E-commerce activities have become increasingly familiar in the present era. The dynamics of the economic and social landscape have created breakthrough opportunities for the Vietnamese e-commerce market, positioning Vietnam as one of the most promising e-commerce markets within the ASEAN region.  The growth of e-commerce has played a substantial role in facilitating the flow of goods and services, supporting businesses, particularly small and medium-sized enterprises, in their pursuit of development opportunities amid the context of economic integration and the technological revolution.

While e-commerce offers various benefits, including market expansion, cost reduction, increased profitability, and expeditious payment systems, it also faces several limitations. Violations in e-commerce practices are becoming increasingly complex.  Challenges related to safety, cybersecurity, protection of personal information, counterfeit goods, smuggling, and infringement of intellectual property rights on e-commerce platforms and social networks remain pressing concerns for both regulatory authorities and consumers.  In particular, the growing prominence of social networks as a widespread medium for e-commerce activities, lacking robust regulatory oversight, represents an issue that warrants genuine apprehension. The constraints within e-commerce transactions remain an unresolved predicament.

Limitations in E-Commerce transactions

In addition to its significant advantages, e-commerce also faces numerous limitations, posing challenges for organizations and individuals engaging in e-commerce activities.

  • High technology costs.  E-commerce relies on telecommunications networks and information technology.  As technology advances, e-commerce has the potential to create new services. However, online operations require substantial investments in technology.  The set-up and maintenance costs of an e-commerce website can be significant for many businesses. Maintaining a website requires professional management, which means businesses need skilled labor trained in marketing and technology to ensure the effective operation of e-commerce.  The high investment costs often deter businesses from comprehensive investment, and even if they do invest, they may not sustain it in the long term.  Additionally, technology evolves rapidly, requiring users to continuously learn and enhance their knowledge of modern technology. In Vietnam, small and medium-sized enterprises have had to overcome numerous barriers to invest in information technology applications.
  • High operational costs for warehousing, labor, and advertising.  Logistics can be a major challenge for most e-commerce businesses.  Typically, transportation costs account for a significant portion of the profits.  Shipping costs often depend on the size and weight of the products.  The cost of shipping is a common concern for customers when choosing to buy online.  When purchasing from a physical store, customers can buy, pay, and take the product home immediately. However, with online shopping, the delivery time depends on the geographical location, and shipping fees can be high, making it difficult for customers to accept.  Warehouse storage costs or high advertising expenses are also disadvantages of e-commerce.  Nevertheless, without advertising, it is questionable whether customers can access the products.
  • Intense and unhealthy competition.  There are countless individuals and businesses engaged in online business, making it challenging for e-commerce websites to stand out and attract customers.  Individuals and businesses that want to survive in the e-commerce market need to differentiate themselves through product quality and services.  Furthermore, significant investments in advertising and promotions are necessary to gain a competitive edge.  However, once pricing is publicly disclosed, in industries with non-exclusive and mass-market products, it is inevitable that price wars will occur.  Competitors are willing to lower prices significantly to attract customers, even if this is not a healthy practice.
  • Customer trust and product quality.  The diversity of e-commerce products provides buyers with more choices, but the quality of these products is not always guaranteed or as advertised. Despite the strong appeal and continuous development of e-commerce, traditional commerce still holds an advantage because many customers lack trust in online transactions.  Trust is another limitation of e-commerce.  While online shopping offers convenience and excitement, it can also be a disadvantage.  Customers are always concerned about counterfeit, fake, or low-quality products when purchasing online due to the inability to experience the products directly before making a purchase.  This is why businesses maintain both online and offline operations to best serve the needs of customers.  E-commerce has an advantage in terms of product data systems and modern customer care processes.  In reality, many customers choose to research products online and then go to physical stores to see them firsthand and make a purchase, or vice versa.
  • Privacy and security concerns.  E-commerce can experience incidents involving the leakage of business and customer information due to the intrusion of technology hackers.  Every day, there are cases of unauthorized financial transactions due to the leakage of customer credit card information.  Customers are still concerned about the security of their personal information, especially credit card information, when conducting transactions on insecure e-commerce websites.  Therefore, businesses need to be proactive and vigilant in protecting and securing their information.   Consumers also need to be cautious about potential fraudulent schemes if their personal information is compromised.
  • Unable to shop if the website or app is faulty.  The majority of buying and selling activities take place on e-commerce websites and apps, relying entirely on internet connectivity.  Therefore, if the website or app encounters issues or malfunctions, it will affect the customer experience and prevent them from continuing to make purchases on an unprofessional website or app, thereby impacting the reputation of the business and customer trust. To ensure professional e-commerce operations, it is necessary to choose a reputable and professional website.
  • Certain industries face challenges in conducting e-commerce transactions.  There are “specialized” products that are difficult to sell through e-commerce platforms due to their unique characteristics or high value, such as trading in gold, silver, gemstones, real estate, massage services, dental services, etc.  Businesses in these industries can only rely on advertising to promote their products or introduce the processes involved in their offerings.  As a result, there are limitations when conducting e-commerce activities for these types of products.

