GNN: a prime example of COD payment risk

COD payments apparently carry huge risks for vendors (Source: kienthuc.net.vn)

With the VND5.5 billion ($243,362) debt, GNN Express JSC in early September announced to temporarily halt operations as well as made a commitment to pay its debts to all online shopkeepers using its services.

The announcement has sent online shopkeepers into panic because GNN owes dozens of millions of VND to each shopkeeper. The debtors include clients of 3-4 years.

According to its Facebook fanpage, GNN has dozens of shopkeeper clients across the country. To pay wages for its staff, GNN has used the money paid as COD as a temporary solution and since the middle of July, has been regularly asking clients for an extension to pay the collected COD payments.

In its latest document on solutions to repay the company’s debts, Hoang Mai Nam, chairman of GNN Express’ management board, stated that the current crisis is entirely the fault of his brother, Hoang Ngoc, the firm’s general director.

“GNN’s shareholders are considering suing Hoang Ngoc at the Hanoi Economic Court,” the document stated.

Apart from offering Hoang Ngoc’s head on a silver plate, GNN has decided to set up a team to find a solution to repay clients as soon as possible.

Besides, the firm also admitted to mistakes in the delivery process as well as repeatedly apologized to its clients. “We hope that the clients find it in their hearts to sympathise with our financial troubles and will help us overcome the crisis,” Nam said.

As a potential lesson of GNN’s crisis, online shopkeepers might be convinced to look for alternative payment solutions to COD, which is currently the main payment solution of a large number of Vietnamese customers.

As running businesses via online websites and social network platforms is becoming a trend, card or QR payment could be good choices, as they reduce the risk of the middleman defaulting, as just happened for GNN.