E commerce logistics in vietnam the reality and solutions

Research objectives 3.1 General objective This research overall is of an aim of assessing the situation in the electronic commerce logistics of Vietnam in order to propose solutions th

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN VĂN THỊNH

E-COMMERCE LOGISTICS IN VIETNAM

THE REALITY AND SOLUTIONS

LOGISTIC TRONG THƯƠNG MẠI ĐIỆN TỬ

Ở VIỆT NAM: THỰC TRẠNG VÀ GIẢI PHÁP

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

-

NGUYỄN VĂN THỊNH

E-COMMERCE LOGISTICS IN VIETNAM

THE REALITY AND SOLUTIONS

LOGISTIC TRONG THƯƠNG MẠI ĐIỆN TỬ

Ở VIỆT NAM: THỰC TRẠNG VÀ GIẢI PHÁP

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS BÙI QUANG HƯNG

Hà Nội - 2018

DECLARATION

The author confirms that the research outcome in of this thesis is the result

of author‟s independent work during study and research period, and it is not yet published in other‟s research and article

The other‟s research results and documentation (such as extractions, tables, figures, formulas and other document) used in the thesis are cited properly, and the permission (if required) is given

Plagiarism in this Thesis will not be tolerated by The author is responsible

in front of theLaws and Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Date: December 11, 2017

ACKNOWLEDGEMENT

course raises my capacity of administration and management up to the next level I

am now very confident in my position of management I would like to extend my

sincerest thanks and appreciation to all those who have helped me ma kd e this

Thesis to be possible

First of all, I would like to express my deepest and sincerest gratitude to my

supervisor, Dr Bui Quang Hung for his useful comments, remarks and engagement

during my process of doing this master Master Tt hesis

I would like to give my sincere thanks tocustomers who have purchased and

used the services of logistics businesses, in my survey, who have willingly spent

their precious time joining the interview s

Sincere thanks are extended to the Hanoi School of Business and

Management (HSB) - Vietnam National University for equipping me with huge

knowledge and skills through various interesting and practical subjects I also

encouragement to make our class time to be come unforgettable time

Lastly, I would like to give my great thanks to my family who have been

always stand ing by me during for the past two years , and encourages encouraging

me to keep moving from the beginning of my study.

This page is intendedly left plank

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E-COMMERCE LOGISTICS IN

VIETNAM THE REALITY AND SOLUTIONS

E-Commerce logistics in Vietnam

The reality and solutions

1 Summary of the results

The result of the thesis is to provide the solutions of logistics for e-commerce

in Vietnam Study on the general situation of logistics and logistics in e-commerce

in Vietnam Propose Proposing solutions (infrastructure of transport, technology

and policies) related to logistics is to support E-commerce development

2 Applicability in practice

E-commerce is a growing field in the world, as the trend is irreversible

However, in Vietnam there are many obstacles to the development of e-commerce

and the biggest barrier now is the logistics (logistics for e-commerce) The thesis

studiesy on the ongoing issues at the big e-commerce companies in Vietnam and

around the world, opportunities and challenges in the coming time to provide

practical solutions to overcome these exist to be able to support Vietnam

e-commerce development

Comment [THP1]: Không có vị ngữ (nghiên cứu

các tình tình trạng chung của Logistics và commerce Logistics để làm gì?

E-TABLE OF CONTENTS

LIST OF TABLES i

LIST OF FIGURE ii

FOREWORD 1

1 Problem of statement 1

2 Literature review 2

3 Research objectives 4

3.1 General objective 4

3.2 Detail objectives 4

4 Research subjects 5

5 Research scope 5

6 Research methodology 5

6.1 Data collection methods 5

6.2 Data processing methods 6

7 Research structure 6

CHAPTER 1: THEORETICAL FRAMEWORK ON E-COMMERCE AND LOGISTICS IN E-COMMERCE 7

1.1 E-commerce 7

1.1.1 Concept 7

1.1.2 Components of e-Commerce 8

1.1.3 Ecommerce models 11

1.1.4 The role and benefits of e-Commerce 12

1.2 Logistics in e-commerce 16

1.2.1 General concept 16

1.2.2 Components of Logistics in e-commerce 16

1.3 Factors influencing logistics in e-commerce 19

1.3.1 Macro Factor 19

1.3.2 Subjective factors 20

CHAPTER 2: LOGISTICS STATUS IN E-COMMERCE OF THE WORLD

AND VIETNAM 23

2.1 Logistics Status in E-Commerce of the World 23

2.1.1 Research at Amazon 23

2.1.2 Research in Wal-Mart 29

2.1.3 Overall evaluation of logistics solutions in e-commerce in the world 34

2.2 The status of logistic in Viet Nam 35

2.2.1 Research at Sendo.vn 35

2.2.2 Research at Tiki.vn 43

2.2.3 Analyzing the influence of factors on logistic behavior in e-commerce49 2.2.4 Customer survey 55

2.2.5 Summary of SWOT Matrix 61

CHAPTER 3: SOLUTIONS TO COMPLETE LOGISTICS IN E-COMMERCE IN VIETNAM 64

3.1 Logistics operations development direction in Vietnam e-commerce sector 64 3.2 The proposed solutions for Logistics activities in the EC in Vietnam 65

