Photo by Quy Hoa.
Coincidentally, “the king of hi-end fashion” Johnathan Hanh Nguyen’s eDiGi shop, Apple’s first authorized store in Vietnam, announced to close on May 17, after five years of operation. The shutdown happened a day before Apple officially launched its online store in Vietnam.
This action begs several issues, among them whether the state of the mobile retail industry will alter as major stores like Mobile World Group, FPT, and CellphoneS, intensify their competition.
His old iPad was broken, Huynh Thanh Dat (District 3, Ho Chi Minh City) decided to visit the CellphoneS store near his house. However, he could not find the color he wants, so he moved to The Gioi Di Dong store.
What surprised him was that the product price of this store was about VND2 million higher than the CellphoneS store. When the shopkeeper saw that Dat was about to leave, the Mobile World Group’s shop staff immediately called the manager and ended up selling the product at the same price as a rival store.
The story partly proves the fierce price war between mobile phone retailers, which has been going on silently since 2020. Recently, at the company’s 2023 annual general meeting of shareholders, Mobile World Investment Joint Stock Company’s Chairman of the Board of Directors, Nguyen Duc Tai, stated that in the price war, competitors “will hear groans in the near future”.
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| This year, the purchasing power of the market decreased, so all retailers had to find ways to stimulate demand. Photo by Quy Hoa. |
Tai stated that all merchants need to find strategies to boost demand since this year’s evaluation of the decline in market purchasing power. Due to overstock and pricing rivalry amongst retail chains in 2023, the price of the iPhone 14 product line in the Vietnamese market fell to a record low.
The market’s pricing differential between major and small retail chains often varied between 1-3 million dong. However, as the pricing war intensifies, this amount is presently between VND10,000 and VND200,000.
Right after Mr. Tai’s statement, many other big retailers, such as FPT, CellphoneS, Mobile Viet, etc., also participated in this “survival” battle. First of all, a slogan war broke out. Mobile World declares, “The price is so cheap!”. FPT Shop continued: “Where it is too cheap, it is cheaper here”. Viet Mobile also said, “Cheaper than cheap ones”.
A representative of FPT Digital Retail Joint Stock Company (FPT Retail, code FRT) said that in the short term when the sellers lower the price, FPT Retail must also lower the price, but in the long term, it will expand the product line to limit this price war. Mrs. Nguyen Bach Diep, Chairman of the Board of Directors of FPT Retail, shared: “Of course, during the difficult market process, there will be “fights”, but in the long run, they will only drag each other down, not eat each other. This price war, which we consider a bad problem, But in the short term, the market is down; we will also go down to sell.”
A representative of the CellphoneS store system also confirmed: “Facing price competition, CellphoneS has invested in a real-time price update system to be sure to always proactively set a lower price than the competition, enough for customers to feel secure about the price when choosing CellphoneS.”.
Not only the price and communication wars, but the retail systems also continuously offer advantages such as FPT Shop confidently with the current advantage of “fast delivery in only 30 minutes” and “payment method”. diverse and flexible”, while The Gioi Di Dong still focuses on customer service.
In the first quarter of 2023, the entire Vietnamese phone market decreased by 26% compared to the same period last year, when the mobile telecommunications industry declined by 25–35%.
The most affected mobile retail system is The Gioi Di Dong, where profits fell by 90% due to the focus of the price war. FPT Retail has also just announced its consolidated financial statements for the first quarter of 2023, in which the FPT Shop chain brought in VND4,513 billion in revenue, down 20%, mainly due to pressure from demand reduction and strong competition with other products. electronics, especially products from Apple.
And the big man comes
While the price war was cooling down, Apple made the decision to open an online store in Vietnam. This is considered a new move after the company stopped cooperating with eDiGi. Many people think that when Apple enters Vietnam, it may apply a new price to make it easier to compete.
However, there are also opinions that this is just a way to make the brand image the main focus in markets with Apple Stores, like Singapore or Thailand, and does not affect Mono Stores or retail chains. exist. The Apple Store will also be a place to distribute limited products that have never been or rarely appeared at retail chains, such as accessories or expensive items such as the Apple Pro Display XDR.
