ESSAY SUBJECT MICROECONOMICS THEME e COMMERCE MARKET ANALYSIS IN VIETNAM

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY ECONOMICS AND LAW DEPARTMENT o0o ESSAY SUBJECT: MICROECONOMICS THEME: E-COMMERCE MARKET ANALYSIS IN VIETNAM Group : Class : K60MF2 Major : International Business and Trade Teacher : Ph.D Phạm Văn Quỳnh Ho Chi Minh City, March 31, 2022 TABLE OF Contents PRESENTATION/ REPORT REQUIREMENT REQUIRE: • Group of 5-10 students • The last two weeks of school • Content of requirements: use the supply and demand model to analyze a market of products and services in Vietnam, for example, the gold market • Write, print, and submit a report (to GV) and submit online to the link: at least 25 pages A4 before 17:00 on April 12th, 2022 • Class presentations THE NECESSARY CONTENT: • • • • Present the topic and generalize the basic theories of the problem Conclusions or lessons learned The names of the team members and each person's work State facts and use theories to analyze reality EVALUATION CRITERIA: • • • • Presentation Teamwork How to present/present a report Answer your questions and those of your teachers CONTACT INFORMATION: About lecturer: • Ful Name: Ph.D Pham Van Quynh • Email: phamvanquynh.cs2@ftu.edu.vn MARKET RESEARCH – TEAM The number of members: 10 GROUP 1) Phạm Gia Bảo Student’s ID: 2115027133 2) Nguyễn Phạm Minh Thư Student’s ID: 2115027077 3) Phan Nguyễn Khánh Linh Student’s ID: 2115027030 4) Phan Thị Minh Tâm Student’s ID: 2115027073 5) Lê Thành Đạt Student’s ID: 2115027098 6) Hoàng Gia Phúc Student’s ID: 2115027116 7) Trịnh Hải Tùng Student’s ID: 2115027087 8) Trần Thị Phương Trinh Student’s ID:2115027125 9) Trần Thị Mai Anh Student’s ID: 2115027030 10) Trịnh Thị Minh Ngọc Student’s ID: 2115027 GROUP A few opening words The impact of the COVID-19 pandemic has changed a lot in the traditional economy Entering the 4.0 era has made the number of smart mobile devices increasing, which sets the stage for the e-commerce industry to be born Group 3, who are part of Gen Z, young people today must be the ones who know and also through this essay on the e-commerce market will help students understand more about this market in the most objective way According to the statistical report, Vietnam is on the list as the country with the most developed e-commerce market in Asia and the world in the future with the presence of major exchanges in the country This is also a bright spot for Vietnamese citizens in particular and Vietnamese students, in general, to discuss this issue more closely OoOoO - Thank you! Before entering the main content of the essay, group would like to express their sincere thanks to Ph.D Phan Van Quynh has guided us on the extremely useful knowledge about microeconomics recently Although this is a very new and strange subject for us, the teachings and instructors have made it easier for us to understand and imagine this specialty Once again, we would like to thank you and wish you much success on the next teaching journey GROUP A Analysis of E-commerce market size and Competitors The situation of E-commerce development in Vietnam and the world: 1.1 E-commerce development in the world: E-commerce continues to grow strongly across the globe, especially in developing countries where e-commerce originated Development accounts for more than 90% of the total value of global e-commerce transactions, of which North America and Europe alone have reached over 80% E-commerce growth is fastest in North America, followed by Asia-Pacific and Western Europe In Asia, Singapore and China have two countries with rapid e-commerce development and keep up with North American countries In the rest of Asia, e-commerce has developed but is still very slow Source: US Census Bureau, 2005 The US is the country with the most developed level of e-commerce in the world Currently, US e-commerce activities account for over 70% of global e-commerce The country's retail sales from online sales increased year-over-year, and year after year was higher than the previous year B2C is the oldest and fastest-growing e-commerce model However, in recent years, the B2B e-commerce model has developed faster GROUP Source: US Census Bureau, 2004 E-commerce in Latin American countries has developed very rapidly in recent years Venezuela is the country with the fastest growth rate of e-commerce in the region, increasing by 224% in the two years from 2005 to 2007 After Venezuela are Chile, Mexico, and Brazil with similar e-commerce development rates respectively 183%, 143%, 116% The country's most popular form of online payment is a credit card B2B e-commerce accounts for 80% of e-commerce transaction value in Latin America Brazil is the fastest-growing country in the region, followed by Mexico and Argentina Currently, 88% of B2B e-commerce websites in the region are Brazilian GROUP 1.2 Current status of e-commerce development in Vietnam: E-commerce has appeared in Vietnam for the past 10 years since the Internet was launched in 1997 However, e-commerce applications have only been really popular in the past years since the Law on Electronic Transactions was promulgated in December 2005 and took effect in March 2006 The