3.2.1 proposed solutions to business 66

3.2.2 Recommendations to the State 69

REFERENCES 72

APPENDIX 74

Survey Questions 74

7 CPFR Collaborative Planning, Forecasting and Replenishment

8 EDI Electronic data interchange

10 SMS Short Message Services

i

LIST OF TABLES

Table 1.1: E-commerce models 11

Table 2.1: Amazon's refund policy 29

Table 2.2: Service prices in the city on Shipchung.vn 38

Table 2.3: Prices in interprovincial 40

Table 2.4: Return Policy of Sendo.vn 41

Table 2.5: Refund processing at Sendo.vn 42

Table 2.6: Order processing capacity 45

Table 2.7: Delivery fee and order processing at Tiki.vn 46

Table 2.8: Return goods policies of Tiki.vn 47

Table 2.9 : Customer survey results 55

Table 2.10: Customer survey results 57

Table 2.11: Customer survey results on transportation activities 59

Table 2.12 : Customer survey results on Return shipping 60

ii

LIST OF FIGURE

Figure 1.1: Components of e-Commerce 9

Figure 2.1: Process Order at Amazon 23

Figure 2.2: The application process at Amazon 25

Figure 2.3: Amazon Warehouse 26

Figure 2.4: Amazon's warehouse system 27

Figure 2.5: Amazon's shipping process 28

Figure 2.6: Process Order at Wal-Mart 30

Figure 2.7: Walmart's warehouse systems 31

Figure 2.8: the inventory management process at Wal-Mart 31

Figure 2.9: Cross-docking technology process at Wal-Mart 33

Figure 2.10: Processing online at Sendo.vn 36

Figure 2.11: The number of orders per day on sendo.vn 37

Figure 2.12: Processing online at Sendo.vn 43

Figure 2.13: Number of orders 44

Figure 2.14: Infrastructure information technology 51

Figure 2.15: the level of use of electronic equipment in enterprises in our country 52

Figure 2.16: About using email by enterprise size 53

Figure 2.17: Charted the cost of procurement and application of information technology in e-commerce 54

1

FOREWORD

1 Problem of statement

Globalization and international integration brings tremendous opportunity

opportunities for enterprises after Vietnam joins series of international trade

organizations (WTO-2007, TTP 2015, EVFTA-2015, ASEAN-AEC ) However,

most business executives and enterprises managers spend a lot of time for finding

solutions to overcome challenges and competitive pressures than expected business

opportunities that these agreements bringing out

The solutions are often mentioned in economic research and business strategy

building such as: enhancing product quality, reduce product costs, building and brand

management, innovation-creative, enhance qualifications, modernizing equipment and

technology, increasinge investment and international cooperation These solutions

are absolutely correct in terms of business strategy However, to help make these

strategies are effective as expected, the internal problems of the business needs to be a

basically rebuilding, which , logistics is one of the aspects that businesses in Vietnam

have not yet widely appreciated This is an activity that appeared in the entire process

of production and business of enterprises Logistics take an important role in the

planning and using of materials in production, transferring of goods to consumers, and

even in the management process of funds and human resources This activity

contributes to lowering the cost of production and business, shortening the time for

circulation of goods, capital optimization, ensure deadline and progress of business

contracts and partly enhance reputation and corporate brand

In electronic commerce (E-commerce), logistics plays an active role in the

Back-End1 activities of E-commerce enterprise with the basic objective is the delivery

time, a sufficient number quantity, right place, right customers enhances

competitive advantage for businesses Although since 2011 to date, the logistics

service in Vietnam has been developinged rapidly, it has not yet to meet the needs of

e-commerce Also, many e-commerce businesses (considered as the big enterprises in

the field of e-commerce) must be close downd last year as: Beyeu.vn, Deca.vn,

Fab.vn, and Lingo, recently

1 In the field of e-commercial, we use the term of "Back-end" to talk about the process since online customer accept buying to the

time of goods, products be delivered to customer

Comment [THP2]: Không hiểu ý câu này là gì

nên không chỉnh được ngữ pháp Hiện ngữ pháp và cách dùng từ đang bị sai

2

Vietnam E-commerce and Information technology Agency (VECITA) reported

that, the interests of online consumers in Vietnam have not been adequately protected

While 40% of online customers think that the price of online shopping is not cheaper

than tradition, 38% are worriedy (and complain) about the time of delivery (sometime

missing or lost) In addition, as the report of VECITA, Vietnam E-commerce is not as

developed as its potential2 This is the biggest barrier to e-commerce businesses in

Vietnam, and this is one of the top priorities that businesses in the field of e-commerce

in Vietnam have to solve remove/ take off in the near future

With these above briefly outlined of limitations, the author selected the topic

"E-Commerce logistics in Vietnam: The reality and solutions" to complete the

Mmaster Tthesis

2 Literature review

Logistics in business is not a fledgling area of research in the world (as in

Vietnam) The first study in this area was formed in the lately 60s of the last century

by E.W Smykay, Donald J Bowersox, Frank H MossmanEW Smykay, Donald J

Bowersox and Frank H Mossman3 with a book about "Physical distribution

development, current status, and potential" ” In this study, the authors acknowledged

the formation of a new business field called Logistics (associated with company of

Malcolm P McLean - the father of the oversea shipping industry - the beginning of the

global logistics sector) The authors noted that this is a totally different activity is way

more different thanfrom the stages and processes of distributation in marketing and

purchase management in production Shortly after this publication was published in

1969, the researchers and the business world were quick to learn the terminology of

this logistics, contributing to the rapid development of a new study field in business

Research by Heskett, J.L., Glaskowsky, N.A and Ivie Jr4 titled "Business

Logistics", was published in 1973 In this period, the study of logistics issues to

focused on distribution operations to reduce business costs Research has proven

Logistics accounts a large amount of resources and the cost of production and business

2 With more than 90 million of population, 44%-48% population use internet, just 2.6 million online customers

3Bowersox, D J (1969) Physical distribution development, current status, and potential The Journal of

Marketing, 63-70.

