Khóa luận tốt nghiệp: Current situation of e-commerce applications for small and medium-sized enterprises in Hanoi city

GRADUATION THESISCURRENT SITUATION OF E-COMMERCE APPLICATIONS FOR SMALL AND MEDIUM-SIZED ENTERPRISES IN HANOI CITY STUDENT : Lưu Đức MạnhSTUDENT CODE : 20051099 CLASS : QH2020E KT CLC 1

GRADUATION THESIS

CURRENT SITUATION OF E-COMMERCE APPLICATIONS

FOR SMALL AND MEDIUM-SIZED ENTERPRISES IN HANOI CITY

STUDENT : Lưu Đức MạnhSTUDENT CODE : 20051099

CLASS : QH2020E KT CLC 1

Hanoi, October 2023

and Business, VNU,

My name is Luu Duc Manh My final essay today marks the end of a long

journey at the University of Economics and Business and is the product of

months of effort, research and discovery In this process, I have been guidedand supported by many people, and I would like to take this opportunity to

express my deep gratitude for the help

First of all, I would like to express my deep gratitude to the Board of Deansand teachers in the Department of Political Economy who have created

conditions for me to have the opportunity to carry out the Early GraduationThesis This credit to the teachers has opened up many opportunities for me todevelop and improve myself more in the future

Secondly, I would like to express my deep gratitude to my instructor, Mr

Hoang Ngoc Quang, for his dedication and extensive knowledge, who took

me through every step of the research and writing process His support played

an important role in the success of this essay I couldn’t finish it without hisenthusiastic support

I would also like to express my gratitude to my family, friends and loved oneswho have always supported and encouraged me during my essay Their

support has been a great motivation to help me overcome difficulties

Finally, I would like to express my gratitude to everyone who read this essay

It is hoped that this essay will contribute a small part to my field of study andenrich my knowledge in this field

Many thanks,Luu Duc Manh

LIST OF CHARTS

INTRODUCTION

1 The urgency of the study

2 The purpose of the study

3 The object and scope of the study

4 Methodology

5 Structure of the study

CHAPTER I: RESEARCH LITERATURE REVIEW &

THEORETICAL BASIS

1 Literature review

2 Research gap

3 Theoretical basis

3.1 The E-commerce concept and fundamentals

3.3 E-commerce application activities in SMEs

3.4 The Benefits of E-commerce to Small and Medium-sized

Enterprises

CHAPTER II: THE CURRENT SITUATION AND POLICIES TO

SUPPORT E-COMMERCE IN VIETNAM

1 Current situation of e-commerce applications in Vietnam

1.1 Infrastructure and Human Resource Current Situation

1.2 Online sales and marketing current situation

2 Some policies to support e-commerce applications in Vietnam

5 The contributions of E-commerce applications in SMEs in Hanoi City515.1 The current situation of SMEs using websites and software in

business in Hanoi 535.2 The current situation of Online Marketing applications of SMEs in

Hanoi 56

6 Analyze opportunities and barriers to E-Commerce Applications in

SMES based on research findings 586.1 Opportunities from e-commerce applications to SMEs in Hanoi 586.2 Barriers to E-Commerce Applications in SMEs 59CHAPTER III: RECOMMENDATIONS AND SOLUTIONS 63

1 The future e-commerce landscape 63

2 Solutions to enhance the application of e-commerce in SMEs 642.1 Training and developing digital skills 642.2 Accelerate the development of SME support programs with Centralassistance 652.3 Complete the legal framework for e-commerce development 65

2.4 Call for financial support through loans 66

2.5 Call for investment in infrastructure 66

2.6 Encourage participation in e-commerce markets 67

2.7 Foster Cooperative Projects 672.8 Encourage secure online payment solutions 682.9 Enhance the quality of products and services 68

No Acronyms Definition

01 WTO World Trade Organization

02 MSDP Mobile Subscriber Data Protection

03 Information and Communication

1I VECOM Vietnam E-commerce Association

12 SMBs Small and Medium-sized Businesses

13 GDP Gross Domestic Product

14 SEO Search Engine Optimization

15 loT Internet of Things

VNNIC Center

18 Vietnam Chamber of Commerce and

VCCI Industry

19 CRM Customer Relationship Management

20 SCM Supply Chain Management

21 ERP Enterprise Resource Planning

2 AI Artificial Intelligence

23 HTTPS Hypertext Transfer Protocol Secure

No Charts

61 |A chart of E-commerce definition including MSDP

02 |Illustration of the Types of E-commerce based on their

characteristics

03 |Chart of classification criteria for small and medium-sized

enterprises based on Decree No 80/2021/ND-CP of the

Government

04 |The chart of the percentage of using Work-supporting tools over

the years

05 |The chart of priority towards recruiting IT & e-commerce

skilled/trained staff by business sector

06 [The chart of assessment about the importance of investment in IT

& e-commerce infrastructure

07 |The chart of the percentage of enterprises having websites over the

years.

