Phân tích thị trường đi chợ online của Việt Nam và một số đề nghị cho Chopp để phát triển tại Việt Nam
MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY (HO CHI MINH CAMPUS) --------***--------
BUSINESS ECONOMICS TOPIC: ANALYSIS OF ONLINE GROCERY RETAILING SERVICE AND SUGGESTION FOR STRATEGY FOR CHOPP’S DEVELOPMENT
Group’s member: 1. Trần Nguyễn Hạnh Tiên (1601015512) 2. Mai Tấn Phát (1601015352) 3. Nguyễn Thanh Thủy (1601015501) 4. Nguyễn Nguyên Trang (1601015533) 5. Giang Bảo Quỳnh Như (1601015330) 6. Nguyễn Thị Ngọc Thủy (1601015502) Class: K55CLC4
1 Overall situation There has been outstanding growth achieved in food and drink internet
retailing. In 2018, food and drink internet retailing grows by 74% in current value terms to reach sales of VND 1.5 trillion last year. Food and drink internet retailing is expected to grow even further over the forecast period to reach sales of VND 5.0 trillion in 2023. The niche market of online grocery service shows new sign of growth, with a lot of new small and medium-sized players which focus on the niche of clean label and organic food and drink.The type of this market is monopolistic competition. In this industry there are many buyers: e-commerce users and sellers: online grocery service providers. Each of the service providers produces a differentiated product in terms of range of products offered, delivery service, order mechanism and technology developed. To enter into and exit from this industry, new firms may face some barriers to make an entry into the market, but economies of scale and capital resources are small enough for them to tolerate with. This industry is backed by the growing demand of urban young population with busy lifestyle. They are technological savvy and lead healthy lifestyle, preferring fresh over processed foods. They are under daily pressure of preparing healthy meals but lacking of time to go shopping and process foods. Therefore they have demand for saving time and a wide variety of fresh goods. This growing demand has given the opportunities for online grocery retailing to thrive in the market of clean and organic foods. In online grocery service industry, most firms operate as platforms, posting information on price, products and sources of products. Consumers of these platforms can make order of their needed goods through means such as applications, websites or Facebook pages. Then the confirmations of these orders will be sent to the consumers within the time depending on the service providers. Some providers now commit on the fast delivery, besides the high quality of the fresh products. Therefore it is obviously that this type of industry focuses much on technology investment, especially delivery technology and also human resources in order to effect the orders from customers in the most dedicated manner. 2 Porter’s five forces model analysis for online grocery retailing 1.1 Threat of new entrants Firstly, high investment on technology is a barrier of this industry. It can be seen that the future trend in this industry is increasing technology investment, which focuses on omnichannel strategy (technology aimed at customizing experience of customers on online and offline sites), online payment and door-to-door delivery. Secondly, professional training is a significant barrier, as skills of human resources are specific to this industry. Employees in this industry are needed to be armed with skills related to collecting foods that are not only high-quality but also meet the preference of individual customers.
