VietNamNet Bridge – A lot of wooden furniture manufacturers have admitted that they still have not found the solution to the distribution system over the last three years, since the day they began focusing on developing the domestic market as they export markets got narrowed amid the global economic crisis.

Manufacturers should focus on production

The showroom of the Truong Thanh Corporation on Bach Dang Street in Binh Thanh district of HCM City is regularly quiet with few visitors, though it covers a large area of 500 square meters and is well equipped.

The same situation is occurring with most wooden furniture manufacturers, who are facing big difficulties in distributing their products. To date, the manufacturers have been distributing products themselves. However, it seems that they have not succeeded with the distribution chains.

Ngo Thi Thu Hong, Deputy General Director of Truong Thanh Corporation, admitted that the company spends money to run five shops, but the shops just aim to popularize the image of the company among the public, while the company does not expect to make profit with them.

Nguyen Quoc Khanh, General Director of AA Company, also said that the biggest problem for wooden furniture manufacturers, who decide to exploit the domestic market have a bad distribution network.

“The profit is not big enough to cover the expenses on retail premises, worker wages, electricity and water,” Khanh said.

At Vifa Home, a wooden furniture trade fair held in HCM City in November, a lot of businesses admitted that they still have not found any solutions to the distribution network development over the last three years.

According to Khanh, when consigning goods, manufacturers usually have to offer the discount rate of 30-50 percent, which makes them feel that it is too costly. A lot of manufacturers decide to distribute products themselves. However, they have realized that the expenses to run retail shops are even higher than the discount rates.

It seems that wooden furniture manufacturers have realized that they need to share profits with professional distributors, and that they should gather strength on production and rely the sale of goods on professional distributors.

What to do?

Participants at the workshop discussing the solutions to the distribution market held recently all said that in order to boost sale, it would be better for manufacturers to entrust the sale to professional distribution partners.

The most important characteristic of the domestic market is that manufacturers have to fulfill small orders, while customers always require diversified products. Therefore, wooden furniture manufacturers should focus on developing the designing staff and carrying out the market exploration.

Khanh from AA has revealed that this is the way the company will follow in the time to come. A company would be set up which specializes in distributing AA’s products.

Viet May Depot, which has existed for the last three years on the market, now distributing Hoang Anh Gia Lai’s products, has gained big achievements as a professional distributor. It now has 130 shops located in the provinces from Da Nang towards the south, which allows it to obtain a 300 percent growth rate over 2010.

According to Vu Van Anh, PR Director of Viet May Depot, in order to set up a distribution network, it is necessary to build a system of depots and shops, a transport team, an advertisement and branding team. There are a lot of things to be done, and it would be better if the works are carried out by professional distributors.

Anh has revealed that Viet May Depot plans to expand the shop network to 250 by 2012.

Analysts also believe that it would be better if manufacturers entrust their distribution partners, and that the current 30 percent discount rate is acceptable if comparing with the expenses they have to pay if opening shops of their own.

Source: SGTT