Ecommerce Industry Of Vietnam Challenged By Poor Logistics

Part of the challenge in providing white glove solutions is the unrealistic expectations of customers. Logistic firms that are implementing white glove services must always be prepared for any eventualities. It is also important to inform carriers and shippers about their liabilities when using white glove services in transportation management.

According to Financial Times, Vietnam’s ecommerce industry is facing the challenges of poor logistics and consumer price sensitivity. Actually, the challenge of poor logistics is not only limited to Thailand but includes Southeast Asia in general.

The logistics cost of Vietnam accounted for 20.9% of its GDP in 2016. According to the World Bank, it is higher than China, Thailand and Japan. Because of the inflated logistics costs, local businesses need a cut in costs in order to be competitive. According to Vietnam Prime Minister Nguyen Xuan Phuc, the cost of transporting goods via land accounts for 59% of the total logistics costs.

Land transportation is 9.7 times more expensive than water transport and 2.5 times more than train transport. The disparity can be blamed on the insufficiency of infrastructure development with rail links lacking the necessary connections to storage depots. Transport by water takes 3.5 times longer compared to land.

The advancement of Vietnam ecommerce vendors is also hindered by price sensitivity which proves to be a big challenge considering that shipping fees have to be accounted for when setting up prices. The best incentive that a Vietnam online retailer can offer consumers is lower prices.

Online sales in Vietnam have grown rapidly in recent years. At present, online sales account for 3.39% of the country’s retail market. According to reports from local media, total retail market grew by 10.9% last year to $173.27 billion. According to estimates, 30% of the population is expected to shop for products and services online by 2020 with each shopper spending an average of $350.

Last mile delivery of products purchased online requires white glove solution so that shippers can reduce the risks associated with delivery. Liability is eliminated when there are no customer complaints. On the other hand, if the customer is happy, the shipper can expect growth and profitability.