Earlier this year, Amazon partnered with the Vietnam Ecommerce Association (VECOM) to provide ecommerce services for local online businesses under VECOM. They also held numerous workshops for sellers, the latest one being in Hanoi and Ho Chi Minh City, called Selling Globally on Amazon.
Similarly, Alibaba-backed AliExpress has been looking to sign up more Vietnamese sellers on its platform since July as it teams up with OSB Investment and Technology JSC to support international exports by Vietnamese small and medium-sized enterprises (SMEs).
Vietnam is one of the biggest exporters in the world, ranked at number 28 out of 225 countries at $214 billion of export value in 2017. Based on 2016’s exports data, Vietnam’s main exports are machinery products, textile goods, and footwear and headwear products.
Vietnam has become a manufacturing hub with one of the lowest minimum wages in the ASEAN region at $147 to $167 per month (Figure 2). Expanding infrastructure for new projects and a rapidly increasing working age group have promoted low-cost mass-production with many global companies establishing manufacturing bases in the country.
Global companies are benefitting from low production costs but local businesses also have access to ready-to-sell goods at competitive prices. In Vietnam, some 600,000 SMEs are searching for appropriate channels to expand their market share. Ecommerce offers this opportunity from the comfort of their homes.
As in all other developing countries, ecommerce in Vietnam is mushrooming. Statista forecast annual growth at 16.8%, higher than Thailand (12.8%) and Indonesia (13%). However, the Vietnamese market is small and still in its infancy. Therefore, the international market offers economic opportunities for local retailers.
Vietnamese merchants are attracted to global e-marketplaces which access customers searching for a broader variety of products and enable international sales at low cost. Online merchandising boosts sales while mitigating the risks of the local economic downturn.
AliExpress executive Yang Ninh commented, “Vietnam, as one of the most diverse manufacturers in the world, is an important destination for Alibaba.”
Comparing between Amazon and AliExpress
To know which platform suits Vietnamese sellers, we compared the specifications of the two platforms in the table below.
Whether Vietnamese sellers choose Amazon or AliExpress depends on the target market
Those selling high-end, expensive products may prefer to sell on Amazon because site visitors have higher purchasing power and the majority hail from developed countries. Those wishing to target consumers in the Americas may also prefer Amazon which has a stronger top-of-mind awareness in the region.
Conversely, AliExpress offers Vietnamese sellers a wider global customer base. AliExpress has a more extensive global presence (Figure 3), with site visitors to the platform spending on average 2 minutes longer than at Amazon.
However, the annual service fee at AliExpress is higher than Amazon. Sellers with limited funds or those just starting out might be better to opt for Amazon which also offers different pricing plans for individuals and professionals. Meanwhile, AliExpress discounts annual service fees for retailers if they manage to attain the required annual sales specified for particular categories. This offers value for those selling hundreds or thousands of items.
Vietnam has many local ecommerce players, providing sellers with alternative options for domestically growth. However, reliance on these e-marketplaces alone is not sufficient for Vietnamese sellers to tap international customers. Listing on either or both of the AliExpress or Amazon platforms offers the most realistic opportunity to maximize sales.