promulgation of the Law on Electronic Transactions is considered a turning point for the development of e-commerce in our country This shows that the Vietnamese government has seen the role of e-commerce in economic and social development In addition to promulgating the law, the government also issued the "Master Plan for E-commerce Development for the period 2006-2010" The objectives of the plan are: • 60% of large-scale enterprises conduct business-to-business e-commerce transactions (B2B); • 80% of small and medium enterprises know the utility of e-commerce and conduct e-commerce transactions in the form of business-to-consumer (B2C) or business-to-business (B2B); • 10% of households conduct e-commerce transactions in the form of businessto-consumer (B2C) or consumer-to-consumer (C2C); • Government procurement offers are published on websites of government agencies and e-commerce transactions in government procurement (B2G) After years of promulgation of the law as well as a master plan for e-commerce development, in our country e-commerce has been applied in many fields such as: • In the field of production and services, businesses have deployed e-commerce software in business administration such as accounting management software, enterprise resource management software, sourcing software, and customer database management software • In the field of online buying and selling, the number of exchanges, or virtual markets, has increased rapidly According to a study by the Department of Ecommerce and Information Technology - Ministry of Industry and Trade, by the end of 2007 the number of B2B e-commerce platforms in our country was 40, and B2C was 100 The C2C e-commerce platform is also growing fast Although the number of B2B e-commerce platforms is less than B2C, the revenue growth rate from B2B exchanges is higher GROUP • In the field of financial services and banking, our country has implemented banking activities electronic goods, electronic securities Consumers can access e-banking services through the internet (internet banking) or mobile networks (SMSbanking) • In the field of electronic securities, consumers can query market information and account information, register to open an account, manage investment portfolios, place trading orders as well as receive information about results transaction results • In the field of passenger transport, passenger transport companies, especially railway and air transport, have launched online ticket sales The implementation of electronic ticketing activities in the aviation sector is an indispensable requirement when participating in the International Air Transport Association (IATA) Jetstar Pacific, formerly known as Pacific Airlines, was the first Vietnamese airline that started selling e-tickets in March 2006 • By the end of 2008, Vietnam had deployed several online public services online such as electronic customs declaration, electronic certificate of origin, electronic tax declaration, online public procurement, business registration certificate, investment certificate, establishment license Electronic representative office, online seal registration The implementation of online public services helps the government implement the "one-stop" plan quickly It also creates a transparent and open environment for all public services In addition to the implementation of the above-mentioned online public services, since 2009 Vietnam has also implemented e-government procurement (eprocurement) - online bidding on large units VNPT, EVN, and EVN Hanoi People's Committee • By the end of 2007, more than 30 provinces have approved programs and plan to develop local e-commerce in the period up to 2010 Many plans have been developed with good quality and high feasibility, for example such as the Ho Chi Minh City E-commerce Development Program for the 2008-2010 period or the Bac Ninh Province's Ecommerce Development Plan for the 2007-2010 period GROUP Besides the development of e-commerce in scale Across the country, Vietnam is also very interested in e-commerce cooperation with the world Our country has actively participated in multilateral forums on e-commerce with APEC, UNCITRAL, UN/CEFACT, UNCTAD Bilateral cooperation on e-commerce with several countries like China aims to promote strengthened trade activities between the two countries, cooperation with the United States to improve the capacity of protecting personal data, etc., and several other countries Currently, many large US corporations in the field of information technology and ecommerce such as Microsoft, IBM, Intel, IDG, Yahoo!, Google, and eBay are officially present and active in Vietnam market in Vietnam Scale of Vietnam's e-commerce in 2025 According to the annual report SYNC Southeast Asia by Facebook and consulting firm Bain & Company published on November 25, Vietnam is at the forefront of driving change and seizing development opportunities based on digital transformation in the post-pandemic period of COVID-19 Despite the negative impacts in 2020 due to the COVID-19 pandemic, Vietnam's ecommerce still has strong acceleration steps, becoming one of the fastest-growing ecommerce markets in the region According