With the pandemic forcing a rapid shift in how consumers shop, Vietnam’s digital economy is mushrooming significantly, with eCommerce as the fastest growing sector in Southeast Asia in 2022 (26% CAGR). The growth of the affluent middle class, increased urbanization, young labor forces, digital natives, and the convergence of super-apps constitute a changing economic landscape. This flurry of new economic activity and innovation makes internet-enabled services more accessible and affordable. Despite the flourishing growth of eCommerce and other digital services, Vietnam-based eCommerce platforms, digital service providers, SMEs, and regulators are grappling with varying risks related to consumer protection, misuse of personal data, counterfeit and substandard goods, fraud, cyber-assault, intellectual property infringement and more.
In the face of these risks, eCommerce market players must rethink their service models to enhance corporate responsibility regarding digital trust, consumer rights, and environment, social and corporate governance (ESG).
As the middle class reaches higher tiers of the income pyramid, they continue to drive the growth of Vietnam’s digital economy. Increasing demand for sustainable options, transparency of product/service information, and proactive customer relationship management, compel businesses to take responsibility for digital behaviors in their space.
Digital trust
The dilemma many businesses face today is how to successfully embed technology into their operations and gain customers’ trust in products and services. Global eCommerce sales were nearly 5 trillion USD in 2021 and are projected to reach roughly 6.4 trillion USD by 2024. The cross-border nature of eCommerce requires crucial steps to enhance the importance of consumer trust and dispute resolution in a world where people expect one another to be digital. Amid growing public and regulatory demand for ethical and trustworthy sourcing, use of technology, and putting customers first, consumers are rethinking their purpose. They choose businesses that align with their values.
Rapidly shifting consumer behavior and regulatory scrutiny of new technology pressures companies to acclimate to the interconnected world. Unsurprisingly, the growing sensitivity of data privacy and security influences how consumers expect businesses to run. Consumers expect businesses to ensure personal data protection, cybersecurity and offer trustworthy AI-powered algorithmic targeting. Large digital platforms or high-growth companies should take proactive approaches to risk mitigation by developing codified policies on data governance and the ethics of using disruptive technologies.
With the newly developed legislative framework for cybersecurity and personal data protection, such as the Law on Cybersecurity 2018, Decree 53/2022/ND-CP implementing the Law on Cybersecurity, Draft Decree on Personal Data Protection, and Draft Law on Digital Technology Industry, companies may consider new regulations as an opportunity to revamp cybersecurity transparency and data privacy. As online shopping and a consumer’s digital identity become the norm, companies that value digital trust by strengthening end-to-end customer service throughout the consumer journey can explore the uncharted horizon of growth and help consumers achieve maximum value from their purchases.
Consumer rights and interest protection
The approach to eCommerce needs a tremendous update grounded in commitments to deepen engagement with customers in a way that genuinely meets their needs, which is essential to maintain stable growth of sales, customer loyalty, customer acquisition and service cost, and business reputation. With the increasing prevalence of complaints filed to regulatory authorities, the Government recognizes the necessity of reevaluating and amending the Law on Protection of Consumer’s Rights and Interests, combined with the recent issuance of the Decree 85/2021/ND-CP amending and supplementing the Decree 52/2013/ND-CP on eCommerce, and the Decree 98/2020/ND-CP prescribing administrative penalties on violations against regulations on commerce, counterfeit and prohibited goods, and consumer rights protection.
Besides improving regulatory frameworks, businesses can quickly pivot to meet the needs of their customers, identifying gaps in their business models and value chain to achieve substantial levels of operational resilience, organizational agility, and fulfillment flexibility. Therefore, incumbents are expected to review rapidly shifting customer behaviors to a proliferation of new technologies and business models that should exhibit customer-centricity via multichannel communication, rigorous compliance and governance measures, and optimization of channel strategies for the customer journey.
To best align with current regulations and policy objectives, such as Decision 1175/2021/QD-TTg, businesses are encouraged to reassess how they serve consumers with a distinct variety of preferences for better consumer protection, especially when they are constantly informed. Additionally, eCommerce players would have to adjust their regulatory compliance models to fit with what is planned by the Draft Decree regulating the management of imports and exports transacted via E-commerce. Regulatory agencies are becoming warier of ever-increasing eCommerce trade values and seek to alleviate fraud with more robust customs controls. Aside from the prevalence of regulatory bottlenecks in E-commerce supply chain management, it is notable that consumers are increasingly concerned about sustainability which ultimately changes their consumption patterns, and they become more responsible with their choices.
ESG
In Asia Pacific, consumers are becoming more environmentally conscious. They care more about sustainability than ever before, and in some cases, they are willing to spend more on premium products to support the cause. However, consuming cohorts’ increasing diversification and fragmentation demand companies to become more “purpose-led” and embed ESG in their business strategies. Amid macroeconomic headwinds, rising prices, and squeezing cost of living, companies face multiplying challenges to the integrity of ESG goals and their commitments to corporate ESG solutions.
Though the ESG framework is recognized strongly in Vietnam, there are still barriers to adoption in which 61% of businesses cite a lack of knowledge, 67% due to regulatory challenges, and 71% lack of understanding of data required for ESG reporting, according to PwC Vietnam and the Vietnam Institute of Directors (VIOD). In conjunction with Resolution 136/2015/NQ-CP on sustainable development and Decision 889/2020/QD-TTg on sustainable production and consumption for 2021 – 2030, companies need to maintain their social license by integrating ESG into strategies and business models to create long-term values with measurable approaches for reporting and disclosure frameworks.
Beyond sustainability goals and commitments to better consumer protection, purpose-led companies can make a difference by providing authentic values and positive change, either environmental or societal, and high-quality products/services. By building purpose into business models and demonstrating that they benefit multiple stakeholders and broader society, companies can tap into lesser-known problems and raise awareness, spur consumer interest in their products and demands, and even attract high-quality employees. With changing consumer landscape, companies thus will have to find new growth angles by adopting a sustainability mindset, increasing the speed of innovation, and ensuring digital maturity to grasp nuances of different markets.