Last week, I had the good fortune of attending the first meeting of the Kauffman Global Partners Network, a new initiative by the Kauffman Foundation for Entrepreneurship. If you’re not familiar with the org, please take a look at their website, they’ve done some great work recently in both research and expansion of entrepreneurship programs.
At the conference, fellow attendees brought up the term CIVETS, which I hadn’t heart of until now. The term refers to high potential developing economies that may emerge as the next generation growth economies of the world (the next BRIC, which refers to Brazil, Russia, India, and China). I was pleased to note that the V stands for Vietnam, and interestingly enough, that night at dinner when the topic was being discussed, we actually had members from almost all of the CIVETS countries at the same table, so I felt I was in good company.
After my last post, I did receive a number of comments about E-Commerce in Vietnam. This is an area where I have a lot of experience, as I used to actively manage large E-Commerce implementations for US firms, and have been advising several Internet entrepreneurs about strategy in Vietnam.
My next post will delve into more depth on this topic, as I couldn’t possibly cover everything in a single post. But here I just wanted to highlight what I would consider two of the most important issues when looking at the E-Commerce market and potential opportunities there for Vietnam.
Implementation: How to do E-Commerce in Vietnam and achieve both profit and scale? I’ve met a number of very bright and motivated entrepreneurs who have said they want to be the Amazon, Zappos, or Airbnb of Vietnam. Easier said than done. Successful implementation requires a deep understanding of both the customer and the ecosystem. There are a few players actively engaged in forging a path, but even with a number of Groupon clones fighting it out in the market, E-Commerce has a very long way to go before it reaches mainstream consumers. A closer examination of the ecosystem reveals where you will find the real challenges, and real opportunities.
Scale: How big will the E-Commerce market in Vietnam be? I’ve heard predictions of anywhere from $150 million to $5 billion by the year 2015. Relative to other emerging markets, I would say that both of these estimates are off by a lot. To help give you some useful perspectives from the US, China, and India, see the following links:
How Flipkart broke India’s online shopping inertia
China E-Commerce May Pass U.S. in 2015, Boston Consultancy Says
Forrester: E-Commerce To Reach Nearly $300 Billion in U.S. by 2015
My goal here is to provide a realistic and pragmatic perspective on E-Commerce in Vietnam. I don’t have a vested interest here, but I do believe in the great talent and persistence of entrepreneurs in Vietnam, and I hope to support anyone who wants to win in this market. A winning strategy begins with setting the right expectations and taking the right approach.
The road to E-Commerce riches will certainly not be an easy path to forge. For those who do make it, they may find a very small pot of gold waiting for them. And for those who don’t, they may just wake up with that nasty hangover you get from drinking fake booze at a Vietnamese nightclub.
More on these, and other topics of interest, next time…
Was a little disappointed that you didn’t cover the challenges of implementation, namely that the pervasiveness of credit cards in Vietnam is not the same as it is in U.S. E-Commerce in Vietnam relies on that premise being successful. I’ve heard of mobile payments as a way to get around that, but I haven’t been really following on the latest developments in that field.
I can see there are many challenges of implementation. And you are right, the prevasiveness of credit cards in Vietnam is no the same in Vietnam. I’m not even sure if they have a credit system set up. Numbers of Groupon clones actually require you to either pay cash at the office, or they’ll have someone come to your house and pick up the money. You can’t go mainstream with a system like that.
I just wanted to highlight two important issues, and if you read the article about Flipkart, you’ll quickly see that they faced very similar problems there (i.e. lack of on-line payment), but innovated a way around that through COD. Another analogy is in the US before the internet, there was a large mail order business, and businesses did accept COD, even when there were credit cards available. As I said, I didn’t want to address everything in one post, because I felt it would be too much for one sitting (I’m trying to keep my posts around 500 words). I’ll address these things, as well as other important issues to consider in my next post.