Difficulties and Barriers When Applying E-Commerce in Vietnam Essay

There are many difficulties when applying e-commerce into Vietnam. The first one is that there are only few end users in Vietnam have used credit card in their lives. It is because of the tradition of using cash. In addition, Vietnamese people used to do merchant in face-to-face fashion and most of the transactions are paid directly by cash. The second one is the Internet usage is still not widespread and not popular in general. It is because the Internet and telecom charge are still very high, especially in comparison with the salary of common labor. Moreover, the living standard is still low, GDP per capita of Vietnam is about US $1411 (data of World Bank 2011). Last but not least, the financial system needs to be changed to support Internet buying and selling with or without traditional invoices (traditionally, business invoices are issued and controlled centrally by the government, with unified forms). While Vietnam is still a developing country, startups, especially for small and medium enterprises, have to face with many difficulties to set up e-commerce in business as well as barriers when running on it. Below are some main barriers to e-commerce adoption by SMEs: †¢High costs of e-commerce implementation †¢E-commerce is too complex to implement †¢Organizational resistance to change †¢Lack of technical skills and IT knowledge among employees †¢Lack of time to implement e-commerce †¢Lack of suitability of electronic campus for products/services offered by small businesses †¢Lack of awareness of e-commerce benefits †¢Security concerns/lack of trust †¢Lack of financial resources †¢Lack of senior management support/enthusiasm Vietnamese is still inexperienced in Internet dealing with foreign companies. It is showed up by the growth rate and the problems which have occurred in reality which Nhommua. com is an example. The following parts will describe more about this issue. Case study of Nhommua. com Brief introduction about Nhommua. com Nhommua. com, which was established in 2010 under M. J Group in cooperation between IDG Ventures, Rebate Networks and Ru-net Global with a total investment of $60 million, is a business on group sales discount. This company was a pioneer with its first running e-commerce in Vietnam at that time. According to the company’s survey, after one year of operations, the business took 60% of market share. The monthly visitors of the web page are 4 million. There are thousands of customers and millions of vouchers sold. Nowadays, Nhommua has to share the marlet with many other competitors but it still keeps the first rank in the market with the market share of 35. 37%. At the third quarter of 2011, Nhommua. com achieved good results in sales, but made little profit. That’s the reason why investors have worried a lot and are attempting to get back their investment. There was a scandal inside of the management team leaders which caused the business to close in a short time and damaged their reputation. Products and services: Diversified products and service are traded on Nhommua. com. Most of the products and services are in the food industry, functional foods, cafe, spa, dentist clinic, travel, clothes, fashion stuffs, home linen, interior, etc. Due to this diversity, the quality and original of products and services sometimes are not accredited. Some customers had complained in some forums that they were not satisfied with the quality of products they bought. It was not mentioned clearly on the web of Nhommua about the original and information of products then it caused confusing and unpleasant to customers after use. Even some information is not reliable. For example, a voucher of a dentist service did not mention clearly about service charge or additional fee but when customers came to use this service, they had to pay more fees which they did not aware in advanced. Nhommua has created very good deals for both producers and customers. Firstly, in the producer’s side, Nhommua helps to bring back more customers than usual or it is a good chance for producer to have more new customers database. With a good price, it creates demand of customers. It is also a good chance to build up branding by promoting. Secondly, in the customer’s side, Nhommua offers chance to use a cheaper price of product or service. It arouses the potential need of customer. Customers have many chances to buy at a cheaper price for a product that they want to have. Discount may be up to 90% if there is a big group agreeing to buy this product. It is a very attractive price for customers. In contrast, producers have to agree on reducing price much. It sometimes means that to have more new customers, producers have to reduce the price and get less profit in the mean time even get non-profit. Procedure of trading on Nhommua. com Those customers who buy vouchers to get discounts may find a lot of choices. It is easy for customer to buy vouchers online by signing up for an account, choosing the product or service which is available at open selling time, clicking on the buy icon and filling in the necessary information to make sure Nhommua can reach the customer. The deal will be done within 72 hours. There are three method of paying for the deal. One is the customers pay at home when using home delivery. For this way, customer may sometimes have to pay a shipping fee if it is not in the free shipping area. Customer can also purchase a voucher directly at the Nhommua office. The last method is paying by online banking. Below are the figures of signing up an account on Nhommua. com and ordering for a product or service: It looks simple to sign up and order on Nhommua. com but still lacks of reliable information. First, it is difficult for Nhommua to make sure that all orders are reliable. Because to get the good price of a product, that the amount of customers agreeing on this price is high. It may cause some fake orders to increase of this amount of agreed customers on good price. There is no commitment between customers and Nhommua or producers. During the time of the scandal inside the company which caused to close the company in a few months, without any commitment, there were some arguments about the most important thing in business which is Trust. This caused a bad image on e-commerce business and Nhommua after this scandal lost a lot of customers.