU and other CPTPP member countries As of 2019, the Vietnamese government has entered into 13 Free Trade Agreements (FTAs) and is negotiating three additional ones to facilitate cross-border transactions The EU-Vietnam Free Trade Agreement (EVFTA) introduces essential e-commerce regulations, including the elimination of customs duties on electronic transmissions, the establishment of forums for e-commerce discussions, liability exemptions for online intermediaries, and guidelines for unsolicited electronic communications Additionally, the CPTPP includes critical commitments in distribution, logistics, and e-commerce, offering promising growth prospects for Vietnamese enterprises.
The ongoing trade war between the US and China has prompted importers to seek alternative supply sources, with Vietnam emerging as a leading option According to the Nomura Group, Vietnam ranks first for US and Chinese importers looking for new suppliers, followed by Chile and Malaysia This shift in trade dynamics positions Vietnam for significant economic growth as it capitalizes on the demand for alternative sourcing.
3.2.2 Threats of Vietnam’s cross-border e-commerce
CBEC presents significant opportunities for Vietnamese merchants to showcase their products globally; however, it is crucial for these businesses to recognize the potential threats they face in order to develop effective strategies to mitigate them.
Firstly, sellers may encounter the possibility of infringement of intellectual property when selling on marketplaces, especially the famous sites as Alibaba and
To enroll in Amazon Brand Registry, which aids in eliminating counterfeit sellers and those infringing on trademarks, sellers must first register with the U.S Patent and Trademark Office.
Secondly, Vietnamese businesses are encountering increase in supply chain costs due to their offering return of goods and warranty policy to foreign customers
An increasing number of consumers are making purchases with the intention of returning some or all of the items, leading to higher shipping and handling costs for businesses and diminishing their ability to resell products at original prices.
Thirdly, inadequate technology infrastructure is also considered one of the key challenges for Vietnam’s e-commerce, including security concerns, bandwidth availability, and integration with existing protocols The Inclusive Internet Index
In 2020, Vietnam was ranked 50th out of 100 countries globally and 4th among nine Southeast Asian nations, highlighting its position in the e-commerce landscape Despite facing challenges due to inadequate technological infrastructure, which hampers its competitiveness and leads to network security issues, there has been a slight improvement in internet access compared to the 2019 index.
B2B transactions in Africa carry a significant risk of fraud, particularly as importers often prefer deferred payment options due to limited financial capacity This practice, along with the use of CIF (Cost, Insurance, and Freight) terms and the avoidance of letters of credit due to high costs, poses substantial risks for Vietnamese businesses Moreover, the payment process can be compromised by fraudulent activities that allow individuals to obtain commercial documents without proper banking procedures.
SOLUTIONS TO PROMOTE VIETNAMESE PRODUCTS TO THE
3.3.1 Solutions to improve ecosystem structure of cross-border e-commerce exports
Building a management system of e-commerce activities to connect stakeholders
To address the challenges of fragmented and virtualized CBEC transactions, the government should establish an integrated public service platform that connects customs, logistics companies, and banks, thereby expediting transactions Additionally, a dedicated department for quality control of goods in CBEC transactions should be created, along with a mechanism to exempt low-value electronic transactions from inspection to streamline processes The government must also focus on human resource training, legal frameworks, and infrastructure development to support e-commerce, while enhancing public services such as electronic customs, tax declarations, and business registrations Furthermore, a centralized CBEC data center should be established, requiring all e-commerce platforms to process payments through it, allowing market regulators to monitor cash flow and ensure effective tax collection.
To ensure the growth of e-commerce, it is essential to enhance the legal framework by enacting and enforcing laws and regulations that govern commercial activities, while aligning with international laws and best practices for e-commerce transactions.
Implementation of credit information disclosure system
Establishing clear credit rating standards is essential for defining the creditworthiness of transaction subjects and publicly displaying their ratings After completing electronic transactions with foreign companies, Vietnamese businesses can leave their credit ratings in a centralized system accessible to all registered businesses Additionally, implementing a blacklist for enterprises with low credit ratings will restrict transactions with these entities, thereby enhancing the integrity of Vietnam's Cross-Border E-Commerce (CBEC) environment.
Strengthening the construction of industrial environment
The sustainable development of Cross-Border E-Commerce (CBEC) relies heavily on collaboration with various businesses and industries Key players include logistics and payment enterprises, as well as investment and financing institutions that offer essential financial services to support CBEC's international expansion Additionally, industry associations are vital in establishing practical industry standards and formulating effective development strategies, significantly contributing to the growth and optimization of CBEC operations.
