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The misconception of e-commerce and online marketplace in Vietnam

1. Differentiating e-commerce and online marketplace

 

In Vietnam, people are always talking about e-commerce these days without noticing the differences between those two platforms. 

 

Short answer:

  • The online marketplaces are the sites that enable dealers to enlist, login and sell their items. It is a platform for both the sellers and buyers, similar to what you see in a market.

  • The e-commerce sites are the place that a particular brand sells its own items on its site. Only the administrator could add and sell the items. It does not have an alternative to enroll as a vendor, like what you see at a retailer shop. Its target customers are more specific than in an online marketplace.

So those sites that we normally know as “e-commerce” are actually online marketplaces. Some of the notable sites are Amazon, Alibaba, Lazada, Tiki, Shopee, Sendo, etc. The word “e-commerce” is so widely used that we forgot the actual name of it. The e-commerce sites are actually those sites from a particular vendor like Samsung or Apple. They have a site to directly sell on it.

 

Long answer:

There are 5 key differences between an e-commerce site and an online marketplace everyone should know:

 

No.1: Marketing approach and targeting

It is essential to have a lucid idea about your digital marketing approach and focusing on an online marketplace or e-commerce. While in e-commerce you need to concentrate on focusing on purchasers, and in an online marketplace you should pull in the buyers as well as the sellers will be the identity core of your platform. In an e-commerce business, the individual dealer needs to spend more to direct people to their website. When a purchaser discovers the choice, the determination procedure is less difficult, as they are choosing from the items offered by just one organization. Then again, the marketplace profit by different clients working on their site. As there are numerous traders and buyers, they independently promote the presence of the marketplace causing a viral spread of awareness.

 

No.2: Scalability

A marketplace does not sell or purchase any items. So it goes out on a limb than an e-commerce site which needs to always put resources into a stock that may set aside some effort to sell or never sell. As mentioned, the marketplace gains economies of scale all the more effectively, and, in this way, enable them to grow quicker than an e-commerce site. At the point when traffic develops extremely quick, it might be important to look for new sellers to fulfill the need. However, you won't have to stress over spending huge aggregates of cash into new stock or fulfillment centers.

 

No.3: Time and money

To manufacture your own e-commerce site can be as basic or convoluted as you need it to be. There are numerous issues associated with it. So there will be a great deal of time and work required to set up and keep up your e-commerce site. In any case, in a marketplace, as everything stays prepared, you can enlist, and sell without investing much energy and additional work.

Once more, because e-commerce sites need a huge amount of initial venture, they take more time to make back the initial investment. Then again, marketplaces have better overall revenues as their income is fundamentally rates of the exchanges. Depending on the volume of exchanges, this is the earned cash that is normally reinvested into R&D to quicken the growth.

 

No.4: A business of volume

In marketplaces, the profit margin for every deal is lower contrasting with e-commerce deals. It is on the grounds that fundamentally winning income from the commissions it deducts from deals. Subsequently, Marketplaces need to sell more noteworthy volumes of items than e-commerce do. Hence, it's to manage significantly more exchanges, for which it is pivotal to put accentuation on the automation of its frameworks however much as could reasonably be expected.

 

No.5: Engaged audience

Audience engagement is significant in online business – regardless of whether it is an e-commerce site or an online marketplace. Marketplaces have dependably been transactionally oriented and the objective is to coordinate purchasers and merchants. Marketplaces consistently center totally around moving purchasers towards buys and dealers towards posting more items or administrations. Truth be told, marketplaces profit by network impacts: more purchasers draw in more dealers and the other way around. 

 

Engaging the audience in the e-commerce business is harder compared to the marketplace. It is time-consuming and expensive. Indeed, even after you increase some involvement, you might still be targeting the wrong people. Distinctive social media channels like Facebook can help enormously to connect with the group of spectators. 

Because of all of those reasons, e-commerce is usually the game of large brands with abundant capital and much wider brand recognition.

 

2. Vietnamese e-commerce market overview

 

E-commerce sales are projected to reach US$10 billion by 2020, representing 5% of total retail and services income, while 30% of the populace will shop online, spending a normal of US$350 per individual every year.

Vietnam's online business market has seen high development rate since 2013, with online deals expanding from US$2.2 billion out of 2013 to US$6.2 billion of every 2017, the normal yearly growth rate of 20%, the government reported. In the 2013 - 2018 period, e-commerce has been essential in changing and modernizing the distribution system specifically, and Vietnam's commerce market in all and all, expressed Cao Quoc Hung, vice-minister of Industry and Trade, in a meeting on September 14. Vietnam as of now has 50 million web users, representing 54% of the populace and higher than the world's normal of 46.64%, Hung stated. in 2017, around 33 million individuals shopped online at any rate once per year, while the e-commerce business sales expanded from US$2.2 billion out of 2013 to US$6.2 billion out of 2018, contributing 3.8% to the all-out retail and services income. Moreover, online business exercises have turned out to be increasingly enhanced, by means of the PC as well as in different gadgets, for example, cell phones and tablets. Besides, Vietnam's lawful system and approaches, particularly Decree No.52 on online business, have assumed a key job in making good conditions for a high development rate of the retail online business market.

