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International Journal of All Multidisciplinary Research Studies 2023; 2(1):64-71

(Multidisciplinary Journal, Online Journal, Indexed Journal, Refereed Journal, Peer Reviewed Journal)

Analysis and comparison of online fashion service business models in Vietnam

Tran Huu Ai1, Nguyen Xuan Minh Huong2, Doan Thi Van3

IJAMRS 2023; 2(1):64-71 Abstract

ISSN (online): 2583-2964 In the era of industry 4.0, when the internet and became an indispensable part of the lives of
Volume: 02
customers of all ages, more and more, the demand for shopping online products of people
Issue: 01
January - February 2023 smart phones increasing. The current boom of the Internet has led to the emergence of a series
Received: 28-01-2023 of new business methods, including the online fashion store, especially the increasing number
Accepted: 03-02-2023 of online fashion stores. Besides the outstanding advantages, this industry also contains many
risks. Therefore, online fashion business models are appearing more and more, diverse, new
Van Hien University,
[1, 2, 3]
and unique models, in order to attract the curiosity of customers.
Vietnam

Keywords fashion model, online fashion, online business.

Introduction
Introduction to the research problem
In the business market of the world in general and Vietnam in particular, the field of e-
commerce is the business goal of many companies. Different from the old direct way of doing
business, the 4.0 era of business depends a lot on the Internet with optimally invested online
sales websites.
Out of nearly 90 million people in Vietnam, there are about 41 million Internet users, most of
these users are young and have high shopping needs. Therefore, online shopping is no longer a
new thing for this customer segment.
Vietnamese fashion has made rapid progress, the issue of dress is getting more and more
attention, Vietnamese people have begun to choose stylish clothes and constantly update world
fashion trends. Besides, the appearance of talented designers, the birth of countless brands,
stores, shopping malls show the vibrant picture of the fashion industry in Vietnam.
Benefits of online sales:
Attract more customer interaction instead of just offline customers. Increase the number of
potential customers thereby increasing income.
Promote sales anytime, anywhere. As long as there is an internet connection, users can buy
products without going directly to the store.
Save a business cost compared to having to PR advertising on many other channels. You may
not even have a store, but as long as you have a website, you can sell.
Build brand, customer trust in the field you are operating. Because the website, whether selling
or introducing, is still the face of the business to the public.

Theoretical basis of the research problem

1) The status of buying clothes online of Vietnamese people through a survey.
Marketing technology company Criteo (France) recently launched a survey on consumers
on digital devices in Vietnam. The evaluation table shows that users' online shopping
habits are increasing, of which mobile shopping may be the next trend.
The French company said that 65% of respondents belong to the category of moderate
online shoppers, i.e. once a week or several times a month shopping online. The pie chart
above does not show the percentage of people who regularly shop online, but it can be
estimated that this group of "addicted" shopping accounts for 20-26%, that is, once a day
Correspondence or more. times a week
Tran Huu Ai
Van HienUniversity, Vietnam