4Heskett, J L., Glaskowsky, N A., & Ivie, R M (1973) Business logistics; physical distribution and materials

management (Vol 1) Ronald Press Co

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operations, and at that period, problem of optimization of logistics is being left (it did

not take much care of enterprise at that time) Therefore, solving the problems of

logistics can provide huge competitive advantage for businesses The findings

resonated large and manufacturing enterprises soon gathered optimum distribution

process, transport…that opening the period of distribution of matter in the Logistics

However, electronic trading was underdeveloped, so this study purely confined

Logistics within the visible material

In 1985, Jack W.Farrell made a research breakthrough in the field of logistics

Farrell‟s study titled of "New Clout for logistics" ” This study demonstrated the

effectiveness of logistics wouldill increase when we consider Logistics on the

integration view At the same time, the study also confirmed integrated Logistics will

would bring more profit and competitive advantage for enterprises, improving the

image and relationship with customers However, despite the views of FARELL is

correct, this study has not implemented quantitative benefits that the authors stated

On the e-commerce field, the concept of logistics was originally considered as

the traditional view (transport, cargo transfer ) However, theseis views were quickly

rejected and backward with the rapid changes of e-commerce However, until now,

research on the logistics of e-commerce is still a new array of topics in the world

In 2000, Deborah L.B5 made a first study on the logistics of e-commerce, called

"“ E-Commerce Logistics & Fulfillment: Delivering the Goods ".” This work is

fundamental reference for many next-after researches on theoretical perspectives and

model However, the major limitation of this study is that the scope of study conducted

in the UK, where e-commerce is not large enough (in the world) to widely applied

Recently, in 2013, Zhang Jin Shan conducted research "“ Logistics and

e-commerce logistics management " ” This is an in-depth study on logistics in

E-commerce Beside the comprehensive overview of E-commerce logistics, this study

has performed a quantitative analysis of E-commerce cooperation in China - the

largest online market of the world However, the author is not proposingdid not

propose radical solutions to support the growth of Ecommerce in China Logistics

5Bayles, D L., & Bhatia, H (2000) E-commerce logistics & fulfillment: delivering the goods Prentice Hall -

PTRPrentice Hall PTR

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In Vietnam, the researches on this field were most deployed on the base of

traditional view of logistics On the aspect of the international experiences, study made

by the Ministry of Trade of Vietnam (2006) (ministerial-level) with the title of

“International experiences in Logistics and lessons for Vietnam"is was a good

reference In this study, the authors assessed the impact of logistics to business and

business results of enterprises in Vietnam, in general The success of this study on the

lessons of international experience that is was very useful for Vietnam However, the

authors have did not mentioned field of E-commerce logistics

Another theoretical study is the lecture book of Van, Doan Thi Hong This is a

pretty comprehensive product This book contents 11 chapters all about the Logistics

activities that includes: overview of the logistics, the logistics services sector,

Logistics solution, Logistics Administrator, Customer service, Information systems,

Reserves, Managing supplies, determine the need of supplies and materials demand

forecast, transportation, warehouses However, as the same with the study of Ministry

of Trade of Vietnam (2006), this study does not include reference to the category of

e-commerce logistics

Thus, after the process of the review study, the authors recognize the “research

gaps” in Vietnam is the logistics of e-commerce Most references in this field in

Vietnam just VECITA annual reports (or some statement is not scientific research)

Therefore, the gap is defined here as e-commerce logistics in Vietnam The author

hopes that, if the research objectives are solved in this study, this study results will

contribute to fill the research gap as mentioned above

3 Research objectives

3.1 General objective

This research overall is of an aim of assessing the situation in the electronic

commerce logistics of Vietnam in order to propose solutions that support the

development of electronic commerce, in general, and e-commerce logistics in

Vietnam, in particular

3.2 Detail objectives

- Clarify Theoretical Framework On E-Commerce And Logistics In E-Commerce

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- Study the actual experiences in E-commercial Logistics in the world and

lessons for Vietnam

- Assessment the actual status of E-commerce and E-commercial Logistics in

Vietnam, identify the achievements and limitations in this field of Vietnam

- Suggest some solutions to support for the development of Vietnam

Research at e-commerce sites of the world and Vietnam:

+ Some e-commerce businesses in the world: Walmart.com and Amazon.com

+ Some e-commerce businesses in Vietnam: Sendo.vn and Tiki.vn

6 Research methodology

+ Expert method: This method is used in determining the significance of the

factors affecting the Logistics for e-commerce businesses in Vietnam Experts

include: intensive teachers in ecommerce, managers and founders of e-commerce

businesses, the administrators of Sendo.vn, Tiki.vn, Cucre.vn

+ Customer survey method: Measure customer satisfaction on Logistics in

e-commerce

6.1 Data collection methods

To achieve the objective of the study authors collected primary data and

secondary data:

