Popular online retail during the pandemic

The Covid-19 pandemic has created the right conditions for online retail and 2021 has seen strong growth for many essentials and even some luxury items.

It remains to be seen whether this trend will still be adopted by consumers once the pandemic is finally under control.

Online platforms

According to statistics, during the peak period of the pandemic in July 2021, the online site Tiki saw 10,000 daily orders for daily necessities. Lazada recorded five to ten tons per day for green vegetables and processed foods. According to Mr. Tran Ngoc Thai Son, CEO of Tiki, the speed of transition from the traditional model to the modern online shopping style is too fast. During the fourth wave of the pandemic, most essential items such as groceries, medical equipment, medicines and household appliances were all ordered online. Many industry groups that seemed reluctant to take to e-commerce platforms before, such as fresh produce retailers, have quickly embraced this new method of taking orders online during the pandemic, especially during the strict regulatory phase of social distancing. Currently, this group is a major retailer on various online platforms across the country.

Observing the behavior of buyers, businesses also need to change and adapt quickly during the pandemic when transitioning to a new trend change. According to a survey of 15,000 retailers by Sapo Technology Company, digital transformation and shifting sales to cyberspace peaked during the fourth wave of the pandemic. Compared to 2019 and 2020, the solution chosen by merchants in 2021 was to promote sales on various e-commerce floors and online platforms. Thus, 72.8% of businesses moved from offline to online, up 9% from 2020, when only 63.8% of businesses were online. The percentage of sellers doing business offline and not doing business online also decreased from 36.2% in 2020 to 20.9% in 2021.

Many online shopping records have been made, especially on the e-commerce floors during super sale occasions. For example, the e-commerce platform Shopee recorded that the number of orders in its store increased 14 times on December 12, 2021, compared to the average daily rate. The brands on the stand also attracted many new users, with one in eight users making their first purchases there. Online retail is not only booming on mainstream e-commerce platforms, but is also very active on social networking sites such as Facebook and TikTok. Reports from Google, Temasek and Bain & Company show that in terms of scale, Vietnam’s e-commerce market in 2021 grew by 53% from 2020, to hit US$13 billion. According to the same report, from the onset of the pandemic to the first half of 2021, Vietnam added eight million new digital consumers, more than half of whom come from small towns.

However, Google, Temasek and Bain & Company believe that the actual market size may be larger than the statistics presented, as these figures only calculate the size of official e-commerce transactions made through a professional online retail platform. As sellers and buyers exchange information through messages, social media chat groups or messaging apps, it is difficult to measure all sales as the unofficial e-commerce platform is also very active in Vietnam.

E-commerce fraud

The Covid-19 pandemic has caused the number of sellers and buyers on online platforms to rapidly increase, and e-commerce has had an explosive year in 2021. However, it remains to be seen where this trend will continue to be. adopted by consumers once the pandemic is finally under control, which is hard to say.

According to a recent consumer survey conducted by Vietnam Report Joint Stock Company (Vietnam Report), more than 45% of respondents said they would shop online less once the pandemic is over. Although many stores are closed now during the ongoing pandemic, that does not mean they are no longer important. E-commerce will not completely replace physical stores. When the pandemic is under control, customers will return to physical stores as the experience cannot be replicated online and it is also the perfect place to introduce new items when people gather.

Another important reason the boom may be difficult to sustain is that product quality across online channels remains a sore point for consumers and regulators. There is the problem of selling counterfeit or shoddy products through e-commerce platforms. In the past, sellers would often take photos of products and then put them up for sale and were suspected of photo editing, but now, to create more visual images, many sellers are live streaming certain products. During the live broadcast, sellers use genuine products to showcase, but when it comes to buying customers, it may not be the same product at the time of delivery. After buying on e-commerce platforms, customers can complain, exchange and return goods, but it also takes a long time, so with low value items, customers often ignore this feature. Customers buying on social media sites often prefer to give up the money rather than having to return the product. Therefore, to avoid spending money to buy counterfeit products, many consumers will always prefer to go to real stores to choose and buy products.

Many fraudulent companies broadcasting live on social networking sites have been shut down by the authorities. Nevertheless, offenders become bolder because the profits are so high. As of October 2021, the nationwide market management force has inspected nearly 2,500 cases of fraudulent sites and dealt with over 2,300 violations, including e-commerce violations and abusive acts. E-commerce sites selling contraband goods, goods of unknown origin, goods infringing intellectual property rights and counterfeit goods have been fined over VND 18 billion. According to a forecast by the Ministry of Industry and Commerce, in the next two to three years, the rate of commercial fraud on e-commerce sites will increase by around 50-60%.

More recently, the government issued Decree 85/2021/ND-CP amending and supplementing Decree 52/2013/ND-CP on e-commerce issues. Besides the management of traditional e-commerce platforms, online business activities on social networking sites are also included in the management. The decree comes into force on January 1, 2022 and should help manage online sales more effectively and efficiently.

Source: Sai Gon Giai Phong

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