tech-distribution

The fact that technology firms tend to change business strategies, trying to distribute their products directly to consumers, has reduced the market share held by the three biggest distributors – FPT Trading, Petrosetco (PET) and Digiworld (DGW).

In mid-April, a noisy dispute between FPT Trading and Oppo Vietnam broke out. The former unexpectedly imported Oppo smartphones from Taiwan and sold the products at prices lower than the price quoted at Oppo Vietnam’s sales agents.

Observers noted that the dispute partially shows the smartphone distribution market ‘is going downhill’ while distributors have to compete fiercely to exist.

The mobile phone distribution market is being controlled by FPT Trading, DGW and PET in a tripodal position and all three have satisfactory business results.

2007 was the ‘golden age’ of PSD, PET’s subsidiary, when it was chosen to distribute Nokia’s products. In 2011, PSD had revenue of VND5.2 trillion and profit of VND134 billion from this.

Technology firms tend to change business strategies, trying to distribute their products directly to consumers

Meanwhile, iPhones in 2014 made up 23 percent of FPT Trading’s revenue from the mobile phone distribution, and iPad made up 14 percent of the enterprise’s total revenue from the technology product distribution.

A report showed that the Vietnamese electronics market continued witnessing high growth rate in 2015, of which mobile phones saw the highest growth rate – 32 percent. In the fourth quarter of 2015 alone, the revenue from the products reached VND20 trillion, while the figure was VND66 trillion in 2015.

Market survey firms all commented that mobile phones remain the product with the highest growth rate. It is expected that 19.4 million smartphones would be sold in 2016, while the high growth rate would be maintained in the next three years at least.

However, the revenue of the Vietnamese big distributors may decrease because technology firms recently have expanded distribution networks of their own, appointed sales agents or directly distributed products to sales agents.

Distributors, therefore, have been trying every possible means to retain their market share. As FPT Trading obtained the right to distribute Apple’s products, PET decided to cooperate with Samsung and connected with other manufacturers such as Blackberry and Lenovo.

Nokia products were once the major bread earner for DGW. However, in 2014, when Nokia changed its strategy, shifting its focus on mobile phone software instead of hardware, DGW’s revenue dropped dramatically by 64 percent.

The fact that Apple has allowed The Gioi Di Dong and FPT Shops – the retailers – to import Apple’s products directly is also not good news for FPT Trading.

(Source: DNSG)

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