Amazon Gets Ready For Next Global Step

Amazon.com, Inc.doing business as Amazon, is an American electronic commerce and cloud computing company based in Seattle, Washington that was founded by Jeff Bezos on July 5, 1994. The tech giant is the largest Internet retailer in the world as measured by revenue and market capitalization, and second largest after Alibaba Group in terms of total sales. The amazon.com website started as an online bookstore and later diversified to sell video downloads/ streaming,  MP3 downloads/streaming, audiobook downloads/streaming, softwarevideo gameselectronics, apparel, furniture, food, toys, and jewelry. The company also produces consumer electronics, Kindle e-readersFire tabletsFire TV, and Echo, and is the world’s largest provider of cloud infrastructure services (IaaS and PaaS). Amazon also sells certain low-end products under its in-house brand AmazonBasics. Amazon has separate retail websites for the United States, the United Kingdom and Ireland, France, Canada, Germany, Italy, Spain, Netherlands, Australia, Brazil, Japan, China, India, and Mexico. In 2016, Dutch, Polish, and Turkish language versions of the German Amazon website were also launched. Amazon also offers international shipping of some of its products to certain other countries.

In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. Amazon is the fourth most valuable public company in the world, the largest Internet company by revenue in the world, and the eighth largest employer in the United States. In 2017, Amazon acquired Whole Foods Market for $13.4 billion, which vastly increased Amazon’s presence as a brick-and-mortar retailer. The acquisition was interpreted by some as a direct attempt to challenge Walmart‘s traditional retail stores. Amazon is about to open up its platforms to small and medium enterprises in Vietnam. The American e-commerce giant is expected to sign a deal with the Vietnam E-Commerce Association at a forum in Hanoi next Thursday, reports VNexpress.This follows a meeting between the association and Amazon in December. Its development strategy will be revealed at the Vietnam Online Business Forum, which after Hanoi will move to Ho Chi Minh City two days later. The event includes discussions about online shopping trends, tax management, and new technologies.

Vietnam’s e-commerce market grew by 25 percent last year and is expected to maintain its growth in the next three years, says the association. Revenue from online retail is forecasted to hit the US with $10 billion by 2020, accounting for 5 percent of the country’s retail market. Next week, Amazon is expected to announce its first steps into Vietnam’s fast-growing e-commerce market. According to a report in Tuoi Tre, the online retailing giant will sign a deal with the Vietnam E-Commerce Association (VECOM) that will open up its platform to exports from Vietnamese businesses. Amazon’s move is seen as a precursor to greater involvement in a thriving market that is set to become another battleground for the global giants, as internet services and connectivity improve and as mobile payment becomes increasingly commonplace. VECOM figures indicate that Vietnam’s e-commerce market grew by 25% in 2017 and a similar rate of growth is forecast for the next three years. The organization predicts that online retail revenue will hit $10bn by 2020 and account for 5% of the country’s total retail market.

Earlier this year, Chinese e-commerce giant JD.com invested around $44m to become a strategic shareholder in Tiki, one of Vietnam’s first and largest online retailing platforms. “With JD’s expertise in leveraging social media for e-commerce, Tiki.vn’s partnership with VNG [a social media firm] in social network and mobile payments is a natural fit,” Winston Cheng, president of JD.com’s international business, said at the time. JD’s Chinese rival Alibaba, meanwhile, poured $1bn into Southeast Asian retail platform Lazada last summer to take its share to 83%, with Daniel Zhang, CEO of Alibaba Group, noting that “the e-commerce markets in the region are still relatively untapped”, and that there was a “very positive upward trajectory ahead of us”.

Lazada has also worked with FMCG giant Unilever to build an “end-to-end alliance” in the region, which Unilever’s regional leadership expected would help grow online sales three times as fast as previous years. This time last year, Lazada CEO Maximilian Bittner was unperturbed by the prospect of Amazon’s move into the region, saying “It’s very hard for me to worry about someone who has not actually entered the market yet. I think once they’re here, we can start worrying about them.” Mr. Nguyen Tuan Ha, CEO Vinalink once said that Amazon does not stand a chance in Vietnam, because of 1 million Facebook users who do sales business on the social platform. Did we underestimate U.S.’s biggest B2C online retailer? Everyone is crazy about Amazon’s professional business model. This giant also constantly expands its business with product diversification and different warehouses. Amazon offers a professional procurement method, many choices, accurate information, and a very efficient payment process and delivery.

Meanwhile, Vietnam retailers are forever running around with the story of “trust” and “quality”. Recently, Shopping Day 2016 offered many “special discounts”, yet customers had pointed out that the prices were actually higher than the normal market. Getting the certified quality check, not having their own factories, and having to rely on 3rd parties are weaknesses for Vietnam B2C retailers. According to 2015 business view of more than 20,000 small and medium retailers by Bizweb, nearly 40% of the businesses did not grow. This means 40 out of every 100 retailers had the same or worse business growth compared to 2014. Bizweb’s CEO said that this is understandable when even though local retailers tried baby-steps with doing e-commerce, they did not know how to take advantage of this business model. Win-win collaboration also was not given the right attention. Everything seems to be stuck at “use what you have”.

Take omni-channels sales method – which has not been favored enough by retailers – as an example. Online shops still do marketing mostly via their website and Facebook, while other channels such as Zalo, e-commerce platforms are forgotten. While Amazon is experimenting with Amazon Prime Air – a future delivery system from Amazon designed to safely get packages to customers in 30 minutes or less using small unmanned aerial vehicles, also called drones – B2C retailers in Vietnam still stuck with old-fashioned, time-consuming shipping modes, or even hire a motorbike to do the work. Also from the business review in 2015, 75% retailers are still using traditional delivery method via trains, only 48% hired a 3rd-party professional transport partner. The weaknesses of Vietnamese retailers can be mentioned as following: input products are depended on 3rd parties, online marketing has not been done thoroughly, post-production process is still very unprofessional and trust issue for online products from customers. Therefore, if appears a foreign company who can solve all the above issues, will it be embraced by Vietnam consumers, when “foreign favoritism” is a trend in the market?

Amazon will face stiff competition in Vietnam, and Southeast Asia as a whole, from Alibaba and JD.com. In Vietnam specifically, Lazada, which Alibaba owns 83% of, controls approximately 30% of the country’s e-commerce business, according to the Nikkei Asian Review.com. JD.com has shown interest as well, investing approximately $50 million in Tiki, a Vietnam-based online retailer that it intends to help with fulfillment, logistics, and more. The presence of both of these powerful companies will make it difficult for Amazon to succeed in Vietnam, and if the company looks to expand to other markets, like Indonesia, it will find similar situations, often with Alibaba and JD.com having a significant head start.

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