Key considerations in e-commerce activities:

  • Website registration procedures.  Individuals, organizations, and businesses establishing websites for e-commerce transactions need to register and obtain approval from the competent state management authority. During registration, it is crucial to provide complete and accurate information about the website, such as the domain name, types of goods or services offered, and the registered name of the merchant or individual owning the website.  Additionally, the registered address, registration date, and place of issuance of the business registration certificate for merchants or personal tax identification numbers for individuals should be provided.  Information about the representative of the merchant, the person responsible for the e-commerce website, and other required details as stipulated by the Ministry of Industry and Trade should also be included.  For instance, an e-commerce trading floor must disclose its operational regulations, seller information, and dispute resolution mechanisms.  An online auction website should publicly announce complete and accurate information relating to the goods being auctioned, starting prices, acceptable sale prices, etc. An online promotional website must state information about each promotional activity, including the name, address, telephone number, and other contact information of the merchants, organizations, or individuals offering the promoted goods or services, as well as the description of the promoted goods or services and the promotional period.  Failure to disclose or incomplete, misleading provision of information specified by law will result in fines ranging from VND 5 million to VND 20 million and the obligation to rectify the information.
  • Ensuring the security of customers’ personal information.  During the operation of an e-commerce website, businesses may only collect and store customers’ personal information when certain conditions are met, such as obtaining prior consent from the individuals concerned.  There must be mechanisms that allow customers to choose whether to share, disclose, transfer their personal information to a third party, or use their personal information for advertising, product promotion, and other commercial purposes.  In the event of a system breach posing a risk of information loss for consumers, the entity storing the information must notify the competent authority within 24 hours of discovering the incident.  The entity must also verify, update, adjust, or delete personal information of data subjects upon request or provide data subjects with tools to independently verify, update, and adjust their personal information. The website owner has an obligation to protect customers’ personal information. Unauthorized acts of theft, use, disclosure, transfer, or sale of customers’ personal information in e-commerce transactions without the consent of relevant parties will result in fines ranging from VND 30 million to VND 40 million, suspension of e-commerce activities for a period of 6 to 12 months, and the requirement to surrender any illegal profits derived from such violations.
  • Limiting violations in the provision of inaccurate information regarding goods, transaction documents, and misleading origin details is of imperative importance.  Violations related to information provision by businesses and individuals engaged in commercial activities may result in penalties according to Article 66 of Government Decree No. 185/2013/ND-CP dated November 15, 2013, which addresses administrative violations in commercial operations, counterfeit goods, prohibited items, and protection of consumer rights.  Failing to provide invoices and transaction documents not only indicates non-compliance with tax obligations to the state but also deprives consumers of a foundation when seeking redress.  Violations concerning transaction documents may lead to warnings or fines under Article 77 of the aforementioned decree.
  • Be a smart consumer.  E-commerce is a new and essential shopping trend that attracts a large number of consumers, but it also presents certain drawbacks.  Thus, when engaging in commercial transactions on electronic platforms, it is important to be an informed consumer. To ensure that online shopping truly offers numerous conveniences, in addition to efforts from regulatory authorities, consumers need to actively engage in intelligent consumption and thoroughly understand this shopping method. It is advisable to purchase from reputable websites that are licensed, provide clear contact information, and particularly offer terms regarding warranties, returns, refunds, and delivery.  Thoroughly researching products and services before making a purchase is essential to avoid acquiring low-quality products or services. Exercise caution when encountering information requests from unfamiliar websites, as they may violate legal regulations, cause inconvenience to consumers, or even compromise consumers’ financial information. In case of disputes in e-commerce with organizations providing goods and e-commerce services, it is advisable to contact the competent authorities for assistance.

E-commerce is a promising business trend for the future.  Overcoming limitations to ensure the robust development of e-commerce and fostering a healthy business environment is not only the responsibility of the government but also of all citizens, with the aim of enhancing the competitiveness of domestic and foreign enterprises.

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