64
2) Online fashion business models in Vietnam garment industry in the Vietnamese fashion market in this
a) Online fashion business model through period has had a significant increase in sales.
intermediary channels: - Shopee is an effective
online sales channel with no fees that can issue Cheap goods imported from Thailand into Vietnam:-
hundreds of orders per day. In addition to selling, Products originating from China continue to dominate
Shopee is also a channel to help you advertise your popular shopping areas. This product has a long-standing
brand for free. Currently, Shopee is a large and presence, low price and diverse designs. However, due to
reputable e-commerce channel, with the role of an disputes in the South China Sea and many toxic scandals
intermediary channel connecting buyers and sellers related to Chinese products, consumers began to boycott
to help. Online shopping becomes safer, simpler and these products.
more convenient. Vietnamese retailers and consumers began to turn to
According to the survey, Sendo is currently one of products made in Thailand. Because of the low price, the
the large-scale e-commerce platforms in Vietnam, same variety of designs and the import of goods is also
aggregating a variety of products such as fashion, quite simple.
electronics, household appliances and is very The transformation of the domestic brand:- Domestic
popular with consumers. Vietnamese users trust and fashion brands began to change, compete with
prefer. international brands and target the mid-range segment.
b) Business model by Website / Blog / WordPress / The Vietnamese fashion market in the period 2015-2016
Woocommerce: - This online fashion business was extremely vibrant with countless brands and high-end
model has been prominent in 2012 until now. But if stores being born.
you compare the convenience with social media The birth of Vietnamese brands has helped international
accounts, there is a lack of competition. brands affirm their value and become a high-end segment.
c) Business model by social network accounts:- International brands focus on expanding distribution
Selling on Facebook / Instagram is becoming a networks in two big cities, Ho Chi Minh City and Hanoi,
money-making trend in 2019, and will explode in where consumers have an upper-class lifestyle and high
the coming time. Selling on Facebook / Instagram is income, and also where following the trends of the times.
becoming more and more simple and effective, page is very important.
bringing a lot of profit to business people. Good Vietnamese fashion brands compete with international
profit, simple operation will lead to quite high brands quite fiercely. At this stage, domestic brands
competition among business shops.The sales continue to target the mid-range customer segment.
livestream tool has become increasingly popular and Focusing on improving quality, design is a strategy that
extremely effective, many stars have joined in helps them attract more customers, as well as win more
because it provides a good source of income. customers' trust.
The Vietnamese fashion market is now heavily influenced
Research results by foreign fashion brands such as Zara, Mango, H&M,
The Vietnamese fashion market in the period 2015-2016 etc. Vietnamese fashion has to manage to compete with
was heavily influenced by products from big foreign foreign brands. The demand for shopping of consumers
brands such as Banana Republic, Zara, Mango, Levis, increases, the period of technology boom, so the online
etc. In the mid-range segment is the introduction of business of fashion items is extremely developed. Online
products to from China, Thailand, Hong Kong, etc. fashion retail stores and the improvement in consumer
Vietnamese fashion brands always have to manage and perception they are willing to spend money on outfits.
compete with foreign brands. Currently, online shops not only source goods from
The period 2015-2016 is also a period of transformation wholesale markets or Vietnamese garment factories, in
of the Vietnamese fashion market with the introduction addition, shop owners also personally import goods from
of many prestigious brands and products that are warmly Thailand, Korea, China, etc. to sell to other retailers.
received by customers. If you are intending to build Products and fabrics are selected by the shop owner.
yourself a fashion brand, this fashion market analysis Online fashion business and sales people are a lucrative
will surely bring you much needed information. source of profit on facebook: easy to implement, low cost
The Vietnamese fashion market in the period 2018-2019 and large customer base. This business trend is strongly
has many exciting changes, the shopping demand of developed by many unique business ideas from young
consumers increases, and fashion trends do not have too people. However, not every start is successful. So how to
many breakthroughs compared to previous years. This sell online fashion effectively with the hottest social
leads to a strong increase in consumer shopping demand, network today.
especially for the apparel industry. In addition, online clothing business gives sellers an easy
Moreover, this period is the explosion of technology. management without having to wait for other people to
Thanks to the dynamic growth of online retailers and the come to buy, but now customers and sellers can directly
improvement in consumer awareness, people are ready to exchange prices as well as see the goods in person.
spend more on expensive and branded products. The through mobile applications. Customers, whether far or