08 |The chart of the percentage of doing business by enterprises on

social networks over the years

09 The chart of the percentage of enterprises participating in

e-commerce floors over the years

10 [The chart of the percentage of websites with mobile version over

the years

12 [The chart of the percentage of businesses building sales websites

according to the survey

13 |The chart of the proportion of enterprises participating in the

business on e-commerce trading floors

14 |Output of descriptive statistics after processing data from the

survey by SPSS

15 |A comparison chart of the number of new businesses operating in

Hanoi in the period of 2020 - 2023

16 |A comparison chart of newly registered capital of enterprises in

Hanoi in the period of 2020 - 2023

17 |A chart of the proportion of industry structure of Small and

Medium-sized Enterprises in Hanoi nowadays

18 A chart of the proportion of usage of management software of

SMEs in Hanoi 2022

19 |The chart of the percentage of SMEs in Hanoi using e-commerce

Iwebsites/applications for export and import activities in 2022

20 [The chart of assessment about the efficiency of investment in IT

and E-commerce infrastructure to the business performance of

Hanoi’s SMEs in 2022

21 [The chart of the percentage of online marketing tools used by SMEs|

lin Hanoi by 2023

Medium-sized Enterprises (SMEs) is a key engine for the economic

development of nations (The Organization for Economic Co-operation andDevelopment, 2017) Recent investigations within the realm of internationalentrepreneurship also focus on the notion that applications of e-commerce

hold promise for fostering the growth of small and medium-sized enterprises(SMEs) (Arto Ojala et al 2018)

The exponential pace of digital transformation to the point where

modern e-commerce today is creating significant changes in the economic

environment, impacting all sectors of the industry (Nguyen Hoang Tien,

2022) E-commerce has become an indispensable part of global retail (Koenvan Gelder, 2023)

The development of e-commerce not only helps business activities

smoothly but also provides many new values and meets new needs of

businesses and consumers Therefore, every country in the world is interested

in developing e-commerce Some of the roles of e-commerce include:

changing the nature of each country's economy and the global economy,

increasing knowledge in the economy, and opening up opportunities to

promote the advantages of the following developed countries so that they cancatch up, even surpass previous countries, shorten the gap in knowledge

levels between developed countries and developing countries

The integration of e-commerce platforms by businesses in Hanoi has

been aligned with the prevailing trend This has allowed them to access both

domestic and international customer bases, leading to an expansion of theirexport markets Ta Dung Tri, Deputy Head of the Trade Management Office

under the Hanoi Department of Industry and Trade, emphasized that this

adoption of e-commerce has played a pivotal role in driving economic growthand fostering local development (Ngoc Mai, 2023)

There is no doubt that Hanoi city is transforming at an incredible speed,taking into account the numerous research statistics coming from different

times Over the past several years there has been massive progress concerningthe E-commerce industry such as increased market and changing customer

trends This is the opportunity that companies should take advantage of so

that they can market their products through this channel while keeping

production or operational expenses down as compared to their peers Thoughdoing so in the context of our current digital environment involves doubts anddifficulties, it is still necessary Therefore, the status of e-commerce facilitiesfor small businesses in Hanoi city needs to be examined to establish the issuesand prospects of these small businesses This research tries to establish the

relationship between e-commerce and small and medium-sized enterprises in

Hanoi City and offer feasible guidelines for businessmen, the government,

and other stakeholders Such enterprises will then receive the data necessaryfor strengthening the economy and long-term life of the city

2 The purpose of the study

This research aims to provide a detailed and thorough evaluation of theE-commerce applications of SMEs in Hanoi city On that basis, propose some

perfect solutions to promote E-commerce applications at these businesses

3 The object and scope of the study

Object: E-commerce applications

Scope: Small and Medium-sized enterprises

Time: from 2020 to 2023

Location: Hanoi city

4 Methodology

This study will be conducted primarily through the study of available

literature and references to gather information from reliable sources, includingprevious studies, market reports, and documents related to e-commerce in the

SME sector in Vietnam and especially in Hanoi This is an inevitable method

and has appeared in all research papers so far By understanding the

information, data and research methods of these references, we can bring outthe research gap that this topic can explore further, and then, we will better

understand the current situation, trends and challenges that SMEs in Hanoi arefacing

In addition, the paper will also use descriptive statistical methods to

summarize and present data collected from conducted surveys The study willuse measures such as average, variance, and frequency to describe the data

and give an overview of the e-commerce situation for small and

medium-sized enterprises in Hanoi

The data for this research was collected from Small and Medium-sizedEnterprises in the province of Hanoi City, operating in the retail sector in

different sectors:

e@ Wholesale and retail;

e Processing and manufacturing industries;

e Information and communication technology;

e Construction;

e Transportation, warehousing;

e Agriculture, forestry and fisheries;

e Education and training;

e Accommodation and food services;

e Financial, banking and insurance activities;

e Real estate business;

e Administrative activities and support services

Business representatives responding to the survey are leaders and

managers of the enterprise (from the level of Deputy Head of department and

equivalent or higher)

After the trial interviews, the questionnaire information was revised toensure that people could read and understand the questionnaire and answerthe information correctly

The data collection process is conducted online through direct phone

calling and through online Google Forms Data was cleaned and digitized in

Excel before processing with SPSS The questionnaire is self-constructed and

includes:

