“No manufacturer could deliver products within 3 to 5 days to retailers like distributors. In case of importing directly, retailers have to prepare 2 months in advance upon receipt of goods, even there are manufacturers who do not sell directly to Vietnam but transiting in the third country”.
It was sharing from Mr. Doan Hong Viet – Chairman of Board of Directors in a meeting with us last week. We would like to share this conversation.
- Dear Sir, the fact that nowadays, many retailers import directly from manufacturers instead of distributors. Thus, distributors such as Digiworld not only compete with other distributors, but also compete with retailers. Is this true? How is the competition at Digiworld?
The rising of retailers put distributors in the supply chain into a new challenge. However, I assert that the relationship between distributors and retailers is a cooperative, interdependent relationship rather than competitive or substitutive.At Digiworld, we do not take this as a competition but an opportunity to grow further. Instead of stalling as a regular distributor competing with large retailers (only in moble phone industry where retailers are purchasing directly from manufacturers), Digiworld always takes the initiative to oversee new and special directions. Digiworld is making efforts to invest and improve its role as a Market Expansion Service (MES)
- What are the comparative advantages of distributors comparing to retailers who purchase directly from manufacturers?
With the easy-selling products on the market and their competition based merely on price, retailers can purchase directly from manufacturers (if they accept). However, the easier it is to sell, the lower the profit is, while the harder it is to sell, the higher the profit is, but it consumes lots of efforts for brand building. At this point, only high-grade distribution model is able to bring in added value and affirms its role in this distribution value chain.
No manufacturer could deliver products within 3 to 5 days to retailers like distributors. In case of importing directly, retailers have to prepare 2 months in advance upon receipt of goods, even there are manufacturers who do not sell directly to Vietnam but transiting in the third country, and this is also the barrier for retailers to work directly with manufacturers. On the other hand, manufacturers do not only sell to a few major retailers, they need to cover the whole market with different retail segments, so choosing to collaborate with distributors is still a priority.
- In your opinion, what would the trend of simultaneous existence of wholesalers and retailers be in the future?
I think wholesales and retails are the two extremely important modules in the supply chain from manufacturers to markets and approaching consumers. This relationship is symbiotic. If one grows stronger, it will be the motivation for the other to improve and adapt to that growth. As a result, I believe that the rapid growth of retailers will help distributors look back, evaluate every aspects from more challenging angles, and from there may come up with breakthrough business development strategies.
- Other distributors are quite quiet, while Digiworld still perseveres on the wholesale route. Could you share your business strategy?
In the coming years, DGW continues to grow and affirm its pioneer position in providing MES to ICT, healthcare industries and expand to other potential businesses including FMCG.
In 2016, DGW completed its foundation to become an official Market Expansion Service Provider. Therefore, 2017 is the time for us to expand our business to health care, seeking growth opportunities with new potential markets. DGW, with its competitive edge of MES, is confident in bringing win-win co-operation to both DGW and its partners – who have quality products and not built brand name yet, helping to maximize growth of their products.
In the near future, FMCG, in which DGW has dedicated for long, is being invested before we were listed on the stock exchange. We have been preparing for quite a while, including inviting Mr. Tran Bao Minh, one of the marketing masters in the FMCG industry, to join the DGW’s Board of Directors. We are confident that his knowledge, experience and acumen will help DGW succeed in the FMCG industry.
DGW also promotes M & A strategy, its target partners are firms who own the quality products and existing distribution channels but no experience in branding and promotional, communicate activities.
- Many adopt a view that Digiworld after 2 years of declining profit, has flourish signs thanks to the cooperation with Xiaomi and starting to enter pharmaceutical market. What do you think and how does Digiworld prosper?
Mobile phone still has a good growth rate of 63% compared to 2015. Xiaomi started cooperation in mid-March 2017, the cooperation with a new brand will help DGW diversify brands, increasing its competition and business capabilities. However, DGW not only wants to extent the ICT industry circle, but also wants to open the circle to the new industry such as Healthcare, Pharmaceuticals, and FMCG. The story has only started and there are a lot of things ahead, I believe in strengths of DGW and prospects of the new industry which will help DGW move closer to becoming a billion-dollar company.
- What is Digiworld expected when embarking with Xiaomi?
With the strategic agreement with Xiaomi, we expect a stable annual growth for Mobile phone. Xiaomi is one of the eponymous electronic brand since the end of 2010, Xiaomi’s product lines are diverse, creating a Mi-Eco ecosystem, not only smartphones.
Compared to other mobile phone brands that have joined in Vietnam for a long time, Xiaomi has a different marketing strategy to ensure that in the same price segment, Xiaomi products always have higher configuration. Xiaomi does not have to hire Lionel Messi or Cristiano Ronaldo to promote its products. In contrast, Xiaomi uses the promoting and communicating strategy based on the power of social network and the Internet. They focus on building likeness and loyalty of the Mi Fans community through reality experience.
Thank you, sir!