Digiworld : GREAT OPPORTUNITY FOR DIGIWORLD WHEN VIETNAM IS LISTED IN THE TOP GROWING MES COUNTRIES

Vietnam experienced high growth rate of Market Expansion Services (MES) in FMCG and health care segment which ranked no. 2 and no. 4 respectively in Asia-Pacific region. Massive market growth potential is the incentive for corporates with strong foundation like Digiworld.

Overwhelming trends of Outsourcing and MES

Procter & Gamble (P&G)-a global leading consumer goods enterprise-invested annually 2 billion USD on average in research and development (R&D). Nonetheless, few know that after decades of dedication in the race of product development, P&G decided to outsource some R&D activities and obtained over-expected results. Thanks to outsourcing, product renovating efficiency of P&G increased by 60% and brought more than 10 billion USD revenue from over 400 new products. Nowadays, about half of P&G's creative products originate from outsourcing.

Nike-best global supplier of sport clothing and items-is the first to implement outsourcing in the production segment. Its products are manufactured in China, Indonesia and Vietnam. Particularly, shoes made in Vietnam account for 41% of its total goods.

P&G and Nike are outstanding examples of corporates tending to outsource secondary process to focus on activities which utilize their core values and abilities. As simplest, outsourcing is considered as firms hiring outsiders to implement a service or create a product instead of self-implementing. Outsourcing is recognized as a business strategy since 1989 and became more and more well-known.

Experts evaluated outsourcing as a corporate solution for saving significant administration expenses and fixed expenses related to technology equipment. In addition, outsourcing increases effectiveness and efficiency as outside partners achieve better outcomes thanks to their expertise. As a result, firms are able to focus on developing core abilities and rapidly turn the table of competition.

In a narrower scale, market expansion service (MES) is an outsourcing approach for manufacturers hiring distribution, product marketing, brand development, retail management and after-sale processes.

According to Roland Berger from Germany-the biggest European management consulting firm, demand for MES is continuously increasing because corporates focus more on core competence; supply chain efficiency becomes more crucial due to accelerating competitive pressure. Moreover, unpredictable elevation of economy, society and politics combined with complexity of segment partnering roadblocks in Asian-Pacific nations lead to the MES selection of firms.

In researched fields, Roland Berger emphasizes the positive potential of fast moving consumer goods (FMCG) and health care owing to growing average income leading to growing wealth of the middle-class. Besides, aging population structure in some Asian countries, with expected elders to be 71% in 2030, compared to 55% in North America and 31% in Europe, is also an incentive for health care industry.

Particularly in Vietnam, the FMCG market value is 21.7 billion USD (2016), in which MES market share is only 35% equivalent to 7.5 billion USD. This value is forecast to reach 12.6 billion USD in 2021 with double growth rate of about 10.9% per year, no. 2 in the Asia-Pacific region. Health care MES are also expected to experience positive double growth rate of 10.7% per year for over-the-counter medicine (OTC) and 11% per year for prescription medicine and rank in top 4 countries with leading growth rate in this segment.

Opportunity for Digiworld

In Vietnam's FMCG and health care segments, apart from senior international companies like DKSH and Zuellig Pharma, recently Digiworld - the leading distributor of ICT products-officially provided MES for these two potential fields. Certainly, growing market will create such opportunities for all the players and the faster and more efficient one will gain bigger reward.

To meet the high demand of MES, Digiworld implements 5 market development service including Analysis, Marketing, Logistics, Distribution and After-sale Service. The company inform the counterparts market status to help them research and develop suitable products in the future, and at the same time, generate marketing plans for supporting business of outlets in all Vietnamese cities and provinces.

With human foundation, warehouse infrastructure, logistics, enterprise resource planning, Omni channels, thousands of sale points from ICT store to supermarket and pharmacy network, Digiworld has implemented MES for 20 years of its operation. The company distributed for various technology brands such as Dell, Acer, LG, Obi Worldphone, EATON, Intex, Freetel, Wiko…

Most recently, Digiworld immersed into pharmacy industry by distributing food supplement Kingsmen, providing MES for Domesco partner. Later, Digiworld will distribute vitamin products for children.

In FMCG, Digiworld provided market expansion service for Lion Corporation (Japan).

It is obvious that multinational business partners might consider DKSH and Zuellig Pharma as top choices as these firms are advantageous in global scale and value. However, to be successful in Vietnam and focus on this 'local' market, suppliers will probably look for Digiworld as the local unit which acknowledges culture, consumer behaviors, is capable of consulting marketing strategy or having distribution system across cities and provinces.

One of the most outstanding recent achievement of Digiworld is utilizing MES to bring Xiaomi's hi-tech products to Vietnam market. Accordingly, Xiaomi's products are available in large retail stores across the nation, as well as online through popular shopping website www.lazada.vn whose goods distributed by the company itself.

Hurriedly blended into Vietnam market, as a deficiency, Xiaomi was a wholly new brand, had not aware of behavior and trend of Vietnamese consumers. Xiaomi also had no product distribution system and local marketing team… Furthermore, Xiaomi must face various same-segment competitors who have longevity and significant shares in the market. At the starting point, it is compulsory to find a 'right hand' to cover those drawbacks.

Therefore, through finding Digiworld as a strong cornerstone, Xiaomi gained double growth of 22% per month and reached 2% of market share only after 7 months in Vietnam market, according to GfK. Up to 1/2018, Xiaomi's market share reached 5.2%, only stood behind 3 'big guys' in the market: Samsung, Apple and Oppo.

'Go faster by being alone, go further by being together', this quote is absolutely match the field of outsourcing and MES, when parties can utilize their own advantage to support others, as a collaboration for mutual benefits. With the strength of MES, Mr. Doan Hong Viet considered Digiworld as being able to create market and consumer demands. This is the foundation for broadening the view into other industries apart from ICT.

'vietstock.vn'