07 September 2024

Although the number of products sold by Vietnamese enterprises on cross-border e-commerce platforms has increased in the past five years, high logistics costs are still the main "barrier" for SMEs.

Vietnam is one of the fastest growing logistics markets in Southeast Asia, thanks to the rapid growth of the economy and the boom of e-commerce. According to a report by the Vietnam Logistics Association (VLA), Vietnam's logistics industry contributes about 4-5% to the country's GDP and is forecast to continue to grow strongly in the coming years.

The rapid development of e-commerce is one of the important factors driving Vietnam's logistics industry. Reports from Google, Temasek and Bain & Company show that the size of Vietnam's e-commerce market reached about 23 billion USD in 2023 and is expected to continue to grow at a compound annual growth rate (CAGR) of 29% from now to 2025.

Although supporting the growth of the logistics industry, logistics costs are currently one of the major problems of e-commerce. Compared to the past, cost pressure has improved a lot, but logistics costs in Vietnam are still high, accounting for about 20-25% of GDP, compared to the world average of about 10-15% of GDP. This has posed great challenges for businesses, especially small and medium enterprises (SMEs).

Sharing at the event on online logistics service solutions for Vietnamese sellers recently, Mr. Rouger Lou - Director of Alibaba.com Vietnam admitted that logistics is a big obstacle for SMEs. Although the number of products sold by Vietnamese businesses on cross-border e-commerce platforms has increased in the past 5 years, high logistics costs are still the main "barrier" for SMEs.

In particular, Ms. Thu Le - Deputy Marketing Director of a business specializing in exporting dried agricultural products - said that the value of the company's orders is often only a few hundred thousand VND, but the cost of shipping abroad is quite high, which reduces the competitiveness of the business.

Similarly, Ms. Tran Thi Yen Phi, CEO of DSW Company (specializing in agricultural products trading on Alibaba.com e-commerce platform) emphasized that Vietnam's logistics costs are quite high compared to China, thereby reducing the competitiveness of Vietnamese goods in the online export market.

"In previous years, even though we sold on cross-border e-commerce platforms, when we had orders, we still had to find our own shipping units. Therefore, the pressure of costs and risks of goods was always a pressure for businesses. Over the past year, cross-border e-commerce platforms have begun to integrate shipping units, and orders from Vietnamese businesses are combined with those of neighboring countries in the region, thereby reducing shipping costs and increasing the competitiveness of our goods," said Ms. Yen Phi.

From the perspective of a platform like Alibaba.com, Mr. Lou said: "Although cross-border e-commerce is booming and opening up many opportunities for SMEs, they also face many challenges, especially in optimizing the export process. Businesses must find efficient and reliable shipping solutions to ensure on-time delivery, while minimizing costs and risks of goods."

He believes that providing online logistics services is essential for SMEs in global trade and is also a way to retain businesses on the platform. Accordingly, in recent years, Alibaba.com has partnered with two "giants" of logistics in the world, UPS and DHL, to support the export of Vietnamese goods to 200 countries and territories within 3 to 7 days.

Through international express delivery partners, Alibaba.com said it will ensure that goods are transported safely and on schedule. It also provides detailed order tracking tools, customs consulting services, and cargo insurance solutions. The platform also supports businesses when exporting to Europe because this market is characterized by taxes and fees, and without experience it is difficult to enter this large market.