The Significance of Mobile E-Commerce in Customer Retention in Vietnam

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The Significance of Mobile E-Commerce in Customer Retention in Vietnam

1.0 Background of the Study

Marketing dynamics across the globe have changed significantly, necessitating firms to find innovative ways of attracting, serving, and retaining customers. One of these emerging ways of doing business entails the use of e-commerce. Other than creating a network of customers, e-commerce facilitates business by reducing the cost of operation through speeding up activities, managing customers' information, as well as linking a retailer with the outside world of the outbound supply chain. Research shows that “e-commerce is one of the most innovative expansions of the technologies that enable small and medium-sized enterprise (SMEs) access to global communication and trade” (Nguyen & Thai-Binh 2018, p. 1). Now more than ever, almost all multinational and local businesses have adopted the use of mobile e-commerce as a way of gaining a competitive edge; however, for a sector to gain these aspirations, a clear understand of the significance of mobile e-commerce toward improving the rate of customer loyalty and retention is paramount.

Vietnam is located in the Indochinese peninsula and is among the Southeast Asia region. For the last decade, regions bordering Vietnam, such as China to the North, Cambodia, and Laos, have economically grown; this does not mean Vietnam has been left behind. Research by Phong et al. (2018) indicates that Vietnam's growth in internet use has gone up from 20% to 67.1% for the last 6 years. In the production sector, the country has also experienced a remarkable increase in output, which has translated into an overall growth in Gross Domestic Product. The interlink between the growth of industrial operations and the increased use of the internet has created a significant opportunity for the retail industry. One of the ways through which ecommerce has been enhanced is via the establishment and commercialization of business solutions and platforms such as e-commerce and m-commerce.

1.1 Justification of the Study

The mobile commerce is one of the most growing technology in all parts of the world. Technological advancement has also enhanced the use of mobile devices, such as smartphones and tablets. For this reason, this study will be focused on investigating the use of mobile commerce (m-commerce) in Vietnam. The growth of mobile communication technology, as noted by Nguyen and Thai-Binh (2018), is one of the main reasons why most of the marketing strategies are customized to meet the needs of the population that uses phones for long hours. The millennials in Vietnam use phones to an average of 2 hours per day. During the time millennials spend online, they order products, such as foodstuffs, cloth, entertainment products such as gaming console, among others. Additionally, Weng-Onn and Soon (2016) indicated that online shopping through m-commerce has grown with an index of 25% for the last 5 years, hence making it essential to investigate how mobile commerce facilitates customer retention. It is due to these reasons that this study focuses on the population of Vietnamese millennials.

1.2 Problem Statement

The growth of the use of business support solutions and that of competition in the global markets are exponential. These dynamics create pressure for the overall retail industry as firms contend for available target markets. The increased pressure in the business is a 'blessing in disguise' for customers, mainly because they get quality products and services at low prices, increased convenience, and accountability on the side of retailers. Nevertheless, these benefits come at a cost. First, businesses have to establish a secure business model to interlink customers and the products or services being offered. This requirement raises the problem of cost and the security of customer data.

Customer retention is one of the main objectives of a business; efforts towards retaining a customer starts at the initial point of contact. The marketing department in any company establishes the first interaction with customers, and how they portray the company's products determines, to a greater extent, the possibilities of instilling customer loyalty. Retention also depends on how well a firm leverage information technology in communicating, marketing, selling, and offering after sale-follow-up. In the case of Vietnam, a vast number of businesses that use e-commerce focus on reaching as many customers as possible without critical consideration of avenues of retaining the existing customer base. That is why this study is oriented toward discovering some of the significances of mobile e-commerce in retaining the customer base.

1.3 Research Aims

·         Examining the role of mobile e-commerce in enhancing customers’ loyalty and retention

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