+ To collect secondary data on the logistic activity of e-commerce businesses

around the world, the author use two large-scale e-commerce businesses, Walmart

and Amazon, as the representatives The author collects data at the websites of these

two enterprises on each logistic activity in e-commerce: Order processing, Inventory

management, Transportation, Order refund; thereby drawing lessons on logistic for

e-commerce businesses in Vietnam

+ To collect secondary data from e-commerce businesses in Vietnam, the

author chose two representatives at e-commerce businesses: Sendo.vn and Tiki.vn

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From their data, the author found out the strengths and weaknesses in logistic

activities of e-commerce businesses in Vietnam

+ The author use data from the Vietnam E-commerce Association in 2016 to

analyze the current status of environmental factors: Impact of external

environmental factors (Legal Frameworks, Infrastructure information technology

and Subjective factors of human resources in the enterprise) to clarify the factors

affecting logistic in e-commerce of Vietnamese enterprises

+ Primary data was collected by interviewing customers who have purchased

goods via e-commerce channels of enterprises in Vietnam The purpose is to

assess the level of satisfaction of customers about logistic policies in e-commerce

of Vietnamese enterprises The author designs the questionnaire and asks the

businesses to post it on their website to collect the customers' opinion The number

of votes received by the author was 203 votes Therefore, the author conducted the

study with 203 questionnaires

6.2 Data processing methods

Data will be collected after processing by software Excel and Word software, in

the form of graphs and tables

Chapter 2: Logistics Status In E-Commerce Of The World And Vietnam

Chapter 3: Solutions To Complete Logistics In E-Commerce In Vietnam

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CHAPTER 1: THEORETICAL FRAMEWORK ON E-COMMERCE AND

LOGISTICS IN E-COMMERCE 1.1E-commerce

1.1.1 Concept

E-Commerce is defined by many international organizations, but there is no uniform definition of e-commerce In general, definitions of e-commerce are divided into two groups depending on the point of view (Pu Xiao, Jin Si Shi Gang, Deng Bian Zhu, 1991)

In a narrow meaning

In the narrow meaning, e-commerce is known limitedly to be the purchase and sale of goods and services through electronic means, especially via the Internet and other interconnected networks (Kearney, 2015)

According to the World Trade Organization (2010): "E-commerce consists of the production, advertising, sales and distribution of products which are purchased and paid on the Internet, but are the tangible products, including delivery products as well

as digital information via the Internet.”

According to the Asia-Pacific Economic Cooperation (APEC) Electronic Commerce Committee (2012): "E-commerce is a business that is conducted through data communication and digital information”

According to Economic Informatics Department of National Economics University: "E-commerce is the exchange of commercial information through the means of electronic technology, doesn‟t need to be printed in any stage of the entire transaction process” (Mallik, Susan, 2010)

In broad meaning: E-Commerce is the financial and commercial transaction by

means of electronic means such as electronic data exchange, electronic money transfer and sending / withdrawing by credit card (Rosen & Anita, 2000)

The E-Commerce Model Law of the United Nations Commission on International Trade Law (2010) defines: "The term e-commerce should be broadly understood to cover issues arising from all Commercial systems with or without contracts Commercial relationships include the following transactions: any transaction

in the provision or interchange of goods and services, distribution agreements,

8

representations or commercial agents, commission, long-term lease, construction

works, engineering consultancy, capital investment, banking, insurance, concession,

joint venture and other forms of industrial or business cooperation, freight or

passenger transportation by sea, railway, air or by road "

The definition shows that definition of e-commerce is broad, covering almost

all areas of economic activities, in which the purchase and sale of goods and services

is only a very small area of ecommerce

Different perspectives have different definitions of e-commerce (Thomas L

MesenbourgThomas L Mesenbourg , 2004)

- In terms of telecommunication: E-commerce is the transmission of

information about products and services as well as payments through telephone

networks, computer networks or any means

- In terms of the Business Perspective: Ecommerce is the application of

technology towards automation in business transactions and workflow

- In terms of the Business Perspectives: Ecommerce is a tool to meet the

expectations of companies and customers to cut costs while improving the quality of

goods and speeding up the delivery of goods to customers

- In terms of the online landscape: Ecommerce provides the ability to buy and

sell services and information online on the Internet

Therefore, e-commerce is divided into:

- E-tailing or virtual stores on the web with online catalogs are sometimes

grouped into "virtual shopping centers"

- The collection and use of personal data through web contacts

- Electronic data interchange (EDI), data interchange between enterprises and

enterprises

- Using email and fax are as a means of accessing and establishing

relationships with customers

- Buying and selling between enterprises and enterprises

1.1.2 Components of e-Commerce

E-commerce includes the components as shown below:

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9

Figure 1.1: Components of e-Commerce

It can be seen in the figure that the infrastructure of E-commerce consists of four main elements: people, public policy, technical standards and organizations

In details:

- People include buyers, sellers, managers, servants and intermediaries

- Public policies include laws, tax circulars, and guiding documents

- Technical standards include documents on security and interchange protocols

- Organizations include partners, competitors, associations, committees of the state, government

The management of e-Commerce includes five elements: business services, information distribution, multimedia, computer networks and transactional facilities