Building a system to ensure safety and security
Electronic security is crucial for the growth of Cross-Border E-Commerce (CBEC), necessitating a collaborative effort from all sectors, with the state playing a pivotal role To protect the safety and confidentiality of personal data across various domains, including economic, social, and political spheres, businesses and the government must work together to establish a robust electronic security framework This framework should incorporate internationally recognized measures to prevent unauthorized access and safeguard against data theft The government should lead by implementing comprehensive regulations on information security and ensuring that businesses adhere to these standards Additionally, stricter penalties for personal data theft and violations of intellectual property rights in e-commerce are essential to enhance protection and compliance.
3.3.2 Solutions to improve the quality and quantity of human resources
Altering the education of e-commerce at universities
The Ministry of Education and Training should promote the establishment of e-commerce faculties in universities and support the development of relevant study programs tailored to Vietnam's current context Additionally, vocational guidance sessions must be organized to highlight the potential of e-commerce and inform students about available job opportunities in this growing field.
Stakeholders should assist businesses in human resource training and the development of an e-commerce training plan for businesses
Organizations in logistics, insurance, and banking should hold regular meetings to share practical e-commerce knowledge Additionally, government agencies must encourage businesses to participate in international e-commerce conferences and courses hosted by Amazon Global, helping Vietnamese enterprises connect with marketplace platforms.
Training employees to form a specialized department in CBEC
Well-trained employees in CBEC must be staff who meet strict standards, specifically as follows:
- Possessing skills to communicate with customers online
- Having the ability to understand technical operations
- Having the ability to build, develop and manage online websites, as well as stores in e-commerce trading floors
- Having already mastered the rules and principles of conducting online business;
- Having already mastered the issues related to trade, IT to be able to successfully apply when conducting electronic transactions
- Having the ability to proactively updating new technologies, seize new business opportunities in e-commerce
- Possessing good English skills Knowing other foreign languages is recommended
3.3.3 Solutions to improve the efficiency of cross-border e-commerce activities
Developing policies on capital support for SMEs to sell on international marketplaces in the early stage
Vietnamese small and medium-sized enterprises often struggle with limited financial resources, making it challenging to invest in additional features To support these businesses in overcoming initial hurdles, implementing low-interest loan policies is essential.
Completing the necessary infrastructure, invest in developing and applying new technologies in e-commerce
The advancement of infrastructure and technology is crucial for the sustainable growth of e-commerce Companies should allocate a dedicated budget for e-commerce investments and consider hiring specialized talent to develop proprietary technology, which can reduce costs and protect customer data By ensuring robust security measures, businesses can foster customer trust, ultimately enhancing their reputation and standing in the market.
3.3.4 Solutions to raise Vietnamese businesses’ awareness
Organizing regular seminars to raise the awareness of businesses about the importance of application of e-commerce on promoting sales and building brand recognition
Furthermore, in-depth discussions on legal, social, economic and technological aspects and implications of policies for the facilitation of e- Commerce should be encouraged
State management agencies should have a team in charge of researching on CBEC
To ensure businesses can effectively respond to changes, it is crucial to consistently update and disseminate accurate information in a timely manner Establishing dedicated information pages will provide guidance and advice to enterprises Additionally, forming a support team of programmers to assist Vietnamese businesses in developing their own websites is essential for fostering their online presence.
Promoting and raising awareness at door-steps and general public levels
To effectively reach the community, awareness campaigns should utilize popular public platforms like television, radio, and drama A focused educational initiative is essential to inform the public about the advantages of e-commerce services.
3.3.5 Solutions to enhance the competitiveness of Vietnamese businesses
Credit cards are universally popular, but specific countries exhibit unique payment preferences, like AliPay in China, Sofort in Germany, and cash in various Eastern European markets Understanding local payment methods is essential for enhancing customer satisfaction.
Developing products is a crucial solution for enhancing the e-commerce capabilities of small and medium enterprises Authorities should implement strategies that support these businesses in establishing e-commerce applications Although geographical indications exist for some specialty and indigenous products, their production scales remain limited To address this, the Government needs to introduce policies that assist businesses and associations in brand building through effective planning of production areas, developing and harmonizing product standards with international norms, enhancing media branding, facilitating participation in trade fairs and exhibitions, and providing support for creating websites and engaging in international marketplaces.
Completing the necessary infrastructure, invest in developing and applying new technologies in e-commerce
The development of robust infrastructure and advanced technology is essential for the long-term growth of e-commerce Companies should allocate a budget specifically for e-commerce investments, including hiring specialized personnel to create proprietary technology that reduces costs and protects customer data By ensuring strong security measures, businesses can foster customer trust, enhancing their reputation and positioning in the market.
Forming an association with other businesses in the industry and service providers
To foster collaborative growth, businesses must shift their perspectives on competition and industry integration towards a more positive outlook, enabling them to identify suitable competitors and partners The government should actively facilitate these connections, allowing businesses to collaborate effectively For instance, companies can share insights on targeting specific markets or work together to coordinate product shipments, ultimately reducing shipping costs.
Competing by quality and reputation