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Retailers cutting out the tech middleman

Update: December, 03/2016 - 09:30
 A new trend is developing in technology product sales, with retailers themselves also playing the role of distributors, a conference heard in HCM City on Tuesday.  – Photo

HCM CITY – A new trend is developing in technology product sales, with retailers themselves also playing the role of distributors, a conference heard in HCM City on Tuesday.

Business executives said in the past distributors totally dominated the market by being the sole link between manufacturers and retailers.

But the industry value chain has changed because retailing has exploded with the mushrooming of chains, which has given them unprecedented clout.

Khổng Phan Đức, general director of VietinBank Security Company (VietinBank SC), said the competition between distributors and retailers began in 2010.

“Since then many retailers like Mobile World and FPT have appeared and grown strongly. They have replaced distributors by working with manufacturers to acquire the right to directly sell [the latter’s] products through their stores.”

Huỳnh Phước Cường, a market researcher, said there is intense competition between distributors and between distributors and retailers.

“Retailers have started to import and sell products. They have deep pockets and strong management and can join the value chain to improve their value addition.”

Cường said the intensity of the competition was understandable because it was a young industry with high growth, which was over 19 per cent in the first half of this year.

"The competition is likely to continue," he said.

Distributors indispensible

Participants said that no one could deny that retailers had grown, but contended that having distributors were essential.

Retailers faced many risks when they play the role of distributors, they said.

Đặng Trần Hải Đăng, deputy director of VietinBank SC, said it would take longer for products to reach from manufacturers than from distributors.

"Changes in price and technology trends are also major risks," he said.

"For manufacturers, it is imperative to enter the market and retain market share, and so they use various distribution routes," he said.

"But distributors are their first choice, and those who can offer services like marketing research, consultancy and after-sales service are always in manufacturers’ short list," he said.

According to Trần Vũ, general director of Dell Vietnam, for a manufacturer finding a market is not the only task. To ensure demand for its products, the manufacturer also needs to understand the needs of consumers, organisations and companies.

Thus, his company needs a distributor to provide market data.

Bùi Văn Hoà, head of Freetel in Việt Nam, said in the past he had worked for a retail company. When it grew, it wanted to buy products directly from manufacturers thinking it was simple, but discovered it was very difficult, he said.

“It needs deep pockets to do the job of a distributor well and professionally.”

With this experience, he decided to partner with a distributor rather than retailers to distribute Freetel’s products.

“Finding a partner who understands the market and has good financial capacity is necessary.”

Distribution of electronic products is a fledgling industry in Việt Nam. The product categories include phones, laptops, tablets, cameras, home appliances, and printers.

The conference was organised by the HCM City Stock Exchange and VietinBank SC. — VNS




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