10

E-commerce is a new field, moreover, in terms of the composition of commerce, whose theoretical and practical foundation relies heavily on the theoretical foundations of other disciplines To research e-commerce, it is necessary to understand and apply the following works:

e Marketing: Many issues of marketing are directly related to ee commerce For example, in marketing, it important to know how much it costs to spend on advertising as well as profit and sales

- Computer Science: The developmental base of e-commerce involves computer science such as languages, media, computer networks, network security, network intelligence, and so on

- Behavior and consumer psychology: Consumer behavior is the key to the success of B2C business

- Finance: Finance, banking are the main participants in e-commerce Many financial institutions play an important role in online transactions

- Economics: influenced by economic resources, the macroeconomic theory applied in the construction of e-commerce and e-commerce systems also re-impact the different economic sectors

- Management information system: it is responsible for the development

of e-commerce such as system analysis, system development, insurance planning, protection and payment not only in a system but also from system to system

- Accounting, auditing: e-commerce audit is a challenge for the audit industry

- Management Science: The issues of e-commerce need to be managed properly Besides the usual management, e-commerce need a new management approaches

- Business Law and Business Ethics: Ethical and legal issues are very important in e-commerce especially in today's globalized world Many bills are drafted and become standard laws, for example, copyright law, intellectual property law, etc

11

- Other issues: language, sensory systems, management, public policy, health, communication, etc

1.1.3 Ecommerce models

E-commerce is divided into a number of models such as B2B, B2C, C2C based

on ecommerce component The following figure can be used to illustrate how to divide these models

Table 1.1: E-commerce models Government Business Consumer

12

+ Business-to-Government (B2G) and Government-to-Business (G2B): These transactions include customs clearance, tax filing, financial reporting, and regulatory documents Customer to Government (C2G) includes construction permits, real estate registration, etc

These transaction models belong to a form called e-government E-government

is the way in which governments use new technologies in their operations to make it easier for people, businesses to access information and services provided by the government; to improve the quality of services and to bring better opportunities for people, enterprises to participate in building institutions and the process of developing the country

The purpose of e-government is for the people, it has a revolutionary influence

on the power, survival of governments and real democracy in each country The development of e-government in accordance with the planned roadmap will open the possibility of promoting the intellectual contributions of all people involved in promoting the development of the country E-government will improve the government in four important ways:

- People can make comments easier for the government

- People will receive better services from government agencies at anytime, anywhere (at home, at work, on the phone, etc.) and for any reason

1.1.4 The role and benefits of e-Commerce

* Role:

The development and prosperity of an economy are not only based solely on natural resources and labor, not only on a large scale determined by the level of information technology and creative knowledge Along with that trend, e-commerce emerged that has changed the status of the world economy thanks to its enormous influence (Sanja Lekovic, 2013)

- E-commerce changes the economy of each nation as well as the global economy The greatest asset of a business is increasing knowledge in the economy‟s properties is and knowledge has truly become the most important factor and production resource

13

- E-commerce opens up the opportunity to bring into play the advantages of developed countries so that they can catch up even beyond the countries that have gone before

- E-commerce rebuilds the foundation, the national economic strength, and has the potential to change the global balance of power

- E-commerce shortens the knowledge gap between developed countries and developing countries

- Ecommerce is involved in the process of revolutionizing online marketing and marketing

* Benefit

When considering the various applications that can be used to work with digital information, it can be seen that e-commerce is not simply the delivery of information and goods but it can also change their relationship

+ Helps customers make better choices when making purchases

Electronic advertising provides customers with accurate information about the nearest store that contains the item, the time and manner of the store, and even suggests a way to review the product If customers do not want to take a look at the item before purchase, orders can be placed and paid electronically

E-commerce creates new opportunities for both retail customers and enterprises As e-commerce is getting better and more and more enterprises are organizing online businesses, customers can compare and buy more easily

+ A new intermediate force

Through e-commerce, businesses can inform potential customers about items that they are particularly interested in Although nowadays intermediaries tend to be eliminated, the tendency of direct interaction between buyers and sellers is increasingly detrimental to intermediary brokers But e-commerce will still open up new types of intermediaries

For example, there will be brokers looking for specific markets, informing customers of good business opportunities, items that are really hard to find, conducting periodic surveys on specific items for businesses

+ Opportunity to reduce costs

14

In the last few years, the Internet has become increasingly popular among consumers Web sites make consumers believe in using the Internet, they provide both consumers and businesses with new ways to describe and find information

Internet-based transactions make electronic data interchange (EDI) and bank transactions less costly than using specialized intranets It not only saves costs for large businesses, but also provides opportunities for small businesses to take advantage

of electronic processes and thereby reduce undue costs like in the past

On the other hand, Internet transaction time is only 7% of transaction time via Fax, equal to 0.05% of the time of transaction by mail The cost of Internet transactions is only 5% of transaction costs through fax or mail, equals to 10% -20%

of normal payment costs

Moreover, e-commerce helps reduce the cost of sales and marketing The cost

of the office constitutes the cost of the product, reducing office costs by reducing paperwork, reducing the number of office workers also means reducing product costs These factors will enable large companies to appear and small businesses can provide services to customers at lower costs Small and medium-sized exporters can set up online stores at a much lower cost than setting up outbound stores Therefore, consumers can buy goods at lower prices, manufacturers in developing countries can buy components and parts at cheaper prices