to the Vietnam E-commerce White Paper, in 2020, the growth rate of e-commerce will reach 18%, the scale will reach 11.8 billion USD, and it is the only country in Southeast Asia with double-digit ecommerce growth According to representatives of large corporations of Google, Temasek, Bain & Company, Vietnam's e-commerce market has a lot of potentials, increasing by 16% and reaching a scale of over 14 billion USD This report also predicts that the average growth rate in the period 2020 - 2025 is 29% and by 2025, Vietnam's e-commerce may surpass the threshold of 52 billion USD and hold the 3rd position in the ASEAN region 2025 in 2025, the growth of 34%, the highest rate in the region 10 GROUP Photo source: VietnamCredit Vietnam is currently one of the leading countries in Southeast Asia when in the first half of 2021 alone, the country has 74% of people using the internet daily and more than million new e-commerce users, according to Google data With strong growth even as traditional shopping has returned to the new normal, Vietnam's e-commerce continues to break through with new trends Experts said that these will be important factors contributing to shaping the market in this industry in 2022 At the same time, according to Lazada Vietnam's e-commerce panorama report and market trends with the theme "E-commerce 2021: Adapting and quickly overcoming obstacles from Covid-19", the booming industries thanks to the shift in consumer habits in the past year are also expected to continue to promote the digital transformation of brands, sellers Social commerce - take advantage of social networking as a potential commercial channel: One of the booming trends from the end of 2021 to the beginning of 2022 in the form of combining e-commerce with social networks Taking advantage of large platforms with a huge number of users every day such as Facebook, Instagram, 30 GROUP Twitter, or most recently TikTok, helps sellers and brands increase engagement with customers According to a survey by Remarkable Commerce, more than 90% of social media users access their favorite platforms using a mobile device 54% use social media to research products and shop Through the activities of commenting, live streaming, shopping, and evaluating products directly on social networking posts with vivid visual images, users can easily find the right quality item On the contrary, the sellers and brands have the opportunity to reach more potential customers, expand customer files, and increase popularity Since then, incentive programs and campaigns have also been more effective A livestream of shopping on the Lazada app Photo source: Lazada Vietnam Besides, making good use of modern technologies and attracting users such as 3D images, 360-degree videos, AI, or live streaming features on social networks can 31 GROUP help sellers and brands make the shopping interface more user-friendly, and closer to the user "Playground" of content creators: According to a Nielsen report, up to 63% of consumers still keep their online shopping habits in the new normal, even if traditional sales activities return to the same Many users said they maintain the habit of buying online because of the advantages of convenience, time savings, deep incentives, and taking place densely all year round Shopping activities combining entertainment – and shoppertainment are also increasingly diverse, helping consumers to both shop and relieve stress after working hours at home Not only small retailers, but large domestic and international brands are also gradually grasping this taste In particular, the Livestream of product introduction and sharing of consumer experiences in the past year has helped many brands reach record sales In the shopping festival "New Year, sale to" launched from January 5-14, 2022, Lazada recorded a 2.5-fold increase in the number of users willing to spend on the Livestream The number of orders sold on the LazLive channel also quadrupled Livestream views increased more than times, indicating that users are very excited about the entertainment content in The Spring Online Festival such as Tet Gala, Loto Sale, Slashing Price At the same time, LazLive also recorded a nearly 8-fold increase in sales compared to the same period last year The above figures partly show that consumers are increasingly enjoying entertainment content on e-commerce and live streams The self-created content series of live streamers, sellers, and brands have also become a powerful assistant of the ecommerce business channel In addition, apart from the live streams, users can share the experience of using the product through the form of reviews, short videos, "unboxing", instructions to use new products, services, technologies on their page This becomes a new form of marketing, which not only helps drive sales and stimulate shopping but also supports users to make more informed choices in spending 32 GROUP 3 Personalization to provide the optimal user experience: In the e-commerce trends predicted to ascend this year, personalizing user experience is considered an important key to helping businesses in this industry, as well as sellers and brand partners, increase customer satisfaction