Vietnam’s e-commerce sector is witnessing a period of strong growth and has become an important component of the country’s digital economy, Ms. Nguyen Thi Minh Huyen, Deputy Director of the Vietnam Department of E-Commerce and Digital Economy (iDEA) at the Ministry of Industry and Trade (MoIT), told the Cross-border E-commerce Summit 2024, held recently by Amazon Global Selling Vietnam (AGSV) and iDEA.

Retail e-commerce sales have grown at an average of about 20 per cent over the past ten years, putting Vietnam among countries posting the fastest e-commerce growth in the region and the world. The global e-commerce market is forecast to see continued strong growth, with revenue of $7.4 trillion expected by 2025. In particular, cross-border e-commerce is steering a new era of global trade and has become a new way for many Vietnamese companies to reach customers worldwide.

“In the context of Vietnam increasingly integrating deeply into the global economy, along with opportunities from new generation free trade agreements, the trend of converting from traditional business to digital platforms is considered an effective solution to help businesses penetrate into and expand their export markets,” Ms. Huyen told the gathering. “Many businesses have thrived thanks to opportunities to develop exports through cross-border e-commerce.”

Opportunities on offer

According to AGSV data, Vietnamese businesses have created miracles in cross-border exports, with the number of those achieving sales of $1 million a year on Amazon rising ten-fold in just five years. The number of Vietnamese selling partners registered through Amazon has also increased more than 35-fold over the past five years, while the number of products sold rose more than 300 per cent. Beyond exporting products, Vietnamese exporters also invest in brand development, helping their long-term growth.

“Online exports have opened up immense global opportunities for Vietnamese businesses of all sizes,” Ms. Huyen noted.

In his remarks, Mr. Ngo Sy Hoai, Deputy Chairman and Secretary General of the Vietnam Timber and Forest Products Association (VIFOREST), said Vietnam’s wood industry has experienced continuous growth for 20 years, at an annual rate of over 10 per cent. However, he added, the industry still grapples with various weaknesses and challenges. Primarily, most wood processing businesses are small and medium-sized enterprises (SMEs) focused on processing orders from external importers, which limits added value. Positive factors include inexpensive labor and available planted forests, while design and branding capacity remain quite poor.

“Participating in e-commerce will help businesses increase export opportunities amid increasingly fierce competition,” he went on. “In fact, the industry is positioned as one of the biggest beneficiaries of e-commerce, with revenue on Amazon among the top.”

In the textile and garment industry, according to Mr. Truong Van Cam, Deputy Chairman of the Vietnam Textile and Apparel Association (VITAS), Vietnamese brands still only have a few names on the world textile map and this is a weakness for businesses. He emphasized Amazon’s role in enabling direct customer access for textile products, affirming Vietnam’s position with competitive pricing, quality, and rapid delivery. “E-commerce offers a direct avenue to end-consumers, facilitating brand building despite smaller volumes,” he added.

Overcoming obstacles

Despite the clear progress, Ms. Huyen said, accessing major e-commerce platforms around the world remains difficult for businesses in Vietnam’s north. Reasons include human resources for cross-border e-commerce not meeting requirements, a lack of information on regulations in foreign markets, and limited skills and knowledge on establishing business strategies and building and protecting brands in cross-border e-commerce.

An AGSV representative said there are still many companies in Vietnam that have not yet begun their digital transformation or lack the necessary resources and talent to seize this new business opportunity. Recent research from Access Partnership reveals that of the 300 micro, small and medium-sized enterprises (MSMEs) in Vietnam surveyed, 86 per cent said they would not have sufficient capacity to carry out export activities without e-commerce.

“Resolving the difficulties and challenges, maximizing the advantages and export potential of Vietnamese goods, and making cross-border e-commerce a factor helping boost exports and increase international competitiveness requires cooperation from management agencies, major e-commerce platforms, and units providing support services for e-commerce, and effort and determination from businesses,” Ms. Huyen said.

In order to accelerate e-commerce as a pioneering pillar of Vietnam’s digital economy by 2025, the government has implemented strategic policies integrating advanced Industry 4.0 technologies. This will drive efficiency across business cycles, modernize distribution, boost competitiveness, and fuel growth in both domestic and export markets.

On the business side, Mr. Cam affirmed that for Vietnamese textile and garment brands to reach global consumers, local enterprises must change a great deal, both in terms of export methods and increasing shifts in design.

Similarly, Mr. Hoai believes that businesses will have to adapt to the new competitive environment to develop.

Analysts at the Cross-border E-commerce Summit 2024 agreed that when participating in the field, Vietnamese businesses cannot afford to adopt short-term, risky thinking. Conducting business systematically and with a strategy accompanied by brand protection is the best way to engage and expand their customer base. The Access Partnership research also identified that Vietnam’s e-commerce export revenue could reach VND296.3 trillion ($11.8 billion) by 2027 if its businesses are fully supported and speed up the application of e-commerce to export products and services.

Amazon Global Selling announced at the Summit the second phase of its “Cross-border E-commerce: the Breakthrough Era” program, undertaken in partnership with iDEA. The program will aid collaboration between pivotal associations and industries to collectively boost and fortify cross-border e-commerce capabilities for leading export sectors. It aims to heighten awareness, furnish additional training resources, and assist member businesses to succeed in the realm of global e-commerce.

It will coordinate with iDEA to shape a vision and roadmap to empower Vietnamese businesses and unleash the country’s e-commerce export potential. This comprehensive plan encompasses four key focus areas: cultivating talented cross-border e-commerce entrepreneurs; boosting the cross-border e-commerce ecosystem; connecting and empowering local manufacturers; and promoting Vietnamese brands worldwide.

“Over the past 5 years, Amazon Global Selling has been relentlessly dedicated to empowering Vietnamese businesses for global success,” said Mr. Gijae Seong, Head of AGSV. “Vietnam’s export potential is immense, and we aim to strengthen our partnerships with governmental agencies to further support local enterprises in seizing international opportunities.”