® Quantity: 18 questions

® The questions focused on SMEs's own views on the status of

e-commerce adoption for SMEs in Hanoi, by assessing the agreement

of the surveyed businesses about the opportunities and challenges forthis group of businesses

e Scale: The research paper uses a 5-level Likert scale, where Level 1 is

Very Dissatisfied, Level 2 is Dissatisfied, Level 3 is Normal, Level 4 isSatisfied and Level 5 is Very Satisfied

5 Structure of the study

CHAPTER I: RESEARCH LITERATURE REVIEW & THEORETICAL

BASIS

CHAPTER II: THE CURRENT SITUATION AND POLICIES TO

SUPPORT E-COMMERCE IN VIETNAM

CHAPTER III: RECOMMENDATIONS AND SOLUTIONS

CHAPTER I: RESEARCH LITERATURE REVIEW &

THEORETICAL BASIS

I Literature review

This section will review the previous research on SMEs in Vietnam

concerning their e-commerce use and prospects Consequently, it provides asolid foundation for formulating some recommendations and proposals thatwill be useful in addressing the challenges related to e-commerce applications

in small and medium-sized enterprises in Hanoi

A very close study of the main topic was conducted by Phung The Hung,and Ngo Quang Truong in 2022 which has a quite similar study filed when

focusing on the current situation and application of e-commerce in retail

enterprises in Vietnam While possessing a lot of practical valuable

information about applying E-commerce to business operations, and at the

same time provides a detailed view of data collection and processing methods,

it has not delved into researching the applications in SMEs but rather on

helping retail businesses better understand how e-commerce can help them

improve their business operations and generate more profits However, it stillcontributed a lot to the research by bringing about a considerable method forstudying the status of the E-commerce application process

Another study published by Van Anh Thi Nguyen et al in 2023 has

provided information on factors affecting the digital transformation of SMEs

in Hanoi, as well as support policies and programs from the government and

the city of Hanoi to help SMEs adapt to digital change Therefore, the

research topic can better understand the current situation of e-commerce

applications for small and medium-sized enterprises in Hanoi and offer

appropriate solutions to help these businesses develop e-commerce

A study that investigated the benefits and barriers of SMEs in

e-commerce, published by two Vietnamese scholars, Huu Phuoc Dai Nguyenand Thai Binh Dang, has also shown statistics on electronic commerce

concerning the adoption rate among Vietnamese SMEs by the year 2017 Itoffers information on why companies would want to adopt e-commerce, whatthey stand to benefit from it and how it can be effectively implemented to

improve business operations This research which focuses on a smaller extentSMEs in Hanoi also benefited quite a lot from the research achievements ofthese 2 Vietnamese scholars

Another reference that has direct significance to this research paper such

as that of Dao Thi Thu Huong (2014) mainly focuses on the E-commerce

situation in Da Nang and an overview of the e-commerce market in Vietnam,thus creating a gap in specific information about the situation in Hanoi It isalso important to consider the scope of the study as the business and legal

situation can vary from one locality to another

Another very practical document by Amir Sedighi and Behroz Sirang(2018) has also focused on the impact of E-commerce on business

performance through factors such as "financial performance, internal process,customers, growth and learning" However, this document does not focus onthe specific situation of small and medium-sized enterprises, nor does it have

a much larger scope of research

Another research article published in the Journal of Industry and Trade

was quite a long time ago (2010) but also provided detailed information aboutspecific factors affecting the e-commerce application process in another

Central city, Can Tho City However, we can see the research gap in terms ofgeographical scope, regional characteristics, and most prominently, the

difference in business structure while Can Tho can strongly focus on some

specific business sectors such as agriculture, fisheries, or food processing,

Hanoi is an economic center of the country, possessing a great diversity of

business sectors, including industry, services, information technology,

education, and many others

In addition, Decree No 80/2021/ND-CP of the Government about

"Detailing and guiding the implementation of several articles of the Law onSupport for Small and Medium-sized Enterprises" has also provided a lot ofinformation about legal support for small and medium-sized enterprises in

Hanoi and from there, the research paper can investigate more specific

impacts of these regulations on E-commerce application in SMEs

2 Research gap

As outlined in the above sections, this study aims to provide numerous ofhow small and medium-sized enterprises (SMEs) can leverage eCommerce totheir advantage Yet, the existing literature offers limited insights into the

potential influence of the utilization of e-commerce on SMEs, especially in abig city like Ha Noi This is the motivation behind my study, which aims toinvestigate how E-commerce adoption affects the performance and

competitiveness of SMEs in terms of sales, revenue, and market reach

In the process of studying documents related to the application of

e-commerce in small and medium-sized enterprises (SMEs) in Vietnam, it

appears there was some study conducted before However, this is still with

limited perspectives hence opening a significant scope for further research

Some areas that have not properly been researched include the emphasis

on the capital city i.e., Hanoi, the key economic center in Vietnam We need

to know the nature of these issues in Hanoi to understand what it takes to

introduce e-commerce into this particular setting There is also a need to study

SMEs, SMEs and special attention to e-commerce for some important groups

of Vietnam’s economy

Reviewing past research, we notice that researchers have written

extensively about the state of affairs in SMEs in Hanoi concerning

e-commerce applications; thus, the subject under study is not new The studydoes not offer any detailed examination of what selling via their sites, as well

as large e-commerce platforms, means for the success and competitiveness offirms The two aforementioned areas to be included in this study are namely;determining whether or not e-commerce increases sales figures, revenue, andmarket coverage

