Vietnamese businesses struggle to sell profitably on Amazon

HO CHI MINH: While US eCommerce site Amazon is a hit for many Vietnamese businesses, some struggle to profitably sell on the platform since operating expenses are high.

Nguyen Ngoc Luan, general-director of Meet More Vietnam Co Ltd, which sells fruit coffee, said low profits have dissuaded his company from continuing to sell on Amazon.

“Despite having relatively high revenues, expenses on shipping and storage are quite significant,” he told Tuoi Tre Newspaper.

Businesses operating on Amazon can opt for either fulfilment by Amazon (FBA) or tulfilment by Merchant (FBM) services, he said.

They can have Amazon stock, pick, pack, and ship customer orders under FBA, while FBM requires sellers to handle their storage and order fulfilment themselves.

“We use FBA since we do not have our own warehouse or links with distributors in the United States, but doing this results in low profit margins.”

A company in Ho Chi Minh City’s Cu Chi District that sells rice paper and dried rice noodles said it is still struggling despite having been on the platform for almost three years.

“Profits gained from global eCommerce platforms are not high even though products are sold at higher prices than domestically,” a company representative said.

“This is because operating and advertising fees on these sites are high, not to mention expenses for shipping, packaging and logistics.”

Lai Viet Anh, deputy director of the Vietnam Ecommerce and Digital Economy Agency (iDEA), told an eCommerce summit that cross-border eCommerce is thriving in many countries, including Vietnam and is aligned with the country’s goal of developing a digital economy.

But it is also a challenge for many businesses because foreign markets have stringent requirements for imported products, she said.

Another problem is the ability of Vietnamese companies, especially small and medium-sized ones, to research and evaluate potential markets.

Besides production costs, most companies also have to spend on supporting activities such as market penetration, transportation and currency exchange.

iDEA said it would support over 10,000 enterprises through a five-year programme for developing human resources, assisting them with using eCommerce platforms and equipping them with relevant skills to effectively sell products.

Vietnamese products are well received by Amazon buyers, including household items, kitchenware, home decor, wooden furniture, garments, personal care products, and consumer goods, chief executive of of Amazon Global Selling Vietnam, Gijae Song, said. — Viet Nam News/ANN