E-commerce business model in our country today

Today, e-commerce develops strongly because of the speed of internet use and modern technology. People increasingly prefer trading in this form because of the advantages it brings. There are many different forms of e-commerce, in this article, we take a look at 3 typical e-commerce business models in our country.

Benefits of e-commerce business model

Benefits of e-commerce for businesses

  • Expand the market with much smaller investment costs than traditional commercial forms
  • Promote information and marketing to a global market with extremely low costs: Reduce paper costs, administrative costs, business registration costs, etc.
  • Improve distribution system, reduce inventory, and delivery delay, increase product launch speed thanks to the growth of the global Internet
  • Better customer care service, can update and provide information about products, quotes for customers extremely quickly, facilitate buying directly from online
  • Establish solid partnerships
  • Increase sales for businesses
  • Create a competitive advantage through the personalization of products and services
  • Simplify administrative procedures, paperwork, increase efficiency of commercial transactions
  • Price information, product images are updated and changed instantly according to the changes of the market
  • E-commerce is an opportunity to help businesses in Vietnam increase their competitive advantage on the threshold of world economic integration.

Benefits of an e-commerce business model with consumers

  • Eliminate obstacles of space and time: Customers can participate in online auction floors, buy and sell and search for goods and services that they are interested in anytime, anywhere.
  • Wide selection of products and services: Shoppers can access multiple suppliers at once
  • Customers have the opportunity to purchase products and services online from manufacturers or suppliers
  • Customers can buy products at lower prices: Due to convenient, easy and richer information, customers can compare prices between suppliers and sellers more conveniently from there. good price
  • Information on the e-commerce floor is richer, more convenient and of higher quality: Customers can easily find information quickly through search engines with more realistic images and sounds.
  • Customers can now enjoy many benefits from online communities: An e-business environment that allows participants to collaborate and share information and experiences effectively and quickly e-commerce business model

Benefits of e-commerce for society

  • Create a new type of business in the market
  • Improving living standards: Many goods and many suppliers exert pressure to reduce prices. Therefore, the purchasing power of customers is higher, improving people’s living standards
  • E-commerce has a strong impact on underdeveloped countries: LDCs can access products and services from more developed countries through the Internet. At the same time, creating opportunities to learn and absorb experiences from advanced countries
  • Facilitating early access to the knowledge economy: E-commerce stimulates the development of the information technology, data mining and knowledge discovery industries
  • Procurement services are provided more conveniently, creating a driving force for reform for state agencies
simple business model
simple business model

Limitations of e-commerce

The change of business environment

E-commerce is affected by domestic and foreign economic environment, such as national development situation, economic and financial policies or legal, cultural and social environment.

At the same time, e-commerce is also greatly impacted by technological change. Buyers and sellers are in direct contact through e-commerce platforms and the Internet. Therefore, participating in e-commerce requires people to be qualified, knowledgeable about using and mastering their business activities.

Investment costs are not high for technology e-commerce business model

E-commerce depends on telecommunications networks and information technology. The more technology develops, the more e-commerce has the opportunity to develop and create new services, but at the same time there are problems that increase the cost of technology investment. In fact, in Vietnam, small and medium enterprises have to overcome many barriers to be able to apply information technology such as: high cost of information technology, lack of correspondence between information technology supply and demand, lack of partners, customers and suppliers….

The high rate of investment costs makes businesses very little dare to invest comprehensively, if there is an investment, they cannot pursue it for a long time, because apart from that cost, businesses have to spend a lot of other costs. Moreover, rapidly changing technology along with the speed of scientific and technical development makes users to constantly learn and improve their knowledge using modern technology.

The legal framework is not yet complete

E-commerce wants to develop now, it requires countries and especially Vietnam to perfect their legal system in the field of e-commerce, including a lot of guiding documents, specific regulations for each industry, each field.

E-commerce business models in Vietnam

B2B . Model

B2B (Business to Business): understood as e-commerce between businesses, is a buying and selling relationship between businesses. This model accounts for over 80% of e-commerce sales globally.

B2B model is favored by many businesses because of its benefits such as reducing costs of market research, effective marketing, high awareness, increasing cooperation opportunities between many businesses, creating a diverse market of commodities and stakeholders. Businesses can offer goods, find customers, place orders, sign contracts, and pay through this system. This model has helped many businesses in doing business, especially international business.

There are four common B2B models:

  • The B2B model is mainly biased towards the buyer
  • The B2B model is mainly on the seller side
  • Intermediate B2B model
  • Type of commercial cooperation

One of the typical successful B2B models in the world is Alibaba.com of China. In Vietnam, there is cvn.com (Ministry of Industry and Trade); vietnamesemade.com; Vietgo.vn; Bizviet.net…

B2C Model

B2C (Business to Consumer): understood as commerce between businesses and consumers, in other words, the purchase and sale of goods between businesses and consumers through the internet. e-commerce business model

  • E-commerce website: is an electronic information page set up to serve part or the whole process of buying and selling activities.
  • E-commerce trading floor: is an e-commerce website that allows traders, organizations and individuals (not website owners) to conduct part or the whole process of buying and selling goods and services on it.
  • Online promotion website: is an e-commerce website set up by traders or organizations to conduct promotions for goods and services of other traders, organizations and individuals (for example, websites that share discount codes, vouchers, etc.) …)
  • Online auction website: is an e-commerce website that provides a solution that allows traders, organizations and individuals (not website owners) to organize auctions for their goods on it.

In our country, the number of e-commerce websites accounts for more than 94%, which is considered to represent the majority of online commerce activities. The remaining types of websites account for a very small and insignificant proportion.

One of the successful business companies in the world following this model is Amazon.com, Best Buy, AliExpress… In Vietnam, there are Tiki, Shopee, Sendo…

simple business model
simple business model

C2C . e-commerce business model

C2C (Consumer to Consumer): is understood as e-commerce between individuals and consumers, not businesses. This is a rapidly growing and increasingly popular business model. Specifically, these are online auction websites, online classifieds.

Some activities of the C2C model:

  • The most famous in this model is the auction (purchase) operation.
  • Exchange transactions (no currency used)
  • Support transactions (maintenance, intermediary payments, etc.)
  • Selling virtual assets (most typically online games)

One of the most successful brands following this model is the eBay auction site. Vietnam has websites operating under the C2C model such as chodientu.com; heya.com.vn; 1001shoppings.com…

In addition, the type of e-commerce M-eCommerce (Buy and sell via mobile devices) or e-commerce using virtual money has also appeared in Vietnam. In which M-Commerce is widely applied in many types of e-commerce and is growing strongly.

There are also some other e-commerce models that are not popular in our country such as B2G (Business to Government) model: E-commerce between businesses and the government (public administration). This category includes the use of the Internet for public procurement, licensing, and government-related activities.

Recently, many websites of major manufacturers or distributors in our country have integrated many functions to be able to sell online, like an e-commerce site but specializing in a few categories such as Juno, Vascara…

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By Nguyen Manh Cuong

Nguyen Manh Cuong is the author and founder of the nguyendiep blog. With over 14 years of experience in Online Marketing, he now runs a number of successful websites, and occasionally shares his experience & knowledge on this blog.

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