A motorist carries flowers on his motorbike in Hanoi on March 8, 2024. (Photo by Nhac NGUYEN/ AFP)
HANOI: The revenue for package-delivery services has experienced average growth of over 20% between 2019 and 2023, which has led to fierce rivalry in the market, raising concerns about the emergence of unhealthy competition.
The peak period of the Covid-19 pandemic accelerated the rapid growth of online shopping, primarily through eCommerce platforms, helping it become habitual and a necessity for consumers.
As a result, the package-delivery market witnessed significant value growth, soaring from 28.3 trillion dong in 2019 to nearly 59 trillion dong in 2023. Also in the period, the number of parcels handled by delivery companies leapt to 2.5 billion from 715 million.
In 2023, approximately 1.8 billion parcels from eCommerce companies, accounting for some 75% of the total amount.
In tandem with the swift expansion of eCommerce since 2020, many online shopping platforms have followed a trend of developing their own integrated ecosystems, including for delivery.
Delivery enterprises affiliated with eCommerce platforms experienced rapid growth, with many entering the top-10 in terms of market share within two to three years of operations. Currently, the top-10 delivery firms with the largest market shares are engaged in transporting goods for eCommerce platforms.
According to Nguyen Truong Giang, chairman of the Vietnam Post Association, domestic delivery enterprises are facing a wave of franchising and indirect investment to expand into deliveries for eCommerce platforms and cross-border deliveries.
Foreign-backed companies are continuously expanding their capital sources, reducing transport costs, and increasing discounts and promotions to compete for market share.
While the short-term effectiveness of price competition cannot be denied, in the long run this may lead to negative repercussions for the discounters, other companies in the same industry, and the Vietnamese market as a whole.
To ensure healthy competition, La Hoang Trung, director of the Department of Posts under the Information and Communications Ministry, suggested that amendments should be made to the laws, focusing on supplementing conditions for licensing as well as regulations specific to dominant enterprises and business groups in the market.
The government needs to regulate competition by establishing a legal basis for issuing sanction regulations punishing enterprises for violations related to tariffs, promotions, and competition. — Viet Nam News/ANN