3 Theoretical basis

3.1 The E-commerce concept and fundamentals

3.1.1 Definition of E-commerce

E-commerce, in essence, is a very big idea with several names

E-business, online trade or simply called, e-commerce, refers to the buyingand selling of goods and services, or the transmitting of funds or data, over anelectronic network, primarily the internet (Ben Lutkevich et al.2023) Whilemany global organizations attempted to define e-commerce, at present, there

is only one such definition accepted by everyone at the world level

According to the World Trade Organization's (WTO) brief, electroniccommerce, or e-commerce, is defined as the "production, distribution,

marketing, sale or delivery of goods and services by electronic means" Ane-commerce transaction can be between enterprises, households, individuals,governments, and other public or private organizations

According to the Government's Decree No 52/2013/ND-CP on

e-commerce, "E-commerce activities are the conduct of part or the whole

process of commercial activities by electronic means connected to the

Internet, mobile telecommunications networks or other open networks"

More broadly speaking, we can identify these e-commerce definitions intwo classes E-commerce is regarded by its first group in a restricted light.Accordingly, e-commerce means that business firms employ electronic

channels and the Internet to market their wares Such transactions may be

taking place among different businesses on websites like Alibaba or betweencompanies and private customers on platforms such as Shopee, Tiki and

Lazada This involves people dealing among themselves on sites such as

eBay

E-commerce is viewed differently by the other group E-commerce doesnot simply mean buying and selling in this perspective but rather all businessactivities conducted electronically According to the United Nations

Conference on Trade and Development, this includes the four componentsencapsulated in the acronym MSDP:

® M for Marketing: An advertising, which takes place through the site

and other internet marketing

e S for Sale: E-commerce that includes a site with transaction support

and enforced contract signing mechanism

e D for Delivery which is about distributing digital products through theInternet

e P for Payment which includes Internet payment or banking institutions.

MSDP : the Horizontal Model of E-commerce

Necessary tools

——————— > Website/Brochureware

—— E-com enabled website

———” Digital detivery (c.g MP3)

‘or link w/ suppliers

> E-payment or link with

third party (credit card)

Fig 01: A chart of E-commerce definition including MSDP

In the short term, although different meanings of e-commerce are

available across the world, it can generally be summed up as a method or

means for carrying out commercial transactions or exchanging business data

It happens electronically across the Internet, between enterprises and

corporations, consumers and government entities, and government to

enterprises

3.1.2 Features of E-commerce

The growth of e-commerce is primarily dependent upon the boost in ICT(Information Commercial Technology) infrastructure (Vinod Kumar et al

2014) E-commerce is the application of information technology in all

commercial activities, which is why it is one of the important factors to

support the success of a product from a company (Winwin, Yadiati &;

Meiryani, 2019) The information technology industry sees e-commerce

activities as applications related to commercial transactions In contrast, thedevelopment of e-commerce has also promoted and opened up many areas of

ICT such as specialized hardware and software for e-commerce applications,payment services for e-commerce, etc.

In terms of form, e-commerce transactions are completely online

Traditional transactions are limited in terms of how many people can be

reached at a single time Online transactions, which can be global in reach,

can provide content that is both complex and rich, overcoming the traditionaltrade-off between reach and richness (Al-Amin Islam, 2019)

In addition, in e-commerce activities, there must be a minimum of two orthree participants, businesses participate in online marketplaces, which

process third-party business-to-consumer or consumer-to-consumer sales

(Martin Kiitz, 2016) Accordingly, there are parties to the transaction and mayhave the participation of third parties, who create the environment for

e-commerce transactions

As far as the scope of activity is concerned, the marketplace in

e-commerce is a borderless market Online marketing channels are openingdoors for local retailers to break international borders (Adam Weiss, 2015) Atthe same time, parties involved in e-commerce activities can conduct

transactions 24 hours / 7 days for 365 consecutive days wherever there is a

telecommunications network and electronic means connected to these

networks

3.1.3 E-Commerce Business Types

There are six basic types of electronic commerce as shown in the below

figure:

This refers to the fact that enterprises sell products and services to

individual consumers (Jian Chen et al.2019)

It’s the form of the electronic business model that regulates the

relationship between the company and the final consumer and consists mostly

of direct selling products and/or services between companies and final

consumers, through the Internet without intermediaries, namely in the

purchase relationship, in the whole process since the attraction of customers,and even the supply of products (Vasco Santos et al 2022).

