A new daily cargo flight between Nanning, China, and Ho Chi Minh City was launched this week to help e-commerce giant Lazada meet booming demand from digital consumers ahead of the Lunar New Year and bypass trucking bottlenecks slowing trade between the two countries.
Cainiao, the logistics arm of the Chinese internet titan Alibaba Group, which is Lazada’s parent company, started the direct, three-hour flight on Tuesday because it said it is anticipating “a surge in cross-border parcel volume” leading up to the Feb.1 Tet holiday.
The new flight presents an opportunity for the e-commerce company to improve delivery services. Lazada has long relied on road and rail transport, but trucking efficiency is deterred by limited hours when large vehicles are allowed to enter big cities like Hanoi and Ho Chi Minh City. The air freight service will be a significant support to Vietnam’s booming e-commerce industry.
Cainiao pointed out in its news release that Vietnam’s e-commerce market is currently valued at $13 billion a year, and is expected to increase to $39 billion by 2025, which would make it the second-largest market in Southeast Asia behind Indonesia, according to a 2021 regional report.
To demonstrate “the immense growth potential of the local consumer market,” Shawn Louis, a Cainiao executive for the Asia Pacific, cited how during the “11.11” online shopping event, Lazada in Vietnam saw about double the number of orders and sales compared with the year before.
“With the upcoming Tet, one of the largest celebrations in Vietnam, we are anticipating a similar surge in Lazada eCommerce purchases in the weeks leading up to the festival,” Louis said.
Cainiao also cited a recent report by Kantar that revealed that online sales in Vietnam in the month leading up to Tet can triple in volume, with 44% of consumers saying they plan to shop for Tet two weeks prior to the festival.
A separate report released by Think With Google revealed that 94% of Vietnamese consumers said they would usher in Tet 2022 with one or more “digital solutions,” including online shopping.
As the biggest gift-giving celebration in Vietnam, Tet brings on numerous sale campaigns. Besides Lazada, e-commerce sites Shopee and Tiki also launched attractive offers like discounts, coupon codes, and free delivery a month before the holiday.
Consumers eagerly spend on everything from fresh food to electronics. According to Lazada, consumers are buying gifts for Tet earlier than in previous years, to make sure their orders get delivered before the holiday starts.
The growing prominence of online shopping among the Vietnamese has become more evident during the months-long lockdown, with people relying on these internet-based services to buy goods and essentials. But while the surge in order volume posed an increase in sales among online sellers, the pandemic created supply-chain logjams as countries restricted border crossings and production halted amid widespread lockdowns and COVID-19 outbreaks at factories.
The release, citing a Transport Intelligence report, noted that Vietnam is “experiencing an accelerated pandemic-driven logistics and supply chain crisis, following the country’s various movement restrictions and quarantine measures.” Besides slower port operations, export volumes have also declined due to restrictions imposed by both Vietnam and China.
These border restrictions have also greatly impacted sales of in-season farm products like mangoes and dragon fruits. In December, over 6,000 trucks carrying agricultural and industrial products were stranded at the Vietnam-China border for weeks. The Vietnamese government earlier this month urged China’s Guangxi region to reopen border gates and ease customs clearance requirements to facilitate trade flow.