Apple retailers set for price competition shake-up

May 31, 2023 | 14:00
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The latest introduction of a standardised framework by Apple’s online store in Vietnam is likely to redefine the competitive landscape, creating a level playing field for retailers and raising the expectations of customers.
Apple retailers set for price competition shake-up

Apple on May 17 announced the expansion of the Apple Store online into Vietnam. Customers throughout the country can now shop direct with Apple and receive a service delivered by dedicated team members ready to share their expertise in Vietnamese.

Meanwhile, in mid-May, eDiGi, Vietnam’s foremost premium Apple retailer, announced the closure of its store after five years.

The store entered the market when official Apple products were struggling to compete against smuggled counterparts. Backed by one of Vietnam’s top retail companies, IPP Group, eDiGi aimed to carve a niche for itself in Ho Chi Minh City’s District 1, Ho Chi Minh City.

The accolades poured in as eDiGi secured the coveted Apple Premium Reseller and Apple Service Provider certifications, becoming the country’s pioneering haven for Apple aficionados seeking unrivalled services.

However, eDiGi found itself grappling with a market where affordable prices outweighed immersive shopping experiences, and it struggled to establish a distinct identity that resonated with Vietnamese consumers.

Johnathan Hanh Nguyen, chairman of IPP Group, said that the relentless forces of the market had left them no choice but to bid farewell to eDiGi.

“It was the bitter fruit of unfavourable market conditions, a landscape transformed into a battleground of competition. Yet, the challenges of sourcing Apple’s merchandise had become insurmountable, effectively eroding the very essence that had once shrouded eDiGi,” he said.

In the past few years, various retailers have tried their hand at establishing “mono” stores that only sell products from one company, ranging from large-scale outlets to more compact establishments. However, these stores found themselves engaged in a fierce price competition rather than competing on the basis of service quality or shopping experience.

Industry insiders believe opening and operating mono stores incur substantial costs without yielding optimal results, and so several retail chains opt out of this investment.

“We receive numerous partnership invitations from manufacturers to develop the mono store model in recent years. However, we have not observed a viable opportunity for success with this model,” shared a representative of one retail chain.

The battle for customers extends beyond online price wars, spilling into physical retail stores. Before 2023, major retail chains in Vietnam held a significant market share and utilised a pricing strategy supported by after-sales services and store coverage. But currently, the price discrepancy between these chains has significantly diminished.

Retail chains in proximity often engage in direct price reductions at the store level to entice customers to make their purchases. Another retail chain representative said, “The market has never seen such fierce competition before. Larger retail chains, with extensive store coverage and excellent after-sales service, are offering lower prices than smaller competitors.”

In order to stay competitive, retailers have resorted to frequent price adjustments for iPhones in Vietnam. Some retail chains have gone beyond conventional means, utilising adhesive-cutting boards displaying dynamic prices for easy modifications.

Some mobile retailers such as Mobile World Group (MWG), FPT Shop, CellphoneS, and Di Dong Viet have commenced a fierce battle in terms of prices, unleashing a barrage of promotions and deep discounts on a wide range of electronic products, including highly coveted iPhone models.

Nguyen Bach Diep, chairwoman of FPT Retail, even went as far as to claim that iPhone prices in Vietnam are currently the most competitive worldwide.

Contrary to expectations, industry insiders believe that Apple’s May launch of its online store in Vietnam will not place a detrimental impact on local retailers. Instead, it is expected to establish standardised pricing that will serve as a reference point, making it difficult for authorised resellers to justify higher prices.

According to Nguyen Lac Huy, spokesperson for CellphoneS, another authorised Apple reseller, the tech giant’s decision to invest more in the Vietnam reflects the significant growth of the official Apple product market in recent years, and underscores its commitment to the market.

“Apple’s heightened investment and focus on the Vietnamese market will stimulate improved sales and encourage local retailers to enhance their customer experience and refine their service offerings,” Huy said.

Mai Trieu Nguyen, director of Mai Nguyen, a prominent chain of authorised mobile phone retailers, sees it as a potential threat in the future, with the key point being the source of supply.

For instance, with the new online store, Apple is planning to introduce a pre-order initiative for the iPhone 15, ensuring that successful orders will guarantee a 100 per cent availability of stock with clear quantities. In contrast, last year, many domestic authorised resellers boasted about massive pre-orders, only to later face stock shortages, leaving customers disappointed.

“The majority of iPhone buyers are rich, and want to be among the first to own the latest models. Therefore, they prefer to pre-order, and in this segment, whoever has sufficient stock to fulfill orders wins in the market, regardless of price undercutting by competitors with insufficient inventory,” Nguyen said.

A recently published market report by Counterpoint Research on the smartphone industry across Southeast Asia for Q1 indicated a 13 per cent decrease in smartphone shipments within Indonesia, Thailand, Philippines, Vietnam, and Malaysia. Vietnam experienced the most pronounced contraction, plummeting by 30 per cent compared to the same period in 2022.

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By Luu Huong

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