3.1.3.3 Consumer-to-consumer (C2C)

In this process, consumers sell directly to other consumers using the

Internet and web technologies Individuals sell a wide variety of

services/products on the web or through auction sites such as eBay.com

(Sayel M Fayyad et al.2020)

3.1.3.4 Consumer-to-business (C2B)

It implies that individual consumers may, indeed, play a key role in

supply chains, inputting and putting forward certain supplies to a supply chainotherwise dominated by business firms (Jaakko Aspara, 2021)

It’s also stated that C2B e-commerce serves to foster a

consumer-business relationship, in which the consumer gives feedback

regarding the company’s activity, in order to create value for the company

(Vasco Santos et al 2022)

3.1.3.5 Business-to-administration (B2A)

It’s defined as business-to-government electronic trade(Al-Lami&

Alnoor, 2021) Usually, the entity will use the program to manage its services,such as processing citizens’ requests or maintaining official records (Maisha

R, 2023)

3.1.3.6 Consumer-to-administration (C2A)

Consumer-to-administration (C2A) e-commerce encompasses all

electronic transactions between individuals and public administration (Adam

Roger, 2021) It consists of any form of e-commerce that involves

administration dealing with distance learning, exchange of information withinstitutions of education, social security payment or distribution, e-filing tax

returns, and making payments to the Internal Revenue Service (Marc Galli,

2021)

3.2 The SMEs’s Definition and Economic Contributions

3.2.1 Definition of Small and Medium-sized Enterprises (SMEs)

Daniel Liberto (2023) defined “Small and midsize enterprises (SMEs)are businesses that maintain revenues, assets, or a number of employees

below a certain threshold” Clarifying, the CFI Team (2020) has also written

“The traits include annual sales, the number of employees, the number of

assets owned by the company, market capitalization, or any combination ofthese features”

From these definitions, it can be said that Small and Medium-sized

Enterprises (SMEs), also known as Small and Medium-sized Businesses

(SMBs), are businesses characterized by maintaining revenues, assets, or thenumber of employees below specific thresholds The classification of an SMEtypically depends on factors such as annual sales, the number of employees,the value of assets, market capitalization, or a combination of these features.Each country may have its own criteria and definitions for what constitutes anSME

In essence, SMEs are generally categorized based on the number of

workers employed, sales turnover, and capital employed, making them

distinct from larger corporations and multinational companies

As for the specific case of Vietnam, the Government has also set out

specific criteria to identify SMEs through Decree No 80/2021/ND-CP of the

Government on "Detailing and guiding the implementation of several articles

of the Law on Support for Small and Medium-sized Enterprises":

(1) Small enterprises in the fields of agriculture, forestry, fishery industry,and construction have an average annual number of employees

participating in social insurance not exceeding 100 people and the total

revenue of the year not exceeding VND 50 billion or total capital notexceeding VND 20 billion.

(2)Small enterprises in the field of trade and services with an averageannual number of employees participating in social insurance notexceeding 50 people and total revenue of the year not exceeding VND

100 billion or total capital not exceeding VND 50 billion

(3) Medium-sized enterprises in the fields of agriculture, forestry, fisheryindustry, and construction have an average annual number of

employees participating in social insurance not exceeding 200 peopleand total revenue of the year not exceeding VND 200 billion or totalcapital not exceeding VND 100 billion, but not a regulated small

business

(4) Medium-sized enterprises in the field of trade and services have anaverage annual number of employees participating in social insurancenot exceeding 100 people and total revenue of the year not exceedingVND 300 billion or total capital not exceeding VND 100 billion

Small-sized enterprises Medium-sized enterprises

Number of Total capital Number of Total capitalemployees (Billion VND) | employees | (Billion VND)

Fig 03: Chart of classification criteria for small and medium-sized

enterprises based on Decree No 80/2021/ND-CP of the Government

3.2.2 SMEs’s Economic Contributions

“SMEs are a noteworthy driver of economic development, and are vital

to most economies across the world, particularly in developing and emergingnations”, said Faiza Manzoor et al.(2021) According to Ceren Erdin and

Gokhan Ozkaya (2020), the contribution of SMEs to the economy is generallygathered under five main topics: employment creation; fast adaptation to newsituations with its flexibility feature; encouraging entrepreneurship; productdifferentiation through boutique production; and working as a sub-industry inlarge enterprises Among all these features, the most important feature of

SMEs is their contribution to employment In general, SMEs using

labor-intensive production techniques are extremely important in terms of

social as well as economically

SMEs therefore play a vital role in the development of the economy bycontributing to GDP, as they have been a major source of job creation and

output growth in both developing and developed economies (Qiuyan Fan,

2020)

3.3 E-commerce application activities in SMEs

The application of e-commerce in small and medium-sized enterprises istruly a revolution in the business field It can be divided into two main parts:

selling directly through the business's website and selling through various

e-commerce sites (marketplaces)

3.3.1 Business’s website sales

3.3.1.1 Building and managing websites

An e-commerce website built by a company is a website specifically

designed and developed to facilitate online buying and selling of products or

services It allows consumers to buy and sell products and services online

(Andrew Bloomenthal, 2023) These websites are created and managed bybusinesses to enable customers to browse, select, purchase, and pay for itemsonline, often offering a wide range of products or services for sale

Products sold on e-commerce websites can be Digital products such assoftware, videos, music, ebooks, and images ; Physical products such ascostumes, accessories, household appliances, and books ; or Services:

insurance, movie tickets, air tickets In Vietnam, sales websites and

e-commerce websites are often associated with physical product groups

Specifically, the process of building a sales website for a business in

Vietnam includes many steps with the participation of the technical

departments of the enterprise itself, especially the web design and

development department, and programmers

First, businesses need to determine their goals and who they want to

target through the website and research the market and competitors to

understand the industry and trends They will need to identify the product orservice that the business will sell online After that, the business will choosethe appropriate domain name, related to the content or business area of thewebsite, make sure to register it through a reputable domain name provider,and choose a web hosting service to place the website on the internet

