In a previous blog post, I discussed the rise and fall of Vnemart, Vietnam’s first e-commerce platform, from an outsider’s perspective. This blog post, however, will be slightly different. Occasionally, I’ll refer to Khoa, a core team member who was involved with Vnemart from its inception to its closure.

The most pressing question I had when I met Khoa was the same as the title of this article: Why did Vietnam’s first e-commerce platform fail? Khoa seemed reluctant to discuss it at first. After some convincing, however, I gathered a few insights that I can share to shed light on the perspective of someone who was on the inside.

Failure beyond the business model

To begin, I’d summarize Vnemart’s failure as not being due to the limitations of the B2B model itself. After all, Alibaba—the B2B giant in China—remains highly successful. From my conversations with Khoa and over a decade of observing the e-commerce market, I believe the primary reason lies in the nascent state of Vietnam’s e-commerce landscape during 2003–2010. This immaturity brought about several other challenges.

1. Low adoption by domestic businesses

Twenty years ago, domestic businesses in Vietnam showed little interest in e-commerce. They had yet to grasp its importance or effectiveness. Here are some statistics to back this claim.

In 2006, during Vnemart’s prime, only 8% of Vietnamese businesses participated in e-commerce platforms. According to the Ministry of Commerce’s annual reports, this percentage grew slowly and unevenly across different business sizes and geographic locations. Simply put, the smaller the business and the farther it was from major cities like Ho Chi Minh City and Hanoi, the less familiar it was with the concept of e-commerce. Convincing such businesses to participate was an uphill battle.

“Our 50-member team worked hard to persuade businesses to join the platform, but they weren’t bold or willing to try,” Khoa told me.

By 2009, when Vnemart was already declining, the participation rate reached only 12%. However, growth was stalling because the perceived benefits for businesses remained minimal, as noted in another Ministry of Commerce report.

While Vnemart had over 5,500 members from 80 countries at its peak, most were foreign. The platform, developed by Vietnamese to promote Vietnamese goods globally, ironically had less participation from domestic businesses than international ones.

The lack of enthusiasm was evident in the sparse and incomplete product descriptions by local businesses. Some products didn’t even have listed prices. Such poor information discouraged potential buyers from making decisions, leading to a lack of transactions and, ultimately, businesses leaving the platform.

Here is a screenshot of a product description on the Vnemart platform, collected from the Internet.

Even businesses that joined hesitated to showcase their entire product catalog. For instance, Le Thanh Binh, the head of Tre Viet Company, voiced concerns about the lack of clear regulations protecting intellectual property on B2B platforms. For businesses like his, producing handicrafts, design uniqueness was their most valuable asset.

2. Legal and regulatory gaps

Another key factor in Vnemart’s downfall was the lack of a comprehensive legal framework for e-commerce at the time.

For instance, laws at the time didn’t allow the use of electronic signatures, which meant businesses couldn’t finalize contracts or make online payments. This was a significant barrier to Vnemart becoming a true marketplace that facilitated transactions, managed orders, and supported after-sales services.

In a 2006 interview, Nguyen Thanh Hung, then Director of the E-commerce Department at the Ministry of Commerce, highlighted these challenges: “There were many obstacles to development at that time. Firstly, the necessary legal framework hadn’t been established. Even once passed, implementing these regulations took years...”

3. The double-edged sword of monetization

Monetization was another challenge.

Early B2B platforms operated more like online showcases than marketplaces. They introduced businesses and displayed products but rarely supported contract negotiation, transaction execution, or contract tracking.

Most platforms, including Vnemart, followed a common developmental strategy: operate for free initially to attract users, then implement membership and transaction fees later.

After three years of offering free services, VCCI (Vietnam Chamber of Commerce and Industry), which managed Vnemart, introduced paid plans. PRO members paid $50 per year for a website with a unique domain name, content management tools, and unlimited product listings. The GOLD plan, priced at $150 per year, was targeted at domestic businesses to promote their products and engage with international buyers.

This decision had mixed results.

At its peak, around 300 businesses—less than 10% of Vnemart’s members—opted for paid plans. Even if all chose the most expensive plan, total annual revenue would have been just $45,000—a small amount, though it helped cover operational costs.

Charging fees motivated the platform’s development team to improve services, but it also created a barrier for new businesses, many of which were still skeptical about the benefits of e-commerce. Consequently, Vnemart’s ranking among preferred B2B platforms declined until it eventually disappeared.

The invisible legacy of Vnemart

To conclude, I want to revisit an old but still relevant point: Although Vnemart has left behind few tangible legacies, I believe it has an intangible one: its challenges prompted policymakers to create a legal framework for e-commerce, and it provided valuable lessons for businesses aspiring to succeed like Alibaba.