65
near, can choose and shop comfortably anytime, in the import stage to bring goods to the market faster
anywhere. and more efficiently. Normally, in this model, the
Vietnam is currently facing a big challenge when famous "collaborator" often has to have a set of potential
foreign brands are gradually flooding into the market customers available, then find a suitable wholesaler to
such as: Uniqlo, Zara, H&M, Pull & Bear, etc. And get goods and sell to his customer set.
product quality is gradually improving. improving from c) Affiliate model
design, quality, source of goods and in addition, the state Similar to the retail collaborator model, the model
is being strictly controlled in this regard. Affiliate is a form of promoting products or services
Opportunities and challenges for the Vietnamese fashion of Suppliers, which are companies whose products
industry: since 2016 there has been an important event and services want through partners' websites to
affecting the Vietnamese fashion market. On 4/2/2016, promote goods and services to end users.
TPP (Trans-Pacific Partnership) Trade Agreement was Online monetization partners receive a commission
signed. Vietnam's economy is heavily influenced by this when users visit the management partner's website
agreement, and the fashion industry is also directly and perform the actions that the provider wants from
affected. the end user such as: Purchase, register to use the
According to analysts' forecasts, there will be a big service. service, fill in information.
change in the circulation of costumes. Because Vietnam Unlike the collaborator model, in the Affiliate model,
will open the domestic market to other countries because online business people only put sales information on
the barriers have been removed. different online channels to pull traffic to product
Thus, more and more international brands will enter the pages and optimize this traffic flow to get more sales.
Vietnamese fashion market. Vietnamese consumers' The more people performing tasks on the sales
demand for expensive brands will be met. website, the better. These tasks will be recorded on
Domestic brands will have to compete with big brands the Affiliate system and the seller will receive the
from all over the world. Besides, thanks to the TPP corresponding commission after these tasks are
agreement, many local producers can focus on exporting completed.
to other countries, achieving more profits than in d) Dropshipping model
Vietnam. Dropshippingmodel appeared in Vietnam. When
According to survey data, Vietnamese people's spending doing business in this form, you do not need to enter
on clothing ranks third, accounting for 13.9%, only after the product, but when there is an order, the supplier
spending on food (32.9%) and savings (14.9%). This is will deliver the goods to the buyer with your
quite a high figure compared to the spending and saving information. The supplier here plays the role of
of Vietnamese consumers. ensuring the goods and also the transportation to the
customer, and the in-between issues regarding returns,
Discussing the current situation of online fashion packaging, standard labeling. All you need is
service business model in Vietnam Online fashion advertising and Sell products and close orders. When
business models in Vietnam a buyer places an order, the order is processed and
a) Traditional online sales shipped directly from the supplier to the buyer. To do
This is an online sales model that has been formed this, the supply chain from the supplier to Vietnam
and developed since e-commerce and online retail must be complete.
began to be popular. In our country, this online sales The fashion industry has always been an attractive
model is applied by medium and large-scale retail industry for businessmen because it does not require a
and wholesale businesses. large amount of investment capital, is easy to access
Units use online sales channels as an output of to sources, can earn a good profit of 20%, and the
traditional business. They import a large amount of needs of customers are increasing day by day.
goods from suppliers or directly produce products, Especially at the present time with the explosion of e-
store and directly manage operations. Then they commerce plus the shift in shopping habits of the
distribute to offline retailers, resellers; retail online majority of consumers, online business of fashion
on e-commerce channels such as Shopee, Sendo, items has become a potential trend to develop.
Lazada and sell through other online sales channels develop.
such as Facebook, Instagram, website. In addition, easy access to product sources is both a
b) Collaborator model strength and a challenge for online fashion merchants,
In order to reduce the risk of importing goods in because it will lead to price competition. Many sellers
bulk for sale as in the first model, many online are always looking for a way to offer the most
sellers have chosen to resell products from favorable price possible. However, in my opinion, it is
wholesalers and receive commissions. This model is not necessary to lower the price deeply. Sellers should
commonly known in Vietnam under the name “ balance reasonable prices to ensure profits but
Contributor Model ”. maintain product quality and focus on improving
In this model, the person who plays the role of service quality.
"collaborator" will handle online sales to help people