Remarkable Commerce's report shows that up to 80% of users prioritize shopping for products from brands and e-commerce platforms with personalized elements and attractive incentives The conversion rate of orders on online purchase platforms that prioritize personalizing the user experience also increased by 20% According to Lazada Vietnam's e-commerce panorama report and market trends 2022, the purpose of personalization is to enhance the customer's shopping experience With the permission of customers, the information related to the multi-channel shopping experience is aggregated and plays a core role, in helping e-commerce platforms and sellers improve the shopping journey of users The application of AI technology also contributes to this journey more complete when supporting information collection and processing, producing the results closest to the consumer habits and preferences of each user Through the results collected, the e-commerce platform can understand customers better, thereby designing its own experiences to suit the needs, helping to increase the rate of successful order conversion In addition, personalizing the shopping experience also helps brokers grasp spending habits The diversification of payment methods including payment via ewallet, bank card, credit card, or cash on delivery (COD) is also rooted in these personal factors, meeting the needs of all consumers Electronics and consumer goods industry quickly ascends to the throne: The epidemic not only changes consumer habits but also affects sales of existing industries on the e-commerce floor In the fourth wave of Covid-19 in 2021, the FMCG industry has shown strong growth This boom is not only in the number of orders and sales but also reflected in the number of new sellers on the floor Two recent reports by Lazada Vietnam showed that the number of new sellers in the second quarter of 2021 doubled compared to the same period last year This figure still 33 GROUP increased more than 1.5 times in the third quarter of 2021 and maintained growth through the end of the year Many foods, beverage, and restaurant brands in the F&B sector also have an application to guide conversion and business on Lazada in the past year In addition to the attributes of partners such as Nestlé, Vinamilk, new brands such as Star Kombucha also continuously poured sales and orders records The trend of shifting business to e-commerce has led to the highest growth in the number of sellers in this category last year In addition, the fashion, home & lifestyle and electronics industries also showed their attraction with an impressive number of sellers and sales Prominent among the brands that achieved "huge" sales in the shopping festival "New Tet, sale " recently on Lazada is the brand Of Co, founded by Mr Le Duc Duy Mr Duy said that in the last Tet campaign, Ms Cuong’s brand participated in the programs "Deal with Loc Phat 68k price, 88k pronoun", Freeship Max with the result of a significant increase in order conversion rate As a result, sales and orders tripled On the other hand, Mr Pham Minh Hoang's Inuka Store also recorded a doubling of sales during the shopping festival "New Tet, big sale" He said the booth growth rate per month was at 20-30% In large campaigns, this number can be 3-4 times higher than usual According to the data recorded by Lazada Vietnam in 2021, the e-commerce industry in 2022 promises to explode with a series of new trends Lazada representatives said the platform will continue to support partner brands and sellers to conquer new challenges, while gradually optimizing the user experience through promotional campaigns and shopping festivals Foreign investment: The participation is deeper and wider with the strong investment of foreign enterprises in the Vietnamese e-commerce market Specifically, in 2018, Japan's SBI Holdings poured an additional USD 51 million into Sendo; Next, Alibaba also invested another billion USD in Lazada Southeast Asia and SEA increased by 1,200 billion 34 GROUP VND, equivalent to 50 million USD in charter capital for Shopee Vietnam The fact that large foreign enterprises pour capital into the market shows the attraction and development potential of Vietnam's e-commerce market In addition, the fact that large foreign enterprises invest in the e-commerce market is also creating competition for market share between domestic enterprises and foreign enterprises Logistics services: In the growth of the e-commerce market over the past time, there has been a great contribution from the strong development of logistics services, last-mile delivery, and order fulfillment Leading e-commerce companies in Vietnam are sprinting to improve the delivery speed with various strategies to enhance customer experience such as DHL commits to same-day delivery, Lazada opens fire service speed, Tiki with "declaration" of delivery within hours, Shopee "commits" to delivery in hours with Shopee Express service According to a survey by the E-commerce Association, at present, Vietnam has more than 50 large and small fast delivery units This number has increased tenfold over the past five years Besides, the trend of online payment also has strong