“Apple’s goal is to give Vietnamese customers the diversity of owning genuine Apple products across multiple channels and receiving a uniform standard experience through Apple’s services and experts,”, said Mr. Nguyen The Kha, Director of Mobile Telecommunications Division, FPT Shop & F.Studio by FPT System.
Representatives of many large retail systems all said that Apple’s opening of an online store is an important step for the company in the Vietnamese market. At the same time, the above move also shows the importance of Vietnam in the upcoming development plan of the US technology company, including the hardware manufacturing ecosystem as well as related business activities.
The online Apple Store in Vietnam will provide a standard price frame that can be used as a reference, especially in the context that the selling price of Apple products is constantly fluctuating in the country. In fact, as soon as the online store opened, many people exclaimed, “Apple’s price is the highest in the market”.
Accordingly, the price of iPhones offered at the online store is from VND3.3 to VND4.7 million per unit higher than the selling price at authorized retail chains in Vietnam. In addition to iPhones, other products from this online store also have higher prices than the market. In addition, the delivery time is given as 2–5 days, which is quite long compared to the delivery time of several hours at the authorized stores.
Commenting on Apple’s entry into Vietnam, Tai said that in the past, Apple did not advertise or make a brand, but the opening of an online store in Vietnam showed that they were interested in this market. Mr. Tai also shared: “I do not believe that a few Apple stores can replace the more than 3,000 stores of Mobile World, plus competitors’ stores, to serve customers.”
In the genuine sales channels, in addition to online chain channels and stores such as The Gioi Di Dong, FPT Shop, CellphoneS, Mobile Viet, etc., there are also pure online retailers such as e-commerce platforms with selling prices. Offers are also very competitive. Therefore, it can be seen that competition with online channels and offline retail chains is not a new issue. The proportion of online sales by chains is currently at an average of 15-20%. The influence of Apple’s official online store will depend more on the price of the site’s products compared to those of the major retailers in the current market.
According to a representative of Vietnamese Mobile, Apple’s selling price will hardly be cheaper than the selling price of retail systems. Apple cannot devalue its products because that will directly affect the revenue of authorized dealers, and currently, the price in the Vietnamese market is too cheap compared to other regions.
It is not the first time that companies have sold goods online in Vietnam. Like Samsung, it has also been sold online in Vietnam for a long time, but it does not affect the sales of retail systems much.
Similarly, Apple’s online sale in Vietnam will not cause any negative consequences but also shows the importance of the Vietnamese market. Many Vietnamese users still have the habit of going directly to a store to shop, experience products, and receive direct advice from store staff rather than buying online.
However, looking further, Mai Trieu Nguyen, director of the chain of genuine mobile phone retail stores Mai Nguyen, also an AAR store, said that Samsung is also promoting stores in Vietnam. Even when selling online, many retailers are dying, even though people don’t see it.
Apple will be very different, as they move very quickly and conduct penetration step by step. For example, with this online store, there will be an iPhone 15 pre-order program in the near future, and users who successfully place an order will ensure 100% availability and a clear quantity. Meanwhile, last year, many authorized retail stores in the country boasted of a huge number of orders, but then there were no goods to deliver, making users frustrated.
According to Mai Trieu Nguyen, most people who buy iPhones are those who have money and want to own them as soon as possible, so they will book in advance. With this group, whoever has enough goods to deliver will win in the market, regardless of competitors. price but not enough goods. This advantage is considered to be in the hands of Apple, even though they only do it online and have enough goods to make the domestic retailer lose.
Just like the story of Samsung, the high-end phones sold by the company in the first 2-3 weeks are sold out, then the authorized dealers together reduce the price, and as a result, the dealer loses money and the company loses money. Also, if you are no longer interested, if you want to sell, then sell. Mr. Mai Trieu Nguyen said that online is just the first step; in the future, there will be more physical Apple Store stores, which, although they cannot change the situation immediately, will be a potential threat.
The eDiGi closure story is still there. Responding to the press, the chairman of IPP Group admitted that eDigi was forced to stop operating due to unfavorable market conditions. The “King of Brands” said that many factors, such as competition and the source of goods, made the Apple product business no longer attractive, forcing eDiGi to decide to stop operating. Although before that, in 2018, Mr. Johnathan Hanh Nguyen expected this store to account for about 40% of the market share in Vietnam.
