Young, Scrappy, and Overachieving: How Ecommerce is Different in Vietnam

January 3, 2012

9:51 am

In Vietnam’s largest cities, Hanoi and Ho Chi Minh, the streets are clogged with motorbikes swarming around, piled high with everything from live chickens to 10-foot metal poles to four-person families. Some of those motorbikes are making deliveries: with no national shipping giant like FedEx, companies rely on independent shippers (or their own in-house teams) to haul goods to customers.

In this country, where credit cards are far from the norm, ecommerce is only just emerging. Vietnam has around 30 million Internet users, but ecommerce accounts for only 0.5% of its GDP, compared to 3.8% in the United States. Part of this comes from a lack of trust in online shopping.

“In Vietnam, and even in Asia, it’s a low-trust environment,” says Son Tran, CEO of Tiki, one of the top booksellers in Vietnam that now offers other merchandise, à la Amazon.

Adds David Tran, cofounder of top group buying site nhomMua, “Vietnam’s one of the biggest hacking-scam-spam capitals of the world.”

So right now, as Vietnam’s economy develops, ecommerce startups are building an industry – and a trusting customer base – from the ground up.

Following old habits, most ecommerce companies sell items through cash on delivery (COD). Tiki partners with several local delivery companies throughout Vietnam to ship books immediately out of their warehouses. NCT, which runs an ecommerce site called Nava with around 3,000 products, decided to promote big brands in exchange for some help with logistics.

nhomMua sends out 100 delivery guys on motorbikes, wearing nhomMua shirts, to do about 5,000 deliveries every day. (Though nhomMua is a group buying site, they are building up an infrastructure – and planning to add more funding to their $61 million in investment – to move into some form of ecommerce.) To attract more customers, all these companies have a loose refund policy – Son Tran tells me he doesn’t mind if readers return a book because a page is wrinkled.

To grant those refunds – and answer endless questions from distrustful shoppers – customer service staff need to be trained. Anh Quoc, the founder of another ecommerce site called Hula, thinks Vietnamese people much prefer talking to a live person about a product than reading lots of text on a website; his company offers customers service through online chat as well as telephone. And even the big brands are getting a lesson in customer service: to answer calls from users asking, “Is this real?,” nhomMua had to train some of its vendors, too.

This hands-on approach also extends to suppliers: because fake products are ubiquitous in Vietnam, NCT pays a team of people to visit shops and inspect their wares before they sell on Nava.  nhomMua checks out restaurants before signing them up for a deal.

Going above and beyond, Tiki ensures lasting quality by fitting every book they sell with a plastic cover. They hire workers to sit at machines and make sure the plastic matches the book size, and they’ve tried out different machines and plastics to get the best result.

“When Vietnamese people have English books, it’s precious to them, because it’s expensive, it’s hard to get,” explains Son Tran, who is inspired by Zappos to become not the biggest but the best ecommerce site.

Despite these logistical headaches and trust issues, ecommerce is growing. Major players look to inspiring success stories in neighboring China like 360Buy, Taobao, and Dangdang, and Groupon clones in Vietnam have only accelerated the trend. Observers – including foreign companies like eBay – are waiting for an ecommerce boom, and it may happen in the next several years. It’s just a matter of which company will light the fuse and cash in big in the process.

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Kira M. Newman is a Tech Cocktail writer interested in the harsh reality of entrepreneurship, work-life balance, and psychology. She is the founder of The Year of Happy and has been traveling around the world interviewing entrepreneurs in Asia, Europe, and North America since 2011. Follow her @kiramnewman or contact kira@tech.co.

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