Sustainable e-commerce and digital economy go hand in hand: Scholars
WVR - E-commerce is one of the engines of the digital economy, and sustainable development of this industry is becoming a necessity, according to RMIT University Vietnam researchers.
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| The rise of e-commerce coincides with the rise of a new generation of consumers – Gen Z, with their distinctive attributes leading to significant changes in the shopping journey. (Photo: Shutterstock) |
As per the e-Conomy SEA 2022 report by Google, Temasek and Bain & Company, Vietnam’s digital economy recorded a gross merchandise value of 23 billion USD in 2022. It is on course for 49 billion USD by 2025 – making it Southeast Asia’s fastest growing digital economy – largely thanks to a booming e-commerce sector.
In fact, the same report forecasts a compound annual growth rate of 37% from 2022 to 2025 for the local e-commerce sector. By 2025, e-commerce is expected to hit 32 billion USD and account for nearly two-thirds (65%) of the overall value of the digital economy.
According to RMIT University Vietnam researchers Associate Professor Pham Cong Hiep and Dr Nguyen Nhat Minh – contributors of the 2023 Lazada/VCCI report "Sustainable development in e-commerce: Driving force for the digital economy" - e-commerce is entering a new stage of development.
“Following the turbulent COVID-19 period, Vietnam’s e-commerce sector is now concentrating on developing and putting into practice sustainable development strategies,” Associate Professor Hiep said.
“Sustainable e-commerce will create a healthy business environment and provide the best services and products for users, thereby contributing positively to the growth of the digital economy,” Dr Minh added.
The duo elaborated that there are four areas of focus for e-commerce when it comes to developing sustainably, namely the business model, infrastructure; high-quality and digital-savvy human talent, and new technologies to improve customer experience.
Sustainable business model
Building a sustainable business model based on the Environmental, Social and Governance (ESG) framework will become indispensable for e-commerce firms. This will help them gain a clear vision and growth direction in the digital era.
Companies should continue to increase the value of products and services following sustainable practices, and based on an in-depth understanding of consumers gained from the application of technology.
“It is equally important to develop a sustainable e-commerce ecosystem to enhance core services and value offering capabilities, particularly in key areas such as supply chain and digital payment,” Associate Professor Hiep said.
“At the same time, firms are well advised to adopt sustainable practices in financial management to oversee, optimise and protect their assets, revenues, and financial resources.”
Sustainable infrastructure development
With regards to infrastructure, Associate Professor Hiep pointed out that this type of investment has been a big focus for many businesses, especially to install/upgrade software systems for data management, data mining, automation, cloud, and artificial intelligence.
“Information security is a critical priority to improve sustainable development in e-commerce,” he stated.
“Efficient logistics is also crucial to foster end-to-end connection throughout the supply chain and enhance the customers’ shopping experience.”
The RMIT academic said that logistics costs account for an estimated 10-20% of the final product prices. So, businesses can look to cutting-edge technologies such as machine learning, artificial intelligence, Internet of Things and blockchain, to optimise costs.
“Tech applications can also provide low-carbon solutions, and increased efficiency in transportation and post-delivery operations such as exchange and return,” he said.
High-quality and digital-savvy human talent
Meanwhile, Dr Minh highlighted the gap in the quantity and quality of the current e-commerce workforce versus the market demand.
“More universities and colleges should include e-commerce modules in majors such as business administration, management information systems, information technology, digital marketing, finance and banking, logistics and supply chain management,” Dr Minh remarked.
“As for e-commerce businesses, they should build a talent development and management model that ensures diversity, equality and inclusion.
“Increased investment in specialised training for technology, leadership, collaboration, and creative problem-solving skills is also a good idea,” he added.
New technologies to improve customer experience
The rise of e-commerce coincides with the rise of a new generation of consumers – Gen Z, with their distinctive attributes leading to significant changes in the shopping journey.
Dr Minh remarked: “Consumers now shop more smartly. They look for more refined experiences and higher value instead of just price discounts. They are also increasingly seeking eco-friendly products.”
The RMIT academic emphasised that technological application is essential to fundamentally improve customer experience, citing innovations such as shoppertainment (combining shopping with entertainment), customisation/personalisation, and virtual reality.
“E-commerce businesses should boost investment in tech application for each touchpoint throughout the customer's shopping journey. That’s one way they can gain customer loyalty for the long term,” Dr Minh concluded.