+ Know the diversified information

With a huge source of information on the Internet and with a variety of different approaches to information, even with free information, businesses have a great opportunity to capture information This is particularly significant for small and medium enterprises, which are the main drivers of economic development

+ Facilitate early access to digital economy

For a country, e-commerce is seen as the driving force behind the development

of the information technology industry, a key industry that has contributed significantly to the founding of a new economy in the world This is the opportunity for the global economic integration

+ For businesses

Small and medium enterprises can expand their business by applying commerce to:

e-15

- Supply reasonably of raw materials, products, warranty

- Automate all collaborative business processes to improve efficiency

- Improve the relationship with colleagues and partners in the company

- Reduce the cost of marketing business

- Increase the quality of customer service

- Increase the competitiveness of enterprises

- Expand the scope of business cross the border

Public services such as health, education and social services are serving the people at affordable cost and improved quality

Logistics in e-commerce is the process of planning, designing and implementing all necessary elements of the system, process, organization and logistics

to realize and materialize for ecommerce activities (Ruoxi Fan, 2014)

1.2.2 Components of Logistics in e-commerce

The components of logistics in e-commerce include order processing, warehouse management, shipping and returning process All these activities require close coordination and integration of information technology solutions

* Order processing

Ordering is the first step in the complex chain of logistics in e-commerce After finding the information on the website, customers can select some favorite products and then placed in the basket,; the order is made through the online order

The task of the ordering process firstly is to provide enough content and information for customers to make the right choice such as the type, request parameters, options on payment, delivery then the issue of order processing efficiency, involves setting standards to meet customer expectations

Features of e-commerce order processing are order fulfillment, to turn consumer electronic orders into parcels ready for final shipping to direct customers, to.Ccomplete high-end e-commerce orders and add value to your products

The journey of an order is a detailed representation of the order processing The journey of an order must go through many stages and handle a lot of relevant data (sales department, stockpile, manufacturing workshop, accounting department, transportation team) Therefore, the way of information transmission and processing has a great impact on the process of order processing If you are a small-scale manufacturing business, you can use manual methods (telephone, fax) to communicate

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orders and order management However, as the scale of production - business expansion, the method of crafting is exposed low accuracy and economic efficiency is not high and not meet the level of customer service

In terms of time, an order cycle is defined as the period from when the customer submits an order, the business proceeds with the purchase or provides the required service until products are delivered to the right customer address, accepted by the customer and complete the relevant documents

Total order processing time can be divided into two groups:

- Response time information: in the preparation / transmission / reception / status report With the journey of an order as described above, information technology plays a very important role in ensuring shortening order processing time while ensuring accuracy in the transmission process

- Order response time in terms of material: Gathering, packaging, shipping and delivery If the goods are available in stock, it depends only on the operation in gathering and grading according to the structure and size of the loading and transporting goods to customers This factor is directly influenced by the streamlined capacity of the warehouse operations process

In cases products are not available to satisfy orders, more time is needed to replenish supplies (buy / order suppliers)

* Warehouse Management

Warehouse is an important part and is the most classic operation associated with logistics system, carrying out the function of storing, preserving, transferring raw materials, semi-finished products and finished products It involves consolidating, coordinating goods, preserving and storing goods Warehousing plays an important role in ensuring the continuity of the production and distribution of goods, contributing

to lower production and transportation costs while improving the quality of customer service

Basic decisions in warehouse management include ownership decisions, concentration levels, and inventory layouts

Warehouse management in e-commerce is more difficult to predict the consumers‟ demand, because consumer goods are often unstable, short term and

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affected by impact of tastes To overcome this problem, e-commerce inventory

management systems often integrate with supplier repositories and continuously

exchange information as well as supply plans to manage inventory

Typically, the CPFR (Collaborative Planning, Forecasting and Replenishment)

model improves predictability (30% to 40%), improves customer services and sales

(15% to 60%) and shortens the order processing cycle (15% to 20%) (Sanja Lekovic,

2013) E-commerce products are stored at DCs and Fulfillment Center (FC), the task

of moving, sorting, and finishing orders is rather than stockpiling

Fulfillment centers are built on the basis of e-commerce development, with

higher order processing requirements both in terms of processing speed and value

added, which a typical distribution center will not be able to undertake At the

fulfillment centers, orders are completed including finding, assembling, or performing

custom requirements, packaging, etc to form parcels ready for direct shipment to the

consumers Fulfillment centers have very high area requirements, ranging from

500.0000 to 1 million m2, and operate 24/7

* Transport

Demand and transportation challenges in e-commerce require a change in

logistics distribution structure in e-commerce versus traditional retail and includes two

main modes of transport: Line-haul transport and last-mile delivery, where end-point

delivery is the most common feature in e-commerce shipping, which costs a great deal

and is cost effective It is Ddirectly affected by changes in e-commerce such as small

order fulfillment, dispersal, time and location, high processing requirements, and

frequent interruptions payment, after-sales service and refund

Performing the task of delivering the end point, parcels are shipped directly to

the consumer In addition, large-scale e-commerce may have delivery centers to

handle the problem of reverse logistics The cost of distribution in logistics distribution

shows that end-point delivery is the most expensive, and, accountsting for 40% of the

total cost of distribution (A.T Kearney, 2015)