Next, the businesses’s web design team will use web design software to

create an intuitive, easy-to-use interface for users, at the same time as the

increasing demand of users to use and access websites from many differenttypes of devices, businesses need to ensure a mobile-friendly interface

(responsive design) In addition, they also need to choose a suitable platform

or framework for website development, such as WordPress, Magento, or

Shopify or build their own, thereby customizing and integrating necessary

features such as shopping cart, checkout, product management, and social

interaction

Once a basic website is in place, businesses continue to create databases

to store information about products, orders, and customer information Theyalso create quality content for the website, including product descriptions,

images, videos, and blog posts related to their line of business The better thewebsite design and content are, the higher the rate of site being shown on

search engine result pages (Aniebiet Inyang Ntui, 2021) Finally, the businessperforms website tests to ensure that it works properly before launching Aftertesting, businesses can start deploying the website and launching it to the

public

In the process of using the website, businesses also need to constantlyupdate and manage the content, products, and services on the website, use

web analytics tools to evaluate website performance, adjust marketing

strategies based on customer feedback, and improve the site based on

feedback Besides, businesses must also ensure that their website is protectedfrom cybersecurity threats and security vulnerabilities

3.3.1.2 Website optimization

In today's interconnected world, individuals frequently turn to search

engines, particularly Google, to swiftly and effectively obtain information on

a wide range of subjects And for businesses using e-commerce websites,

website optimization or Search Engine Optimization (SEO) plays a pivotal

role in this process, serving as a digital marketing technique designed to

enhance a website's visibility and accessibility (Agus Setiawan et al, 2020) It

achieves this by combining various elements, including website testing,

in-depth analytics, user-friendly design and usability, and adherence to

established online marketing best practices (Rich Page, 2012) Through SEO,

websites are not only made more discoverable but are also optimized to

deliver an enhanced user experience, ensuring that businesses and individualscan effectively reach and engage their target audiences in the ever-evolvingdigital landscape

3.1.3 Online marketing:

Online marketing is a critical activity for small and medium-sized

enterprises (SMEs) in Hanoi, Vietnam, that operate E-commerce applications

It has paved the way for many small-scale businesses to reach every corner ofthe geographic locations that they could not reach physically (Dsouza &

Panakaje, 2023) It happened as a result of changes in business functions due

to the development of the Internet Websites, social media, email, search

engine optimization (SEO), and digital advertising are just a few examples ofthe different channels that make up online marketing (Noorain Mohd Nordin

et al, 2019) Failure to build on the business’s powerful online presence canresult in fewer clients, which is due to more people now using the internet togather information about the things they want to buy or where to transact

goods and services

3.3.1.4 Logistics and Delivery:

The 4th Industrial Revolution progressed extremely quickly with the

development of breakthrough technologies that made trades in goods, servicesand modes of transportation and distribution increasingly vibrant and flexible,

innovative This context opens up many opportunities but also brings many

challenges for businesses, especially small and medium-sized enterprises

(SMEs) in logistics and delivery activities, especially in the face of pressure

to innovate, improve and improve efficiency to compete with other businesses

in the new era Logistics and delivery activities are integral components of theoperations of small and medium-sized enterprises (SMEs) engaged in

E-commerce applications, especially in Hanoi, Vietnam Ensuring efficientand reliable delivery of products is essential to meet customer expectationsand compete effectively in the E-commerce market.

In particular, efficient warehouse management of SMEs ensures that

products are always ready for delivery while working with a reliable logisticspartner helps ensure on-time and efficient delivery Next, project managementand optimization of the final delivery process for customers play an importantrole in ensuring all orders are processed accurately and quickly For Hanoi,the management of regional characteristics is also an important aspect due toits special geographical and population characteristics This may include thedistribution of local partners Besides, technology also plays an important role

in optimizing logistics and delivery operations According to Warehousing

Express, integrating innovative technologies like IoT, AI, and automation

helps streamline operations, enhance efficiency, and provide accurate

real-time data, enabling businesses to make informed decisions and adapt to

evolving market demands seamlessly and quickly But for SMEs, who are

already dealing with profit margins, the application of these types of

technologies must be accompanied by efficient logistics planning, which iscrucial to keep costs down

Another point to note when talking about logistics and delivery activities

is that between SMEs there are always differences in the industry structureand the type of products that they trade, so logistics and delivery activities

will also be different For example, a light and non-perishable product such asclothing may use a faster and cheaper delivery service than a fragile or

high-value product such as a cell phone or jewelry, or different industry such

as the food industry need to follow regulations on food hygiene and supplychain and must have strict procedures to ensure that food reaches consumers

still fresh and safe; the fashion industry, on the other hand, requires quality

checks, packaging fashion in an appropriate way and handling returns

3.3.2 Marketplace Sales

In general, E-commerce application activities in SMEs of Business's

website sales and marketplace sales do not differ much, when they both

include activities related to optimization, online marketing, logistics and

delivery

The first is the difference in the form of website management and

control With businesses that build their own websites, there is complete

control and management and it is possible to create a unique shopping

experience and manage the entire process from website to payment As for theform on e-commerce sites, businesses have a lower level of management

