With the mammoth that is Indonesia within the Southeast-Asian region with e-commerce import. We feel that it is overshadowing upcoming markets within the region. Indonesia’s sudden growth has sidelined the volumes that of Singapore, Malaysia, and Thailand.
That said, Vietnam is a very interesting market. With over USD 2.26 billion, yes with a b, in e-commerce sales in 2018, the market is by no means small. That is approximately half of Thailand’s e-commerce sales. Bearing in mind that Vietnam is still very much a developing country that is behind Thailand by at least 3-5 years, it should not be ignored. There is an expected growth to USD 2.7 billion by the end of 29. Further proof that it is a good market to pay attention to is also the ARPU or average revenue per user is currently at USD 45/user and set to increase to USD 51/user in 2019. That’s a healthy 13% increase compared to the previous year.
One of the biggest hurdles for e-commerce companies entering a new SEA market is always the payment systems available within the country. With developing countries such as Indonesia and Thailand, payments is a big blocker that is often hard to overcome, leading to an influx in reliance of cash on delivery (COD) services.
There has been a decrease of 3% in COD payments between 2017 to 2018, with an increase in e-wallet transactions of 8%
With the decrease in COD payments and increasing popularity in e-wallet solutions in the country, this will start a domino effect that will potentially lead to higher sales and more transactions online due to the increasing offers as well as convenience of the service. An important thing to understand about the market is that due to lower incomes and the development of the country, payment solutions play a crucial role in the appeal of online purchases for locals.
What are some things to consider about moving to Vietnam?
That’s is an excellent question! With Vietnam’s political system being very different compared to surrounding countries, the approach to the market must be different as well. Complications surfaces a lot when you consider moving the products into the country.
Problems such as import and distribution regulations and financial regulations is a very serious few to study and consider. Many companies fail to recognise the brevity of one country’s culture and that resulted in the eventual failure of their expansion into said country.
Importing into Vietnam
First and foremost, it is impossible to move into Vietnam if you can’t even import your products into the country. Common in SEA, Vietnam is a country that has strict regulations but loose enforcement of those regulations for import. This creates the perfect breeding ground for the Asian Clearance.
Vietnam’s clearance solutions are very drastic in differences, depending on whether or not you are willing to bend the rules and wander into a grey area for clearance. However, according to regulations, anything above approximately USD 42 are subjected to duties and taxes upon import.
The duties and subjected to the product and the duties tariff, with taxes at 10% for VAT
What does this mean for you? It means that this product dependency for duty rates makes it very difficult for you to do official importation as your e-commerce goods can fall under 10,000+ SKUs and different product category. This will result in extensive, laborious and and very tedious process of clearance.
As it stands, the country does not have very many customs agents who are able to clear e-commerce products. This resulted in a void in the market, one that Aersure has committed months to fill.
One of the most challenging parts of penetrating a developing nation is the financial infrastructure. Having a restrictive system can be a make it or break it for your business. It is pointless for you to enter a market without being able to take the money you’ve made out of the country.
Furthermore, you’ve got to understand the demographic and what kind of facilities the locals have in order to pay for the products that they order. Credit cards are far and few, anything else is a big challenge for you if you do not understand what you can and can’t do with it.
Vietnam’s online shopping market relies on bank transfers, credit cards, and recently, e-wallets as their main payment methods. Cash on Delivery is predominantly only collected by the local sellers as remitting money out is not as easy as anyone might think.
With the exceptions of credit cards, every other popular payment methods require a form of remittance out of the country and this will result in huge setbacks as the regulation that is controlling foreign transactions is convoluted and very strict.
A general rule of thumb is always to have a local entity in Vietnam that holds an agreement with your entity in your home country and with that, you can maybe make your transactions smoother to perform. This is not without its caveats however, with the transactions potentially incurring a 10% VAT charge, which is a large sum especially in the e-commerce industry.
Only other way is to partner with a remittance house that is able to furnish you with the capabilities of outward remittance at a lower percentage cost. However, as with anything, Aersure needs to inform you that every remittance houses hold a buyer’s beware tag unless you absolutely trust them, or think that they are not the next shady company to pack up and leave.
So are you moving to Vietnam?
If you are, we have good news for you. Forget all of the complications above, and be sure that we will provide you with world class logistics services for your parcels. You can bet that we will provide you with hassle free shipping, all you need to worry about, is selling to your consumers.
Our solution offers your products priority clearance into the country with reliability and peace of mind. Alleviating the stresses and hassle of worrying about import requirements. Furthermore, we’ve partnered with remittance houses that are trusted and reliable to making sure that you’re making back your investment, penetrating into Vietnam’s e-commerce market.