In e-commerce logistics activities, shipping is the most costly and important

operation Customers may not be able to observe all the logistics activities in

e-Comment [A3]: Không hiểu muốn diễn đạt điều

gì Câu không có Chủ ngữ, Vị ngữ

Sellers may have different mindset with the buyer, leading to misidentification

or lack of critical issues in shipping and delivering inappropriate services This deviation causes unsatisfaction dissatisfaction in the purchase process and prevents buyer's order behavior Gaps in delivery appear at different stages of the purchase process, including information gaps, service and implementation

* Handling of goods exchange / refund

The problem of return and logistics is becoming more serious in e-commerce because transactions take place in spatial disparities between buyers and sellers, the product may not make customers really like, aAs the online shoppers have more power than the seller, they also love it A refund is required as a basic service required to make a purchase

Refund products are classified and processed at refund centers or at fulfillment centers

1.3 Factors influencing logistics in e-commerce

1.3.1 Macro Factor

* Mechanisms and policies

Favorable geographic conditions and infrastructure are the main factors that make it possible to apply and develop logistics operations in e-commerce in the country or region Whether e-commerce logistics is effective or not depends on the adequate legal environment and adequate ventilation TodaysToday, the activities of modern businesses in general and e-commerce businesses in particular require a comprehensive and rigorous legal system to ensure their interests in the fields of business The regulations on trade, shipping, transportation, and customs must be

Over the years, especially since the country opened, the technical infrastructure

of the transportation sector has always been considered by the Party and the State to be one step ahead in the overall development of the economy In a long time, the infrastructure is built and developed in a synchronous manner, creating a change in quality to meet the demand for transportation of goods and passengers in domestic as well as international

In short, if the infrastructure system develops in a synchronized and modern way, it will facilitate transportation in e-commerce logistics and vice versa

1.3.2 Subjective factors

* Level of technology application

The level of information technology application is one of the factors promoting the development of e-commerce logistics This has been demonstrated by the fact that e-commerce logistics services have been developed in many countries around the world The information technology revolution has opened up a great opportunity for e-commerce logistics businesses to reduce costs, improve business efficiency and competitiveness in the market

On the other hand, components of e-commerce include computer networks, databases, electronic payment systems, electronic authentication, etc All of these elements are demanding highly information technology Therefore, without the level

* Competitiveness, business environment of enterprises

The business habits of small businesses have caused the stagnation and fragmented development of e-commerce logistics

The first one is the policy and business environment of the logistics companies together The infrastructure for e-commerce logistics is known that it is very expensive, so most companies are not able to trade all the links in the chain of e-commerce logistics activities The new company meets about a small part of the domestic demand, so the problem of cooperation and mutual benefit between companies is inevitable But those companies haven‟t done it effectively, leading to no cost savings as well as improving service efficiency, creating trust with customers

These enterprises don‟t have the connection with each other but even occur creat unfair competition, dumping while quality is not good It‟s harmful to each other The above mentioned factors have had a negative impact on the logistics management of these companies

E-commerce logistics is very expensive, so businesses with high competitiveness and abundant financial resources will have better conditions to develop e-commerce logistics

* Level of human resources

E-commerce logistics requires the modern application of information technology systems Hence, human resources must meet the standards and quality to operate this system

With the highly qualified human resources, they will have the necessary skills for e-commerce logistics, such as modern multimodal transport logistics and supply chain management skills, updated knowledge with new concepts such as "one stop shopping", Just in time (JIT-Kanban), etc.) Thus, they contribute to effective e-commerce logistics and vice versa

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Thus, the level of human resources has a direct impact on e-commerce logistics

If the human resources are highly qualified and knowledgeable about information technology, logistics activities will be highly effective and vice versa

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CHAPTER 2: LOGISTICS STATUS IN E-COMMERCE OF THE WORLD

AND VIETNAM 2.1 Logistics Status in E-Commerce of the World

2.1.1 Research at Amazon

2.1.1.1 Order processing

For products made at Amazon's distribution center

Distribution centers helped Amazon cutting back on inventory thanks to high stock turnover at high delivery centers High automation and mechanization rates increase the productivity, reduce labor costs and reduce processing costs With a large number of the order processing in one center, this model has created great value with low cost The process is as follows:

Figure 2.1: Process Order at Amazon

Order and specify delivery

When customers place orders on the system and specify the delivery place, the system will know where to ship in order to determine the way of shipping Normally, the orders are shipped from Amazon's distribution centers or from the seller's

Order and specify delivery

Order processing center

Scale goods and transfer to truck

The staff picked up the goods according to instructions

The items of the same order will be in the same bin

Package the goods, stick the bar code and move to the loading state

Goods are packed in parcel, sealed

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locations During the process of shipping at the distribution center, the seller must ship the orders to Amazon's warehouse so that the company can carry out the order fulfillment process

Order processing center

All orders are received at a division of the distribution centers and automatically distributed to each specific employee through the wireless network

The staff picked up the goods according to instructions

Typically, goods are stored in separate chambers When the goods need to be removed, the lamp will light up Employees will walk along the compartment and pick

up items until the lights are off again

The items of the same order will be in the same bin

Goods continued to be transported to the appropriate trough, and slid into boxes for delivery The system will arrange for the items of the same order to be in a shipping box

