To be valued by UK Brand Finance (United Kingdom) at USD 19 million for the brand and USD 75 million for the enterprise, but not stopping there, with Market Expansion Services, Digiworld is ambitious for becoming a 'billion-dollar company' by 2020.
Market Expansion Services (MES), DGW's new strategy.
Talking about this strategy, Mr. Doan Hong Viet, Chairman of the Board of Directors cum General Director of Digiworld Corporation (Securities code: DGW) stated that MES was an integrated solution which includes full services for the entire value chain from market analysis - marketing plan development, marketing execution, importation - warehousing, distribution to after-sales services. In particularly, a technology company providing products such as computers, mobile phones, etc. may be able to penetrate in Vietnam using such services from Digiworld. Both sides would work in collaboration to carry out the plan together, from market development to marketing and profit goals.
'Either manufacturers or we have to work through the 5 steps above to find out the best way to approach consumers. It would be hard for manufacturers who have no resources on market research and market intelligence, to do such jobs', Mr. Viet said.
Manufacturers must cooperate with distributors to launch products onto markets
According to Mr. Viet, Digiworld is capable of managing inventory by ERP system. The transparency of information on distribution channels is vital, suppliers always need to know whereabouts their products are, already delivered to which customers and where they are. Thus, partners such as suppliers or banks can keep track of sales and inventory online creating trust and peace of mind.
According to Mr. Tran Vu, Dell's Head of representative office, Managing Director in Vietnam, understanding consumers is hard to achieve. Hence, manufacturers such as Dell must cooperate with distributors who have the ability to do market research and demand research for them.
In distributor selection criteria, there are several requirements need to be met: the widest network, distributor of targeted end user segment.
In fact, the distribution's value chain comprises 5 classes: Logistics, sales, after-sales services, marketing and market analysis. While domestic information-technology distributors mainly do sales and logistics, Digiworld is covering the whole value chain mentioned above. The more highly developed the market and value, the more requirement for qualification, innovation and organizational ability.
Digiworld has been ready for a new adventure
'Digiworld can collaborate with small brands to take advantage of its extensive distribution channels in rural markets, yet holding a balanced ratio about 60:40 with retailer chains. As we foresee this market will be matured within the next 3 years and we have prepared new steps from our market expansion services', Mr. Viet declared.
Digiworld's revenue in 2016 is expected to reach VND 5430 billion, profit after tax to reach VND 140 billion, advancing by 35% compared to 2015. In 2017, revenue is expected to come from the existing products with 15% growth; this company will also cooperate with two new phone brands. And revenue from its new 'move' would not be revealed yet.
According to GFK, a technology market research firm, Vietnam IT market reached VND 154,700 billion in 2015, soaring 22.6% compared to 2014. The attractiveness from the over 93-million-people market and an average income of more than USD 2,000/person per year, has made Vietnam a targeted market attracting various world class technology corporations.
The rise of retail chains such as Mobile World Group, Vien Thong A, etc. leading to a concern of whether retailers would replace wholesalers or not? But Mr. Doan Hong Viet was not worried about this. He showed that retailers who take part in distribution directly from manufacturers would encounter certain difficulties in both product groups.
With branded products which are already popular and there is only competition in term of price, the matter would be time of importation. To import directly, retailers must prepare three months in advance, and if ordered from manufacturer, it would take time and many risks. On the other hand, manufacturers do not want to rely on one partner. With special products, hard to sell, or unknown to the market, there is need to do market research, marketing, sales and after-sales services, etc. Distributors clearly have advantages to retailers in this respect.
'Today we distribute technology products, but tomorrow we could become a market expansion services provider or expand into other sectors in the near future.'