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Wednesday, October 27, 2021

Risks scare away online consumers

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Only 38% of the population do shopping online, of whom only 10% make payment electronically. The dual goal of boosting e-commerce and cashless payments remains a tough job to be fulfilled.

Hinging on more positive signs of a change in consumers’ shopping habits after the social distancing period, the Government in mid-May announced Decision 645/QD-TTg approving the general plan for national e-commerce development in the 2021-2025 period. One of the goals of this plan is to obtain about 55% of the population shopping online with an average purchase value of US$600 per person a year.

However, the above goal will require tremendous efforts to achieve. By the end of 2019, only 38% of the Vietnamese population had done online shopping at least once a year, and slightly more than one third of them had bought goods/services worth over VND5 million, according to the Vietnam E-Commerce White Paper 2019 published by Vietnam E-Commerce and Digital Economy Agency (the Ministry of Industry and Trade).

Moreover, despite their favor of online shopping, most consumers only want to pay in cash instead of e-payment although the latter is encouraged. Quite a lot of people have complained about inconveniences such as wrong or substandard items incongruous with the stated quality while payments have been fully made.

Chau Giang, who recently tried online shopping, has promptly drawn a lesson: putting trust only on products offered by reputable brands. A considerable number of e-commerce traders do not deliver what they have advertised.

To combat counterfeiting in e-commerce, the Ministry of Industry and Trade has issued Decision 2981/QD-BCT and Decision 3304/QD-BCT. Late in February, a working group on e-commerce (including representatives of the Vietnam Directorate of Market Surveillance, the Vietnam E-Commerce and Digital Economy Agency, and local market management bodies) was established to promote the inspection and examination of smuggling, counterfeits, prohibited products and goods of unclear origin. In 2019, market management forces across the country handled 2,213 violations in e-commerce, imposing fines of nearly VND16.4 billion, more than double the figure of over VND7 billion in 2018.

Vietnam E-Commerce and Digital Economy Agency is the mastermind of the formulation of a decree amending Decree 52/2013/ND-CP dated May 16, 2013, which will include contents related to the transparency of product information, regulations on goods labeling, responsibility enhancement of e-commerce platform operators, and specific provisions on e-commerce activities on social networks, etc.

Industry experts believe the Government’s attempts in building a legal corridor and managing the e-commerce market are essential, but the efforts of online sellers are also necessary. It is because if they fail to establish credibility, it will erode the attraction of e-commerce while they themselves will miss the opportunities for business development in this potential area.

Cash payments remain common

Thuy Quynh, a teacher at an English center in Hanoi, has been shopping online for several years now. Albeit her favor of online payments, she does not always find this form of payment convenient. The reason is the types of accepted bank card and e-wallet vary from one e-commerce website to another, but she cannot own all of them. Therefore, she sometimes has to pay in cash upon delivery.

To minimize the risk of information security when shopping or accessing e-wallets, Quynh said she still did not dare to put too much money in the card used to pay online.

Chau Giang, meanwhile, recounted the time when a product she ordered online failed to reach her although she had transferred the money to the seller. The problem was she could not contact the trader.

Cash payment remains the method of choice of online shoppers, reaching an overwhelming rate of 90% versus only 10% of online payments. Among the factors that hinder the development of e-commerce, the aforesaid white paper says that besides product quality failing to match advertising (83%), poor customer care (47%) and unsatisfactory delivery (36%), there is also the fear of personal information leakage (43%) and complicated payment methods (13%).

To protect buyers from losing their money without delivery, e-wallet services have been supplied by many Vietnamese businesses in recent years—Momo, Vnpay, ZaloPay and Viettel Pay to name a few. Despite the fact that e-commerce sites provide shoppers with e-wallets for payment, money from their bank accounts will be transferred to these e-wallets and kept there. Only when they receive the items they order will the money in such wallets be transferred to the seller. Of course, sellers using e-wallet services will have to pay a fee equivalent to a few percent of the transaction value. However, this form permits consumers to feel more assured to transfer money online.

Recently, firms providing payment services via cards and e-wallets have launched a slew of promotion programs to attract users, which renders the use of such services more popular, especially in big cities.

Kazuma Shukuin, chief representative of Japan-based JCB in Vietnam, said transactions via JCB cards grew 50% in 2019, 70% of which came from online turnover. This is possible probably because of the attractive preferential programs that come with JCB cards (such as airport lounges, golf courses, food service systems and virtual cards for e-commerce marketplaces, etc.), said Shukuin. Although Covid-19 has affected JCB’s business expansion plan, he said the number of online payments on e-commerce platforms has still risen rapidly. This is a chance to make cashless payments more noticeable.

According to Tran Tuan Anh, managing director of Shopee Vietnam, e-payment on his e-commerce platform has increased recently, thanks to the multiple incentives this e-commerce platform offers.

Nguyen Thi Thuy Binh, deputy general director of Vietjet Air, said her firm has carried out many programs applicable to budget tickets aimed at boosting e-commerce and e-payments. Recently, this air carrier has launched a program offering 2.5 million promotional tickets for eight new domestic services starting from VND8,000 available to passengers who make payment online.

The diversified efforts have given e-commerce dealers better hope that they could play a part in changing customer habits from cash to non-cash payments.

By Van Oanh

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