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Smartphone market saturated, distributors now selling FMCG

Smartphone distribution is no longer the major driving force for technology product retailers, who are now trying to make money from FMCG (fast moving consumer goods) and food sales.
VietNamNet Bridge - Smartphone distribution is no longer the major driving force for technology product retailers, who are now trying to make money from FMCG (fast moving consumer goods) and food sales.


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FMCG sales have been increasing rapidly

CNN Business cited reports from Canalys and Counterpoint Research as saying that smartphone sales in the globe decreased by one percent in 2018.

The same happening in Vietnam with smartphone distributors reporting a sales growth slowdown. 

The Vietnamese smartphone market once had a high growth rate of 10 percent, with sales soaring by twofold to 15 million products in 2014-2017.

Smartphone distribution is no longer the major driving force for technology product retailers, who are now trying to make money from FMCG (fast moving consumer goods) and food sales.

The impressive sales growth then prompted The Gioi Di Dong (MWG) to increase its number of shops from four in 2009 to 1,072 in 2017. The boom of the smartphone market brought fat profits to the largest smartphone retail chain.

However, MWG’s revenue has been growing slowly in the last two years. By the end of November 2018, the sales of the chain had increased by 1 percent only, while the number of shops had dropped to 1,037.

FPT Retail (FRT) maintained a two-digit growth rate with reported VND15.3 trillion in revenue and a profit growth rate of 20 percent with tech products sold in big quantities. The number of FRT shops has increased to 544. However, analysts say that measures to stimulate sales face high risks. 

With the high debt, the business that own an FPT Shop will not have opportunities to access loans.

The Gioi So (Digiworld) is the most optimistic smartphone distributor, gaining high growth thanks to cooperation with Xiaomi. However, despite sales rising sharply, Digiworld’s profit grew moderately because of Xiaomi low pricing strategy.

Doan Hong Viet, president and CEO of Digiworld, said that the smartphone market is going flat. The competition among distributors has become cutthroat. Distributors’ sales growth depends on their investment in marketing.

As the market is becoming saturated, distributors have to seek a new engine for growth. One area is the FMCG sector. 

The managers of both MWG and Digiworld have said they neef to go out of the ‘technology zone’ and further into the FMCG sector.

For MWG, the company is still waiting to see if its Bach Hoa Xanh chain can succeed. According to KIS Securities, the chain will not made a big contribution to MWG’s revenue and profit at least in the next five years.

Meanwhile, FRT’s plan to open 400 drugstores by 2021, according to Rong Viet Securities, was too ambitious. Even successful drug store chains in other countries spend a long time opening a high number of stores.


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