They need to follow the rules and look and feel of the e-commerce site,

without absolute control over the customer experience

Next, there are differences between the two forms of finding and

attracting customers For businesses to build their own websites to sell, theywill need to invest more in finding and attracting customers to their websites,

which requires large marketing costs and time to build a brand and loyal

customer base Meanwhile, on e-commerce sites, customers are already

available and often search for the product or service they need, which in turncan help businesses reach customers quickly without the need for independentadvertising and marketing

Moreover, companies who develop their own website could also incur

costs that involve improving the website These other expenses may include

online marketing and payment processing fees On the other hand, in

e-commerce sites organizations will most times, only be required to share

some percentage of revenue with the site host or pay a usage fee to them.

Nevertheless, they do not have to concern themselves with additional costssuch as site hosting and publicity

Finally, businesses need to develop and integrate features on their

website as they build and develop themselves, including warehouse

management systems, order management systems, and payment systems

Meanwhile, on e-commerce sites, there are basic features available for

warehouse management, orders, and payments, businesses only need to

customize based on the platform already available according to their needs

3.4 The Benefits of E-commerce to Small and Medium-sized Enterprises

The first benefit of E-commerce to Small and Medium-sized Enterprises

is the increase in revenue Small business owners do not have to solely

depend on foot traffic and can sell their products and services across the

world They can capture new audiences that they wouldn’t be able to reachotherwise ( Paul Anderson, 2020) What used to be a single physical businesslocated in a geographical area has now become a borderless business

including public and international requests By using the internet, SMEs canboth acquire and interpret external knowledge (Williams, Du, & Zhang,

2020), thereby providing cheaper access to a greater variety of foreign

markets (Williams et al., 2020; Zahra, 2020)

Coming second in the list of all e-commerce advantages is the

operational cost savings, which is especially relevant for the smaller number

of employees of SMEs It’s a cost-effective way to streamline business

processes in smaller organizations, allowing business owners to interact

directly with their partners and customers (Raziel Bravo et al 2022)

E-commerce has also revolutionized the way consumers purchase goodsand services The pull-type processing allows for products and services to becustomized to the client’s conditions (Dr Ravi Kant Modi, 2022) In addition,

by reducing the amount of mundane paperwork and enforcing proper integritymechanisms, organizations can improve their internal efficiency (Kartiwi et

al 2018)

Another benefit of e-commerce to SMEs is that delivery processes canrange from the immediate delivery of digitized or electronic goods similar tosoftware or audio-visual lines by downloading via the Internet, to the onlineshadowing of the progress of packages being delivered by correspondence orcourier (Dr Ravi Kant Modi, 2022) E-commerce platforms often come withinventory management tools that help SMEs efficiently track and manage

their stock levels, therefore reducing the risk of overstocking or understockingand minimizing associated costs

CHAPTER II: THE CURRENT SITUATION AND POLICIES TO

SUPPORT E-COMMERCE IN VIETNAM

I Current situation of e-commerce applications in Vietnam

According to estimates of the General Statistics Office, in the first three

months of the year 2023, Vietnam’s gross domestic product was expected to

increase by 3.3% over the same period last year In which, the total retail sales

of consumer goods and services were estimated at VND 1,505.3 trillion, up13.9% over the same period last year, if excluding the price factor, it

increased by 10.3% The two fastest-growing service sectors were

accommodation and food services up 26.0%, and wholesale and retail up

8.1%

At the Vietnam E-commerce Panorama Forum in 2023, VECOM's report

"Vietnam E-commerce Index" emphasized that although our country's

e-commerce is developing at a high speed, it is only in the early stages, thepotential for e-commerce development is still huge Notably, regarding

e-commerce business activities of e-commerce platforms and social networks,VECOM's survey showed that up to 65% of businesses have deployed

business activities on social networks The number of employees at

businesses regularly using tools such as Zalo, Whatsapp, Viber, and FacebookMessenger has continuously increased over the years Selling on social

networks is also considered to bring the highest efficiency, surpassing otherforms such as websites or business applications as well as e-commerce

1.1 Infrastructure and Human Resource Current Situation

1.1.1 Work-supporting tools

Every year, the Vietnam E-commerce Association conducts a survey tomake a report on e-commerce indicators in Vietnam In particular, the surveyconducted in 2022 about the usage of tools such as Viber, WhatsApp, Skype,and Facebook Messenger in the workplace showed that almost 100% of

enterprises used these platforms for work 53% of which used over 50% ofdifferent staff on a daily basis This figure is higher than that of a similar

company with 22%, a significant achievement for such a short period

According to this report, about 30 percent indicated that between 10% — 50%

of their employees did daily work with these tools while 15% showed that

they had only less than 10 percent of the staff utilizing them regularly

Using tools such as Facebook Messenger, Zalo, Viber,

WhatsApp, Skype over the years

Administrative and supporting services

Professional, scientific and technological

Electricity and water production,

Information and communications Real estate businesses activities Financial, banking and insurance activities