66
After Vietnam joined the World Trade Organization corporations to invest more heavily in Big Data
(WTO), the online clothing retail market in Vietnam technology. Big Data helps retailers orient from the
increased not only for Vietnamese but also for beginning which fashion model to produce, how
foreigners trading in Vietnam. At the end of much, and when to reduce the price. In Vietnam,
February, Elise - one of the leading women's fashion fashion businesses still mainly rely on predictions and
brands in Vietnam announced the sale of shares to data. with a certain delay.
the Japanese investment fund Asia Fund. It can be seen that the Vietnamese fashion brands that
TokuoYotaro, a member of Elise's Board of have thrived in the market in the past few years have
Directors, said that in the coming time, Vietnam's fresh business thinking and master the tastes and
fashion industry will develop the fastest in Asia. characteristics of domestic consumers. Before the
According to a 2017 survey by market research appearance of international brands, Ms. Doan Ngoc -
company Asia Plus, Vietnamese young people are CEO of Canifafashion said that this is an opportunity
currently spending significantly more on clothing. for company employees to learn about services and
26% of people surveyed shop for clothes 2-3 times approach how to operate stores. However, domestic
per month, 52% said they usually shop for clothes fashion companies that want to assert their position
once a month. It is estimated that the value of cannot imitate international fashion models, but must
Vietnam's textile and garment consumption per year make a difference.
is about 5-6 billion USD, equivalent to nearly For example, Canifa chooses a price that suits the
120,000-140,000 billion VND. Businesses believe masses, and what it wants to differentiate itself from
that the reality may be much larger, because on the is durability. Ms. Doan Ngoc said, if the collection of
market today, goods of unknown origin, imitation international brands focuses on colors and textures, in
goods, hand-carried goods ... are also strongly order to attract customers with fashion, Canifa
consumed, especially in rural areas. According to chooses fashion enough (i.e. still catching up with
Nielsen's report in the second quarter of 2018, the customers). trend, but the product must have a longer
Vietnamese fashion market will have a growth rate service life, be represented by good materials and do
of 15-20% per year. not have a large change in design). This strategy is
In the past two years, along with the arrival of global suitable for the situation, the income of the majority
brands such as Zara, H&M, Pull & Bear, of Vietnamese consumers is still modest and the
Stradivarius start-up activities, mergers and difference in demand in clothing is not too great.
acquisitions, and expansion of Vietnamese fashion Targeting the higher-end segment, YvyModa is also a
enterprises are increasing day by day. Although successful brand with a new and breakthrough way of
many businesses have shrunk or even disappeared doing things. If in the world, for a long time, fashion
after a period of rapid development, many new brands have taken the organization of seasonal
brands with new thinking and new ways of doing fashion shows during the year as an opportunity to
things appear and are quickly noticed by consumers. communicate and approach customers, partners and
Compared to foreign goods, brands such as the public in the fastest and strongest way, then in
YvyModa, Canafi, NEM are highly appreciated for Vietnam, they operate in Vietnam. This move is still
the reasonable correlation between price, design and unfamiliar. For nearly three years, YvyModa has been
fabric quality. at the forefront of organizing seasonal fashion shows,
Despite such a potential common market, expanding combined with fashion shows on television. In
market share in Vietnam is actually not easy for both particular, this brand has attracted a lot of attention
foreign and domestic enterprises. After quickly through the collaboration with world famous designer
gaining success in a few big cities, foreign fashion Graeme Armor in the Fall-Winter 2018 collection.
brands have mostly stalled, unable to reach other Along with strong marketing, Ivy Moda also brings
provinces because the prices are still quite high and high technology into logistics through RFID
the designs are not suitable to the tastes of the technology: electronic chip management for each item
majority. Vietnamese people. The expansion journey code, helping to increase the productivity of the
of Vietnamese fashion brands is even more difficult stages: inventory, coordination, transportation.
when many consumers still prefer products of goods… It will only take three days instead of 10-15
unknown origin, fake goods. Especially, many days like before for the latest designs to be available
fashion companies in Vietnam are still managing on the system of nearly 70 stores nationwide.
according to the model. family, so the Designer Phuong My once said: “When I work in
competitiveness in terms of new sample rate is not fashion Design only takes up about 1% of the year.
high. The remaining 99% of the time is business, people
Besides, the ability to conduct surveys on consumer management, financial problems, brand expansion” –
tastes and habits is also an important key that that is the reality of today's fashion companies.
Vietnamese businesses must learn in the context of a
shorter and shorter fashion product life cycle today. Conclusions and recommendations
It is this fact that has forced global fashion Conclusion

67
The retail market in Vietnam is currently attracting a lot of - The State needs to pay due attention to commercial
products with the potential of mainly young people. In services because it is an intimate bridge between the
addition, we have removed barriers in the area of our inputs and outputs of any business form. Promote
commitment to establish a comprehensive partnership and trade in goods internationally as well as domestically.
advance across the Pacific, which is a new step that has made
the market explode with foreign investment in the industry. References
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