growth In 2019, the payment method that online shoppers prefer to choose the highest is the COD (pay for delivery) method, accounting for 86%; Domestic ATM cards accounted for 39% and debit credit cards accounted for 17% G Resources and equipment needed for an E-Commerce startup: As an online business, your startup will be relatively low-cost and won't have any upfront costs; your most important resource will be your website As a bare minimum, you’ll also need to pay for hosting, web development, maintenance, and inventory The average costs for eCommerce stores include: • Professionally built E-Commerce website - $5000 - $10000 • Domain name - $2 - $20 per year • Hosting - $300 per month Hiring a team and finding vendors: One of the most attractive aspects of starting an eCommerce company is that it needs very few people to get the business idea off of the ground Although you can 35 GROUP employ extra staff to help manage the site, pack products, and ship orders, it’s equally possible to manage these aspects of the business yourself a If you decide you want to build an in-house team, you can expect to pay: • Web developer :7.000.000 10.000.000vnd/month • Ecommerce manager: 15.000.000 - 30.000.000vnd/month • Accounting: 7.000.000 – 8.000.000vnd/month • Marketing: 8.000.000 -15.000.000vnd/month Another important consideration is the cost of your inventory Whether you’re making the products yourself or ordering them from suppliers, you’ll need to find vendors that offer high-quality products at a reasonable price Obtaining insurance and permits for an eCommerce startup: Even though you’re selling your products online and don’t have a physical store, you’ll still need several licenses and permits before you can begin trading These can include: • Business license • Employer Identification Number • Professional licenses specific to your industry In most cases, you’ll need to pay a fee to obtain the necessary paperwork Contact your local authority to find out the rates in your state Choosing an integrated payment solution: As a new eCommerce business, you need to select a payment system that’s fast, secure, and easy to use The cost of a comprehensive point-of-sale system can vary, with some companies taking a flat fee for the service they offer and others charging per transaction Shop around to find a payment processor that meets your needs and that gives you scope to grow in the future For more information on how payment processing works, read our Credit Card Payment Processing 101 Guide 36 GROUP Marketing: Very few shoppers are going to discover your store by accident online Search engines use algorithms to rank your website, and where to display it on their results pages, therefore marketing is an incredibly important part of an eCommerce site Marketing costs can vary, but on average, eCommerce businesses spend between 7% and 12% of their total revenue on marketing This money goes towards ad campaigns, social media campaigns, and email campaigns that are designed to boost brand awareness and drive traffic to your online marketplace IN CONCLUSION: E-commerce is currently a global trend, attracting great interest from traditional, multinational businesses It is considered a fertile ground for young businesses to develop, and in Vietnam, e-commerce still occupies most of the spotlight in the economic and commercial sectors because it possesses a large market, open business opportunities, and huge potential Moreover, Vietnam is rated as one of the fastestgrowing e-commerce markets in Southeast Asia, behind only Indonesia, with the highest proportion of online shoppers in Vietnam (SEA) at 41% It can be seen that ecommerce is the main catalyst to help our economy close the gap, and even integrate with the world economy Data collected from sources:  https://www.globaldata.com/vietnams-e-commerce-market-reach-us13-1bn2020-says-globaldata  https://www.vietdata.vn/thuong-mai-dien-tu-viet-nam-1262137008(Nguồn: Cục Thương mại điện tử Việt Nam, iprice.vn,)  Thống kê Mua sắm trực tuyến, Thương mại điện tử Internet (2022) (webhostingsecretrevealed.net)  Theo Global web Index, 2017  Cục Thương mại điện tử Kinh tế số (2019), Bộ Công Thương, Báo cáo số thương mại điện tử 2019 37 GROUP  Hiệp hội Thương mại điện tử Việt Nam (2019), Báo cáo số thương mại điện tử 2019, Sách trắng thương mại điện tử 2019  Bộ Công Thương - Cục Thương mại điện tử Kinh tế số (2019) Sách trắng Thương mại điện tử Việt Nam 2019  Hiệp hội Thương mại điện tử Việt Nam (2019) Báo cáo số Thương mại điện tử 2019  Google Temasek (2018) THE END 38 GROUP 39 GROUP ... businesses, despite fierce competition 3.3 Fierce competition between Vietnam e- commerce and foreign e- commerce: Recently, many Vietnamese enterprises have had to withdraw from the e- commerce market. .. limited with the percentage of online businesses decreasing C_ E- COMMERCE MARKET TRENDS 17 GROUP ECommerce Concept: E- commerce or e- commerce refers to the form of business transactions conducted... Competitors Vietnam' s e- commerce sector is witnessing a new wave of competition, as more businesses enter the market, old businesses deploy more services 3.1 Rookies" massively entered the market: Since