Accommodation and catering services

Art and entertainment Education and training Medical and social assistance activities

Wholesale and retail Transportation and warehouse Agriculture, forestry and fishery

Construction Mining, processing and manufacturing

Fig 05: The chart of priority towards recruiting IT & e-commerce

skilled/trained staff by business sector

This chart from the report on the Vietnam E-Business Index (EBI) 2023conducted by the Vietnam E-commerce Association (Vecom) shows the

priority to recruit skilled or trained staff in IT and e-commerce by the businesssector The highest percentage of businesses prioritizing hiring employees

skilled or trained in IT and e-commerce are in the information and

communication industry (91%), followed by Administrative and supportingservices (89%) Meanwhile, the lowest percentage of businesses that prioritizerecruiting employees with skills or training in IT and e-commerce are in theagriculture, forestry and fishery industries, with characteristics that are not toohigh requirements for employees

1.1.3 Roles of investment in technological applications and e-commerce

Investment in technology and e-commerce allows businesses to innovate

and stay competitive Technology investments also often lead to automationand streamlining of operations, which can significantly increase productivity

In 2022, 40% of enterprise participants assessed that investment in IT

and e-commerce infrastructure played an important role in business activities,especially added by another 23% considering that investment is extremely

important Only 3% did not pay high attention to investment in IT and

e-commerce.

ASSESSMENT ABOUT THE IMPORTANCE

OF INVESTMENT IN IT AND E-COMMERCE

1.2 Online sales and marketing current situation

1.2.1 Website used by enterprises

For many years, enterprise websites have consistently held a prominentposition as a key channel for establishing and nurturing a sustainable

corporate brand within the ever-evolving online business environment Thisholds not only for large enterprises but also for small and medium-sized

businesses (SMEs) The significance of enterprise websites in today's digitallandscape cannot be overstated, and they serve as multifaceted tools with

several critical functions that extend well beyond their mere presence on the

internet

First and foremost, enterprise websites serve as the digital face of a

company They act as a virtual storefront, welcoming potential customers,

partners, and stakeholders into the company's online realm A well-designedand informative website not only provides essential information about the

organization, its products or services, and its history but also conveys a sense

of professionalism and credibility This initial impression can play a pivotalrole in attracting and retaining customers, as it reflects the brand's

commitment to quality and customer satisfaction

Moreover, enterprise websites facilitate brand storytelling They offer aplatform where companies can narrate their unique journey, values, and

mission, allowing them to connect with their target audience on a more

personal and emotional level These narratives create a sense of identity andbelonging, fostering trust and loyalty among customers In the case of SMEs,these websites can level the playing field, allowing them to compete with

larger corporations by conveying a compelling and authentic brand story

Enterprise websites are also instrumental in creating an engaging userexperience With user-friendly navigation, responsive design, and

well-organized content, they make it easy for visitors to access the

information they seek Furthermore, they often integrate various interactive

features, such as chat support, feedback forms, and e-commerce capabilities,enabling customers to engage directly with the business This seamless userexperience not only enhances customer satisfaction but also drives sales andconversions

In the context of large enterprises, enterprise websites serve as centralhubs for disseminating important news, updates, and announcements Theyenable these organizations to maintain open lines of communication with awide range of stakeholders, including investors, customers, employees, andthe media This transparency and accessibility help build trust and credibility

in an era where information travels rapidly

Additionally, enterprise websites are critical for search engine

optimization (SEO) They play a pivotal role in enhancing a company's online

visibility When well-optimized, they increase the chances of ranking higher

in search engine results, thus attracting organic web traffic This is equally

relevant for both large corporations and SMEs, as it allows them to reach abroader audience without incurring significant advertising costs

PERCENTAGE OF ENTERPRISES HAVING WEBSITE OVER THE YEARS

Fig 07: The chart of the percentage of enterprises having websites

over the years

According to this chart from the report on the Vietnam E-Business Index(EBI) 2023, showing that the percentage of enterprises having a website didnot change much compared with previous years In the period from 2018 to

2022, the proportion of businesses using websites for business activities

fluctuated between 42-44% of surveyed businesses This indicates the

increasing recognition of the value of the website in establishing and

expanding the online presence of businesses

the years

0% 10% 20% 30% 40% 50% 60% 70%

Fig 08: The chart of the percentage of doing business by enterprises on

social networks over the years

Also from the report on the Vietnam E-Business Index (EBI) 2023, thischart has revealed the current situation of doing business on social networks(Facebook, Zalo, Instagram ) in 2022 continued booming, in particular, up

to 65% of enterprises said to use such models This trend to move online is anecessary shift in the context of the pandemic’s severe impacts Besides otheronline platforms for doing business, social networks are the easiest ones forenterprise adoption

Fig 09: The chart of the percentage of enterprises participating in

e-commerce floors over the years

We can also see that in 2022, 23% of the surveyed enterprises alreadyjoined doing business on e-commerce floors, such platforms gradually drewmore attention from the community, in regard to policy enforcement and

business performance.

Moreover, 22% of the interviewed companies claimed to have developed

a mobile-web version, which is more than it was in years before 2021 It iscrucial for the business to expand onto mobile platforms as it will be anotherway of efficiently reaching out to customers.