E-commerce booming in Asia

 Thanks to its young population structure and its willingness to apply new technology, Vietnam’s digital economy recorded a 16% growth rate from 2019 to 2020. The rising trend is expected to continuously increase with the “National Digital Transformation Program” that the government is deploying.

The above benefits along with a surge in consumerism under the influence of the COVID-19 pandemic are boosting e-commerce development not only in Vietnam but also across the region. According to Bain & Company, Asia-Pacific accounted for more than ⅔ of global online retail growth. Meanwhile, Vietnam’s e-commerce is expected to mark USD 29 billion with a common annual growth rate (CAGR) of 34% in 2025.

The boom in online shopping has caused brands to implement e-commerce strategies to complement traditional retail models, thereby improving business market share and corporate image in the eyes of online consumers. Hence, it is no surprise when the proportion of online sales on total sales is constantly growing.

However, the continuous rise in the quantity and quality of online channels and e-commerce platforms has caused acquiring market share in online business to be increasingly challenging. On the other hand, e-commerce models are starting to become more complex. Brands are currently moving into the rebooting phase and evaluating e-commerce strategies to suit long-term goals.

Building brand identification on sales channels

Although brands are no longer unfamiliar with quickly adapting to catch up with online purchase trends and behavioural changes as well as online consumers’ spending habits, realistically, in order to build an effective e-commerce strategy, there needs to be evaluation on more aspects than what is commonly thought of.

In the initial phase of development of online shopping, brands only had a few main channels to build their digital images, let it be the brands’ official webpages or e-commerce platforms like Lazada, Tiki and Sendo. Nowadays, brands have a wide range of channels to select with strong commercial, marketing and distribution capabilities. Not only that and more importantly is consumer access. This makes it difficult for brands to assess channels’ effectiveness.

Under pressure of a boom in digital trade channels, businesses often choose to build brand identity through sales on all channels, while maintaining the brand’s official website. Sustainability in e-commerce requires time and effort to assess and see the appropriateness of sales channels with business objectives.

Facing a crowded market full of potential, corporations are working towards developing brands by “Shotgun”, or in other words, the strategy of approaching potential consumers multimodally while still maintaining familiar modes such as using the brand’s official website. In order to build a sustainable e-commerce model, businesses will need to consider and assess which channels are suitable for their basic business goals.

Besides online consumer traffic data, brands need many other important information to decide on sales channels such as customer demographic characteristics including age, gender, expenditure capacity, etc. Moreover, marketing strategies on e-commerce platforms need to be consistent with brands’ business goals. A common example of commerce platforms offering a series of discount promotions will help businesses acquire high sales but low returns due to brands competing in the price race.

Last but not least, brands need to continuously monitor and evaluate emerging channels since consumers tend to be more attracted to new and unique web pages or applications. Specifically, online commercial channels on social media are one of the subjects to follow. According to iKala, within the first half of 2020, commercial channels on social media in Singapore, Thailand, the Philippines and Vietnam have gathered doubled orders and tripled the total value of goods compared to the previous year.

Although the current total value of goods created on Instagram, Facebook, Line and Zalo is yet to be high, these channels have had constantly high traffic whenever they launch new e-commerce features. This trend forces brands to evaluate the compatibility between commercial activities on social media with business activities of businesses themselves.

Order completion and the logistics system

The shopping experience is an important key for customers to build trust and loyalty to the brand. Besides online experience, factors in terms of delivery speed and comfort during shopping play an important role as well.

It is imperative for businesses to evaluate strategies for order and logistics completion alongside making decisions about sales channels to create a complete experience for consumers.

Choosing the ‘intermediary e-commerce’ model or hiring a third party to fulfil orders is also an important decision for the e-commerce strategy problem. To summarize, if a brand plans to provide goods on multiple commercial platforms, third-party suppliers such as aCommerce,

Urbanfox or SP Ecommerce can facilitate the distribution process to consumers effectively and efficiently through order processing from various channels, much superior to the traditional method through a warehouse.

Moreover, brands can allocate individual inventories for different e-commerce platforms or select intermediary multi-channel platforms and have a complete reception interface process. However, this method can cause inconvenience when the rotation of goods between channels in the event one channel cannot sell goods, leading to inventory. This blockage will cause the channel model to be cumbersome and in that context, we better understand the influence of revenue interests of different stakeholders on decision making.

Flexibility and sensitivity in long-term planning and strategies

In the past, e-commerce strategies were planned within two to three years. This approach would be sensible in the period when online shopping was still primitive and the market had not changed much.

However, as e-commerce platforms start to stabilize, consumers’ loyalty to brands gets increasingly strengthened, online marketing and distribution are included in the retail business model, and businesses then need to determine more long-term decisions. Sustainable e-commerce strategies need to be formulated in order to set clear goals and targets in a longer span of 5 to 10 years.

Nowadays, short-term strategies are no longer the only solution to create flexibility and a rapid level of efficiency, instead, long-term plans working towards the future can also catch up with consumer trends and technological advancements, while maintaining core sales channels.

The future e-commerce boom promises to continue impacting the market. Consumers are gradually acknowledging brands with reasonable strategies, easily resisting major changes but are still flexible enough to meet demands.

Lastly, a brand’s ability to stand firm when facing timing challenges will depend on sustainable e-commerce strategies, which in turn maintain brand identity, always closely connect and satisfy customer demands.

According to Mr. Mitch Bittermann, Executive Vice President

E-commerce Director in Asia, TMX

Translated by Pham Phuong Anh – Dieu Linh