 

The pronouncement expects to guarantee the fairness between online business and traditional trade, of which endeavors working in internet business must consent to laws and guidelines in equivalent to that of conventional one. From 2013 to date, the most well-known items sold online included garments, footwear and residential (59%), electronic gadgets (47%), and family appliances (47%), among others, while installment and conveyance techniques have been utilized adaptably by ventures. The fulfillment of clients when shopping on the web expanded from 29% in 2013 to 54% in 2017, as per the service. Nonetheless, the quick progression of advancements with regards to the Fourth Industrial Revolution has had a huge effect on internet business exercises and yet making open doors for change.

 

 

 

 

3. Vietnam - the battleground of Alibaba and JD.com

 

Two Chinese giant e-commerce behemoths are gaining ground in the Vietnamese market and Southeast Asian market generally through Merger & Acquisition (M&A). The absence of the worldwide e-commerce giant - Amazon is the opportunity of those two Chinese companies. Southeast Asian market is one of two regions that leading the growth for the industry besides India. Compare to the well-developed market of OECD countries, an underdeveloped African market and the nearly saturated Chinese market, Southeast Asia has fertile soil with many rooms for growth for any e-commerce firms. And of course, the Vietnamese market is the leading market in ASEAN in term of growth. The top 3 e-commerce sites in Vietnam are Lazada, Tiki.vn, and Shopee.

 

Shopee asides, the e-commerce site is owned by SEA, a Singapore-based technology unicorn.

 

Lazada is also a Singaporean start-up, but now a subsidiary of Alibaba. Alibaba is expanding its control of Lazada, its e-commerce business in Southeast Asia it obtained control of in 2016 after it invested another $2 billion into the business and supplanted its CEO with a long-standing Alibaba official. Alibaba's first speculation came in April 2016 when it purchased 51 percent of Lazada for $1 billion, and it included another $1 billion the previous summer to expand its value to around 83 percent. With the present news, Alibaba has contributed $4 billion to date which it said will "quicken the development plans" and help further tie the Lazada business into Alibaba's center e-commerce service. JD.com, another Chinese internet business firm that opponents Alibaba, has proceeded with its extension in Southeast Asia with an interest in Vietnam-based Tiki, a seven-year-old online retail start-up.

 

JD.com is driving a Series C speculation round in Tiki close by VNG, the Vietnam-based online media, and gaming organization that is as of now a financial venture capitalist. The round itself is undisclosed, yet TechCrunch comprehends that it is in the scope of around $50 million in general. The arrangement sees JD.com become "one of Tiki's biggest investors," the organizations said. The team intends to cooperate to help Tiki on promoting, cross-outskirt openings, coordinations, satisfaction, tech and the sky is the limit from there. JD.com is expecting to get a bigger portion of Southeast Asia's development opportunity. The area's online business market is anticipated to develop to $88 billion by 2025 up from $10.9 billion a year ago, as indicated by a report from Google and Temasek. JD.com also invested in an Indonesian unicorn namely Tokopedia and several e-commerce start-ups in the region. Another key feature that is not yet mentioned above is both VNG and SEA are heavily invested by Tencent, yet another major Chinese internet company. To sum up, the Southeast Asian e-commerce market is pretty much the game of Chinese companies.

 

References

 

https://techcrunch.com/2018/03/18/alibaba-doubles-down-on-lazada/

https://www.reuters.com/article/jdcom-tikivn-funding/jdcom-vng-corp-lead-investment-in-vietnamese-e-commerce-firm-tikivn-idUSB9N1P5004

https://techcrunch.com/2018/01/18/jd-com-tiki-indonesia/?guccounter=1&guce_referrer_us=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_cs=Lwi-uHK7lRKFXyb9Yxmd1g

https://www.statista.com/outlook/243/127/ecommerce/vietnam#market-revenue

https://www.vir.com.vn/vietnams-e-commerce-landscape-in-2018-64897.html

http://www.hanoitimes.vn/economy/2018/09/81e0cc9a/vietnam-e-commerce-sales-grow-20-annually/

http://www.ukabc.org.uk/wp-content/uploads/2018/09/EVBN-Report-E-commerce-Final-Update-180622.pdf

 

For further info, you can meet us, call us, message us or take a look at our website www.drive-agency.com

 

Talk to you soon!

 

About DRIVE

Created in 2017, DRIVE is a digital performance company providing clients with a data-driven business strategy, powered by skilled talents, reliable data, and scalable technology system. Certified on major analytics and conversion solutions such as Google Analytics, Salesforce, Tableau and Adobe Analytics, we combine our expertise to meet your business expectations.

 

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