E commerce logistics in vietnamthe reality and solutions logistic trong thương mại điện tử ở việt namthực trạng và giải pháp

Propose Proposing solutions infrastructure of transport, technology and policies related to logistics is to support E-commerce development.. Shortly after this publication was published

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

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

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

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 yetpublished 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 thepermission (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 Businessand Management, and the laws for above-mentioned declaration

Date: December 11, 2017

I have gained huge knowledge, skill s and insights from my MBA course The

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 would like to thank s

my classmates for their friendship and reciprocal 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.

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This page is intendedly left plank

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

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 E-commerce Logistics để làm gì?

TABLE OF CONTENTS

LIST OF TABLES

LIST OF FIGURE

FOREWORD

1 Problem of statement

2.Literature review

3.Research objectives

3.1 General objective

3.2 Detail objectives

4.Research subjects

5.Research scope

6.Research methodology

6.1 Data collection methods

6.2 Data processing methods

7.Research structure

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

1.1 E-commerce

1.1.1 Concept

1.1.2 Components of e-Commerce

1.1.3 Ecommerce models

1.1.4 The role and benefits of e-Commerce

1.2 Logistics in e-commerce

1.2.1 General concept

1.2.2 Components of Logistics in e-commerce

1.3 Factors influencing logistics in e-commerce

1.3.1 Macro Factor

1.3.2 Subjective factors

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

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

i

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

ii

FOR EWO RD

Globalization and international integration brings tremendous opportunity

opportunities for enterprises after Vietnam joins series of international tradeorganizations

(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 processof 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.

1

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.

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 itspotential2 This isthe biggest barrier

to e-commerce

Vietnam, and this

is one of the toppriorities 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 Mossman3with 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 andpurchase 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

2

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Italic

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 Formatted: Font: 13 pt, Bold, Italic

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- Formatted: Indent: First line: 1.27 cm,

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After: 0 pt

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

3

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(Canada)

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In Vietnam, theresearches 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

- 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 thedevelopment of Vietnam E-commercial Logistics

4 Research subjects

This research focuses on actual status in Viet Nam E-commerce and E-

commercial Logistics

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

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+ 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

5

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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

6

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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,

7

representations orcommercialagents,

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

Figure 1.1: Components of e-Commerce

It can be seen in the figure that the infrastructure of E-commerce consists of fourmain 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

- Business services include electronic payment systems, electronic authentication, transactional and security transactions

- Information distribution includes electronic data transmission, email and hypertext

- Multimedia: HTML standards, Java, www, etc

- Computer networks

- The main transaction base is the database

9

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

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

e Computer Science: The developmental base of e-commerce involvescomputer science such as languages, media, computer networks, networksecurity, 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 macroeconomictheory applied in the construction of e-commerce and e-commercesystems also re-impact the different economic sectors

- Management information system: it is responsible for thedevelopment of e-commerce such as system analysis, systemdevelopment, insurance planning, protection and payment not only in asystem 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 managedproperly Besides the usual management, e-commerce need a newmanagement approaches

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

10

- 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 dividethese models

Table 1.1: E-commerce models

a shopping cart to store purchased products and make electronicpayments

+ Business to Customer (B2C) model: Participants incommercial activities include business sellers and consumer buyers.This model uses a web browser to search for products on the Internet,

a shopping cart to store purchased products and make electronicpayments

+ Business-to-Business (B2B) model: Participants in tradingactivities are enterprises, that means buyers and sellers are enterprises

It uses the Internet to create relationships between suppliers and storesthrough quality issues and services Marketing between these twoelements is marketing industry This model is carried out faster thanthe B2C model Customers (enterprises) are eligible to access and usethe Internet or computer network and the electronic payment

+ Customer to Customer (C2C) model: In the C2C model,users are buyers or sellers at the same time and transactions are madedirectly between the consumers together through the intermediary site

11

+ Business-to-Government (B2G) and Business (G2B): These transactions include customs clearance, taxfiling, financial reporting, and regulatory documents Customer toGovernment (C2G) includes construction permits, real estateregistration, etc.

Government-to-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 iteasier for people, businesses to access information and services provided by thegovernment; to improve the quality of services and to bring better opportunities forpeople, enterprises to participate in building institutions and the process of developingthe 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 Thedevelopment of e-government in accordance with the planned roadmap will open thepossibility of promoting the intellectual contributions of all people involved inpromoting 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 onnatural resources and labor, not only on a large scale determined by the level ofinformation technology and creative knowledge Along with that trend, e-commerceemerged that has changed the status of the world economy thanks to its enormousinfluence (Sanja Lekovic, 2013)

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

- E-commerce opens up the opportunity to bring into play theadvantages of developed countries so that they can catch up even beyond thecountries 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

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

+ Helps customers make better choices when making purchases

Electronic advertising provides customers with accurate information about thenearest 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 beforepurchase, 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 onlinebusinesses, customers can compare and buy more easily

+ A new intermediate force

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

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

+ Opportunity to reduce costs

13

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

Internet-based transactions make electronic data interchange (EDI) and banktransactions less costly than using specialized intranets It not only saves costs for largebusinesses, but also provides opportunities for small businesses to take advantage ofelectronic processes and thereby reduce undue costs like in the past

On the other hand, Internet transaction time is only 7% of transaction time viaFax, 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 normalpayment costs

Moreover, e-commerce helps reduce the cost of sales and marketing The cost ofthe office constitutes the cost of the product, reducing office costs by reducingpaperwork, reducing the number of office workers also means reducing productcosts These factors will enable large companies to appear and small businesses canprovide 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 canbuy components and parts at cheaper prices

+ Know the diversified information

With a huge source of information on the Internet and with a variety of differentapproaches to information, even with free information, businesses have a greatopportunity to capture information This is particularly significant for small andmedium 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 globaleconomic integration

+ For businesses

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

e-14

- 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 thepeople at affordable cost and improved quality

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1.2 Logistics s in e-commerce

1.2.1 General concept

According to the Commercial Law 2005, "Logistics is a commercial activitywhereby a trader organizes a single or multiple stages, including receiving, transporting,storing, storing yards, carrying out customs procedures, customer consultation, packing,marking, delivery or other related services as agreed with the customer forremuneration"

Logistics in e-commerce is the process of planning, designing and implementingall necessary elements of the system, process, organization and logistics to realize andmaterialize 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, warehousemanagement, shipping and returning process All these activities require closecoordination and integration of information technology solutions

* Order processing

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

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

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

The journey of an order is a detailed representation of the order processing Thejourney of an order must go through many stages and handle a lot of relevant data (salesdepartment, stockpile, manufacturing workshop, accounting department, transportationteam) Therefore, the way of information transmission and processing has a greatimpact on the process of order processing If you are a small-scale manufacturingbusiness, 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 oftastes To overcome thisproblem, 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 isDdirectly 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-18

Comment [A3]: Không hiểu muốn diễn

đạt điều gì Câu không có Chủ ngữ, Vị ngữ

commerce but only evaluate the quality of the procurement based on the final results ofthe deliveries.

Shipping issues occur when there are gaps between buyers and sellers When thebuyer's expectations and services that the seller meets do not meet at the stage willcreate gaps, these gaps greatly affect the purchase decision from the first buyer, and atsubsequent purchases At the same time, transportation also has a big impact onacquisition decisions and focuses on price, convenience and time issues

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

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

* Handling of goods exchange / refund

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

* Mechanisms and policies

Favorable geographic conditions and infrastructure are the main factors thatmake 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 adequatelegal environment and adequate ventilation TodaysToday, the activities of modernbusinesses in general and e-commerce businesses in particular require a comprehensiveand rigorous legal system to ensure their interests in the fields of business Theregulations on trade, shipping, transportation, and customs must be

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systematized by law If there is no regulations or unclear in the legal system, theactivities of the business are hard to achieve the desired effect.

As a result, legal policy has a direct impact on logistics in e-commerce If thelegal policy is complete, it will make e-commerce logistics development and vice versa

* Infrastructure system

In the field of e-commerce logistics, infrastructure plays an important role,including seaports, airports, railways, motorways, rivers and other facilities andfacilities storage systems, loading and unloading facilities, communication systems infrastructure is one of the components constituting activities providing e-commercelogistics services The basic element of e-commerce logistics is freight forwarding,transportation, logistics and development to achieve high efficiency cannot fail todevelop technical facilities of the sector

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 beone step ahead in the overall development of the economy In a long time, theinfrastructure is built and developed in a synchronous manner, creating a change inquality to meet the demand for transportation of goods and passengers in domestic aswell as international

In short, if the infrastructure system develops in a synchronized and modernway, 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 promotingthe development of e-commerce logistics This has been demonstrated by the fact thate-commerce logistics services have been developed in many countries around theworld The information technology revolution has opened up a great opportunity for e-commerce logistics businesses to reduce costs, improve business efficiency andcompetitiveness in the market

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

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of information technology application, e-commerce logistics activities will not beimplemented effectively.

Thus, the high level of information technology application will create the foundationfor developing and improving the efficiency of electronic commerce logistics Therefore, it

is necessary to build up a modern information system and a strong database so that it reallyhelps to effectively manage e-commerce logistic activities

* Competitiveness, business environment of enterprises

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

The first one is the policy and business environment of the logistics companiestogether 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-commercelogistics 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 Butthose companies haven‟t done it effectively, leading to no cost savings as well asimproving service efficiency, creating trust with customers

These enterprises don‟t have the connection with each other but even occur creat

unfaircompetition, dumping while quality is not good It‟s harmful to each other

The above mentioned factors have had a negative impact on the logisticsmanagement of these companies

E-commerce logistics is very expensive, so businesses with highcompetitiveness and abundant financial resources will have better conditions to develope-commerce logistics

* Level of human resources

E-commerce logistics requires the modern application of informationtechnology systems Hence, human resources must meet the standards and quality tooperate this system

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

21

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

If the human resources are highly qualified and knowledgeable about informationtechnology, 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 highstock turnover at high delivery centers High automation and mechanization ratesincrease the productivity, reduce labor costs and reduce processing costs With a largenumber of the order processing in one center, this model has created great value withlow cost The process is as follows:

Order and specify delivery

Order processing center

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

Scale goods and transfer to truck

Figure 2.1: Process Order at Amazon

Order and specify delivery

When customers place orders on the system and specify the delivery place, thesystem 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

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

Order processing center

All orders are received at a division of the distribution centers and automaticallydistributed 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 beremoved, 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 boxesfor delivery The system will arrange for the items of the same order to be in a shippingbox

Packaging, bar code and transfer

For each specific item, the picker will be placed in the same bar coded bin to indicatethe order, then the bin will be transferred to the conveyor belt running around the warehouseand 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 bewrapped in handmade bags

Scale goods and transfer to truck

Parcels are weighed, labeled and transported to the truck body in storage Lorrieswill 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 alsoperforms the intermediate task of connecting customers with sellers This mode ofoperation is called Drop Ship orders The application process is as follows:

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The company labels and ships to Amazon

Amazon inventory and storage of goods until

getting the order

Amazon pack and deliver to individual

Amazon will be responsible for

post-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

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Formatted: Centered, Indent: First

line: 0 cm

Figure 2.3: Amazon Warehouse

With current inventory management technology, employees in Amazon'swarehouses 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 toAmazon's server, which will then be used to create a map system for the collector Thismakes Amazon inventory time faster without having to find the exact location of eachitem

With modern inventory management technology, Amazon's warehouse system ispacked quickly, saving space and storing more, the process of shipping to thewarehouse also occurs quickly by loading the goods The staff of the warehouse (dollscan 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

2.1.1.3 Transportation

Like all e-commerce companies, Amazon also faces a number of featured issues

in shipping such as small scatteredd an dispersed orders large delivery points To

overcome this situation, Amazon has established transit centers and placed them in

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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:

Merge orders from order completion

Transshipment Center

Local courier unit

Consumers

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:

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:

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2.1.2.1 Processing order.

The WalMmart order process is carried out by an integrated technology

embedded in the product, called CPFR technology This technology will transmit

data about the sale place, where to place the product, as well as other details in

dealing with the goods

Confirmed order

Payment point

Check code

Notify to related parties

Figure 2.6: Process Order at Wal-Mart

Source: www.walmart.com

With the application of CPFR technology, after the order confirmation, the

product will be removed from the shelf and pass through the payment points Here,

theproduct will be scanned product code to update the inventory information to the

retailconnection system The system will send product information to suppliers, point-of-

sale and related vendors, through WalMart's own satellite, which is

continuouslyupdated This information will help the parties know what products are being sold,

how many and when they should be added These data are used for collaborative

planning, forecasting, and replenishment of goods, which assists in the continuous

andoptimal ordering process