As e-commerce in Vietnam grows, last mile delivery has plenty of opportunity to grow with it. But underdeveloped transport infrastructure has so far created a last-mile logistics sector that is more dependent on labour than on anything else. Players that can use technology to deliver superior experience to customers will come out victorious.

Growth potential

E-commerce in Vietnam has been growing quickly. An estimate by the Vietnam E-commerce and Digital Economy Agency (VECITA) put total B2C e-commerce revenue at US$5 billion in 2016, up 23% on-year.[1]

With this speed of growth in e-commerce, last-mile delivery, or fulfilment, the final segment in the logistics network where finished goods are transported to the consumer or business that order them, has huge potential for development.

State of the sector

Using a third-party fulfilment service is still not overwhelmingly popular among sellers. According to the result of a survey of 3,134 companies all over the countries in diverse fields of business in 2016 carried out by the VECITA, for sellers, using a third-party fulfilment service is just as popular as doing fulfilment themselves.


Chart 1: Modes of shipping used by sellers (source: VECITA)


Companies either have their own fleet of dedicated shippers, or have employees act as shippers, or hire a delivery company.

Feedback from customers and sellers show that delivery in Vietnam is both slow and costly.


Chart 2: Challenges when shopping online (source: VECITA, result from survey of 1,159 people with internet access in 2016)


Slow delivery was the 4th biggest challenge when shopping online for customers.


Chart 3: Biggest challenges for e-commerce players. (Source: VECITA. Companies are asked to rate the following challenges 0, 1 or 2 according to the level “no challenge,” “low challenge” or “high challenge”)


High logistics cost was the 2nd biggest challenge to e-commerce players.

Most of the cost of a logistics service comes from labour, as can be inferred from the chart below, which breaks down the headcount of the e-commerce operation of companies.


Chart 4: Human resources breakdown in e-commerce activities of companies (source: VECITA)


Shippers account for 18 per cent of e-commerce headcount at companies.


Image 1: Ads looking for shippers, all of them very recent


One reason fulfilment in Vietnam is so labour intensive is the prevalence of cash-on-delivery (COD), as a result of which all delivery service providers have to accommodate COD (see our payment report for the reasons for the popularity of cash)

The other reason is low-quality infrastructure.

Ho Chi Minh City and Hanoi are the most bustling in e-commerce, ranking first and second in B2C transaction index by the Vietnam E-commerce Association (VECOM) in 2016[2]. And both cities are a shipper’s nightmare.

Traffic jams are frequent and last long.


Image 2: Traffic jam in Ho Chi Minh City (Source:

Newspaper Tuoitre cited the Ho Chi Minh City Department of Transport as saying that 70% of the roads in the city are 7 metres and under in width, and cars move at an average speed of 22 kilometres per hour.[3]

Image 3: Traffic jam in Hanoi (Source:

Fast increasing number of vehicles, plus inefficient design and planning resulted in jams every day.[4]

When one gets from the road to the alley and the sub alley and the sub alley- some as narrow as for one person for each direction, it’s difficult to squeeze a vehicle even if said vehicle is a motorcycle. Mini traffic jams inside alleys are common as vehicles struggle to make space for one another.


Image 4: A small alley in Ho Chi Minh City (Source:

Small alleys in Ho Chi Minh City are getting more and more jammed because big high-rise apartment buildings are allowed to be built inside alleys.[5]

That is not to mention, house numbers are sometimes erratic. Also, one street may be broken into two parts with houses of the same number. [6],[7]

Mushrooming players

Big B2C e-commerce sites namely thegioididong, dienmayxanh, FPTshop and Nguyen Kim do fulfilment by themselves. Among B2B2C sites, Lazada and Tiki are providing fulfilment service, which includes warehousing, packaging and shipping, for their sellers while Sendo is providing only shipping through its shipping partners. The top two C2C sites, Vatgia and Shopee, both provide shipping through its shipping partners.

When one competes mainly on the basis of labour, barrier to entry is not very high. Fulfilment service companies are numerous. Names include Viettel Post, VNPost, Saigon Post, Giaohangnhanh, Shipchung, Giaohangtietkiem and many small players. The only international player that has entered the last-mile delivery game in Vietnam is DHL, which launched DHL eCommerce nationwide in July 2017.[8]

Independent shippers are a force to reckon with. Shipper is popular both as a full- and part-time job. There are Facebook groups dedicated to connecting shippers and sellers in different cities with up to 500,000 members each, where shippers look for orders as well as share with one another tips in the job.

Due to the prevalence of COD, independent shippers and shipping companies alike have to pay the sellers either the whole or a part of the value of the goods in advance when they collect the goods[9], then collect the money from buyers.

Shipping is not an easy job. With delivery time pressure, a traffic jam means they either speed when they can, which in many cases result in traffic accidents, or arrive late and risk customers refusing to receive the goods. If they ship perishable goods, customers may refuse on the ground of the goods being no longer fresh.[10]

The relationship between shippers and sellers is not always sweet. There are cases where sellers inflate the value of their goods, or where customers are nowhere to be found and then the sellers refuse to pay back the advanced sum. There is no information available on the internet of cases where shippers are tricked into carrying illegal goods but this is their biggest fear, as evidenced in interviews with newspapers and shippers’ posts in the Facebook groups warning one another of the danger.

But on the other hand, some shippers trick sellers too. Some shippers work with a seller for a long time and establish reputation, to the point that sellers trust them and do not require them to pay in advance when collecting the goods, and the shipper then vanish with the goods.[11]

In order to streamline the process, there are multiple apps that connect shippers and sellers.


Image 5: An app that connect shippers and sellers

This app and the similar ones on the right each have between 10,000 and 50,000 downloads


These apps allow users to post ads and respond to each other’s ads, call one another, manage their orders, search orders according to location or around their location, filter by diameter and price.

Grab and Uber are also providing their own shipping service, called GrabExpress and UberDELIVER, respectively.

Our opinion

Underdeveloped transport infrastructure resulted in a last-mile logistics sector that is more dependent on labour than on anything else, and consequently, higher cost to both the service provider and the user. Even with such high cost, service is not always very good. In this environment, we think that players that can use technology to deliver superior experience to customers will come out victorious.

In addition self-collection points are currently not implemented by any company and could be an interesting opportunity should it be implemented.













Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at and let us know how we can help.

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