Packaging, bar code and transfer

For each specific item, the picker will be placed in the same bar coded bin to indicate the order, then the bin will be transferred to the conveyor belt running around the warehouse and automatically transferred to specific points by bar code reading points

Packed in parcel, sealed

After the goods have been selected employees will be packaged into parcels, sealed and then sent For items that require special wrapping (such as gift boxes) will

be wrapped in handmade bags

Scale goods and transfer to truck

Parcels are weighed, labeled and transported to the truck body in storage Lorries will ship to post offices and delivery units for shipment to customers,

For Drop Ship orders

In addition to the distribution through the distribution center, Amazon also performs the intermediate task of connecting customers with sellers This mode of operation is called Drop Ship orders The application process is as follows:

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Figure 2.2: The application process at Amazon

Firstly, after signing the contract with the third party suppliers, the company

companies willlabels and ships to Amazon in large quantities

Secondly: after receiving goods, Amazon will put them in inventory and

storage of goodsstore them until getting the order

Thirdly: When ordering, Amazon will pick up, pack and deliver to individual

customers, which may include other items in the order

Fourthly: Amazon will be responsible for post-sale activities and refund

processing if requested by the customer

With tThe form of order processing has been deployed to help Amazon

diversify the goods in the warehouse, to meet all the needs of customers However, for

drop ship orders, long-term storage can affect the quality of third-party goods that

affect the business performance of the company

2.1.1.2 Inventory management

At present, each of Amazon's warehouses is hundreds of thousands of square meters

with large staff and large number of goods With a large warehouse system, Amazon has

adopted the most advanced inventory management technology in the world

The company labels and ships to Amazon

Amazon will be responsible for sale activities

post-Amazon pack and deliver to individual

customer

Amazon inventory and storage of goods until

getting the order

Formatted: Centered, Indent: First line: 0 cm

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Figure 2.3: Amazon Warehouse

With current inventory management technology, employees in Amazon's warehouses can store their goods anywhere Whenever an item is placed on the shelf, the system automatically scans a bar code on the goods, which will be redirected to Amazon's server, which will then be used to create a map system for the collector This makes Amazon inventory time faster without having to find the exact location of each item

With modern inventory management technology, Amazon's warehouse system

is packed quickly, saving space and storing more, the process of shipping to the warehouse also occurs quickly by loading the goods The staff of the warehouse (dolls can be lined up with the novels;, the dryer is folded with a towel )

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Figure 2.4: Amazon's warehouse system

However, the random queuing method above does not affect the inventory management time at Amazon This is due to the application of 100% technology in warehouse management When an order is placed, each order will be loaded into the handset of the warehouse staff The system automatically determines the employee's nearest distance between random items inside the warehouse to complete the customer's order within the shortest possible time This means increased customer satisfaction when not waiting for long service

It can be seen that Amazon's warehouse management technology is the most perfect technology today, the application of this management technology helps Amazon save space storage, determine the exact position of the item, save time and minimize the burden on stock management so that employees can be more engaged with the organization

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crowded locations to save on shipping costs and minimize the impact of dispersal

Accordingly, Amazon's shipping process is as follows:

Figure 2.5:Amazon's shipping process

Amazon's shipping process begins by integrating orders from distribution

centers and contracting with small and medium-sized carriers to deliver goods from

distribution centers to Transshipment Centers At the transshipment center, the goods

are unloaded, packed, classified destination and loaded onto the appropriate cart of

courier partners Then, the orders will be collected and long distance transport 1 time

only to turn the destination of the consumer

In addition, in order to reduce reliance on shipping partners, particularly during

peak occasions such as the festive seasons, Amazon has deployed its own transport

crew using unmanned aerial vehicles "Prime Air" for delivery These devices are

designed Amazon can deliver the package weighs about 2.5kg to customers in less

than 30 minutes This helps reduce pressure on the transport, faster response customer

requirements makes customers more satisfied with the quality of service than Amazon

2.1.1.4 Order refund

Amazon's policy now protects the maximum benefit of consumers Since then,

Amazon has become the largest global e-commerce platform Accordingly, the basic

rules of Amazon's refund policy are as follows:

Merge orders from order completion

Transshipment Center

Local courier unit

Consumers

Formatted: Indent: First line: 0 cm

Formatted: Indent: First line: 0 cm

Formatted: Indent: First line: 0 cm

Formatted: Indent: First line: 0 cm

Source: www.amazon.co.uk With Amazon's customer protection policy in place, Amazon has reduced the status of the seller to a rigorous delivery order, or deliberately makes it difficult to refuse the return and refund to customer

However, this policy also implies many risks of cheating and deception of customers Therefore, to overcome this situation, Amazon has designed the electronic system to detect high abnormal refunds of guests As you can see, every activity in the logistics process of Amazon is closely tied to technology This enhances Amazon's business performance, increases customer satisfaction, and minimizes manpower costs, as well as saves working time for staff at Amazon

2.1.2 Research in Wal-Mart

Launched in 1962, Wal-Mart reached $ 1 billion a year in 1979 By 1993, sales had reached $1 billion a week In 2001, Wal-Mart's daily turnover was nearly one billion dollars At present, more than 80% of US households buy at least a few products per year from their stores Wal-Mart was the first service company to reach the first place on Fortune's list (started in 1955) In addition, Wal-Mart is also on the list of Fortune 100 companies that are preferred by the American workers to work most Logistic activities at the company are as follows: