E-commerce the ticket to MSME success

November 05, 2017 - 09:00

E-commerce has become the easiest way for micro, small and medium-sized enterprises (MSMEs) in Việt Nam to achieve success in both the domestic and foreign markets.

Staffs of an online shopping platform at work. VNS file photo
Viet Nam News

E-commerce has become the easiest way for micro, small and medium-sized enterprises (MSMEs) in Việt Nam to achieve success in both the domestic and foreign markets.

Thu Ngân

HCM CITY — E-commerce has become the easiest way for micro, small and medium-sized enterprises (MSMEs) in Việt Nam to achieve success in both the domestic and foreign markets.

This trading method has become popular in Việt Nam, a concomitant to the surging number of internet and smart-phone users.

Last year 65 per cent of the population using the internet shopped online, according to the white book on e-commerce released by the Ministry of Industry and Trade.

Besides, consumers’ purchasing habits are changing, with even people visiting shops searching online for information about them before going there.

Companies too are greatly benefiting from e-commerce, especially small ones that struggle with capital and human resources.

Trần Đình Toản, deputy CEO of OSB Investment and Technology Joint Stock Company, said e-commerce enabled companies to approach customers anywhere in the world at any time.

"It is also cheaper than traditional trading methods," he said.

Besides, if MSMES use online shopping platforms, they would also get support in terms of managing orders, payment, and shipping, he added.

Pine Kyaw, managing director of Shopee Vietnam, said: “E-commerce in Việt Nam is currently still in its infancy. Vietnamese online sales are expected to grow four-fold to become a US$7.5-billion market.

“The adoption of e-commerce by SMEs will enable them to access a larger database of users and expand their reach to consumers across Việt Nam and grow their business.”

Lại Việt Anh, deputy head of the Ministry of Industry and Trade’s E-commerce and Digital Economy Department, said: “It is estimated that around 200,000 businesses in the country use e-commerce and most of them are MSMEs.”

She told Việt Nam News that e-commerce is a supportive method that helps businesses, especially MSMEs, enter the market and bolster their competitiveness.

“Using e-commerce is an important step for MSMEs to connect with each other and investors so that they can enter the market with competitive prices.”

MSMEs in e-commerce are supported by the Government in the form of training programmes to improve their knowledge of e-commerce and how to effectively exploit it.

According to the Ministry of Industry and Trade, as of the end of last year around 66 per cent of companies had dedicated IT and e-commerce staff in their business structure.

E-commerce to give wings to MSMEs

There are many ways for MSMEs to use e-commerce, the most popular being setting up their own websites and co-operating with online shopping platforms in and outside the country. Some MSMEs opt for a single method but others combine several.

Phong Vân Trade and Production Investment Company Ltd has decided to both set up its own website and tie up with an online shopping platform.

Owner of fashion brand Laka, Phong Vân is one of many MSMEs in Việt Nam trying hard to develop in a market which is becoming more and more competitive.

Two years after expanding its business by using e-commerce, the company has revealed that selling online helped it increase turnover by 20 per cent.

The company’s e-commerce team leader Nguyễn Thế Phương told Việt Nam News that the idea of developing e-commerce had come to them as soon as the company’s founders had thought of establishing the company.

The company chose to go with an online shopping platform because of the great support it was offered, he said.

The platform, Shopee.vn, helped with transportation and quick payment, an important factor for a newly established company.

Tying up with an online shopping platform has also been useful because it, besides advertising the platform, also advertises its merchants, he said.

“E-commerce has played an important role in the development of MSMEs in Việt Nam because it offers us many benefits, especially creating and developing brands.”

Bách Coffee Company Ltd chose a tougher way, but one which has started to bear fruit.

With a dream of taking Vietnamese coffee to the world market, the company’s owner bravely chose three years ago to work with Amazon.

The company’s deputy director, Tôn Nữ Diệu Thảo, told Việt Nam News that after listing on the website, more and more customers and investors began to visit her factories.

While admitting that revenue growth has not been as expected, she said e-commerce has instilled a strong belief in her and her colleagues that even small companies can enter foreign markets.

Hoa Lư Fine Arts and Handicrafts Company set up its own website but also sells on many online shopping platforms.

Tú Anh, the company’s deputy director, said the company has developed e-commerce for many years now, and thanks to selling online, it has found partners and customers in many countries.

Phạm Thông, Lazada Vietnam’s CMO, said selling online is an inevitable trend.

Talking about co-operation between merchants and online shopping platforms, he said MSMEs tying up with online shopping platforms get many tools they can utilise.

Flying higher

Experts said, the early success notwithstanding, MSMEs have to make more efforts to develop online sales and overcome challenges.

Toản of OSB said companies need to make detailed plans on how to invest in and exploit e-commerce.

“MSMEs should clearly know what their strengths and weakness are and who their competitors are. Finding a professional company providing e-commerce services is also important because these companies will help them avoid risks and become successful.”

Furthermore, "developing skilled human resources is necessary, and there should be staff to answer all questions from customers 24/7," he said.

“Be patient. Not everyone can be successful right away.”

“E-commerce using the business to customer [B2C] model can achieve result in two or three months. But business to business [B2B] model can take three to six months.”

Việt Anh said: “MSMEs should be creative  and think outside the old models that other companies have already used. They should bravely adopt new models of e-commerce.

“Learning by studying e-commerce models around the world and developing human resources are important.”

Kyaw of Shopee said one of the key challenges is the slow pick-up in non-cash payments. Vietnamese are still highly dependent on cash on delivery (COD), which tends to have a high rate of mid-transaction cancellations, which causes hassle and increases costs.

Another challenge is the large geographical area of Việt Nam, he said, explaining this poses a logistical challenge in terms of how to extend the delivery network to cover most areas and also ensure efficiency is not compromised even in case of remote locations.

The third challenge is the low overall awareness of e-commerce and digital technology in Việt Nam, he added. — VNS