Thirdly, branding is another barrier for new entrants as this type of service are quite new to most of the young urban population. Therefore the difficulty is in terms of building brand image including perceived values and trust with customers. This requires new firms to invest much not only in their operation including ordering systems, delivery and storage but also in marketing and communication in order to sharpening the positioning of the firm into the customers’ minds. Fourthly, this new industry is subject to low market penetration, which means demand for service of this industry has not grown to maximum extent. Many orders are of low value, which causes the revenue of some firms not be able to cover the operation cost. In conclusion, there are typical barriers in this industry, such as technology investment, professional training for human resources, building brand images and low market penetration. These barriers are significant, which means new entrants are considerable threats for this industry. 1.1 Threat of substitutes & Rivalry among competitors 2.1.1 Provider, having real shops and providing delivery service (Entities) As food and drink internet retailing is relatively new in Vietnam, most key players have been present for less than five years. VinGroup JSC launched its online shopping channel, Adayroi, in August 2015, offering products from its VinMart and VinMart+ supermarkets and other third party retailers. The leading modern grocery retailer,Saigon Union of Trading Cooperatives, launched its internet retailing website Coopmart in September 2017. Mobile World JSC has changed its Vuivui eshop to Bachhoaxanh in its strategy to build Bach Hoa Xanh to be a stronger brand and penetrate deeper into grocery internet retailing. As most players are still new, there are still challenges that they face with food and drink internet retailing.For example, the range of food and drink products on their websites is usually not as extensive as in their shops.However, these companies receive hugh investment from their parent companies and therefore, are challenging competitors that satisfy a much bigger segment compared to Chopp, which targets a niche market. 2.1.2 Intermediaries, picking goods from partner shops and delivering (Online companies) These companies are mostly acting as intermediaries, connecting customers with clean vegetable and meat products from reputable retailers. Now Fresh, Di Cho Nhanh and Sendo are taken as examples. After strengths and weaknesses of these three companies are analysed, a conclusion is drawn that these three are more on par with Chopp. For instance, with 4 years of operating, Chopp definitely can compete with Now Fresh, who is just entering the fresh food market. Furthermore, Chopp offers a broader range of time for delivery than Di Cho Nhanh does. In addition, when using Chopp, customers can buy goods at multiple stores at once, while if customers choose Sendo, they need to make
multiple orders when buying from differents shop. To sum up, Chopp has advantages in aspects that these three intermediaries have yet to come up with solutions. 2.2 Bargaining power of buyers There are many substitutes for service of this industry, including e-commerce service of big retailers. Besides, consumers still prefer to go to physical shops to touch and feel the items before purchasing, which especially applies to fresh grocery. In addition, most key players have been established in less than 5 years and brand loyalty is low. Direct and indirect competitors are continuously entering the market. Therefore switching costs in this industry are insignificant to buyers, leading to high price elasticity of demand. This puts a downward pressure on the this market. In conclusion, bargaining power of buyer in online grocery market is high. 2.3 Bargaining power of suppliers According to General Statistics Office of Vietnam, in 2017 there are 207 supermarkets in Ho Chi Minh City only so the number of substitutes is huge. However considering supermarkets themselves have already had online shopping service and this industry has not presented a large proportion in supermarket’s sales, bargaining power of supplier in online grocery market is high. 3 What is Chopp? 3.1 Introduction With the goal of making safer and healthier food more accessible to consumers in Vietnam, Chopp is an on-demand groceries, food & drink delivery service powered by world-class technology and customer experience. Chopp operates by simply exploring and making an order from many trusted stores providing everything from local food and specialties to hi-end and imported food, from wine and craft beer to USDA certified organic vegetables and fruits… an then welltrained personal shopper will hand-pick the items at the stores and our “chopper” (courier) will come to the stores to pick-up the items and deliver right to your order. This whole process could happen within 1 hour for order from a single store. 3.2 Uniqueness of Chopp Firstly, Chopp is the only service in Saigon that allows customers to shop groceries and F&B from multi-stores, and get delivered all in one basket, all fresh and lean. Secondly, what also make Chopp different from others are the quality groceries, handpicked by well-trained shoppers, just like family. Thirdly, Chopp is characterized by its fast delivery service. After shopping more than 20000 items, at more than 40 stores on mobile app or website, customers can choose either on-demand delivery (within 1 hour) or schedule a 1-hour window at your best convenience. 4 Suggestion for strategy for Chopp’s development
If a person’s lifetime could be elongated to an ample extent in order for him to witness the “grandiose” development of technology from the most rudimental phase to that as of now, we cannot be sure how many years the sum of his existence could be. Back in the day, we had to go hundreds of kilometres to reach one another, let alone travel to deliver something to the right recipients. As time flies, better technology allows us to travel faster because we have planes and trains and cars. However, every higher elevation of technology also goes hand in hand with higher demand of productivity, putting human’s free time at cost. We now count on other people to have things delivered for us, have processed food brought to our doorstep, like in the current model of Grab Food, Go Food. On the other hand, people who put a strong emphasis on eating quality food, now see that pre-made food delivery is not cut out for them, thus, generating a need for e-grocery. Despite the bright prospect of Vietnamese food industry in the future and the gradual shift of customer behavior toward a platform of digitalised market, model of hyperlocal market like Chopp is still facing some challenges.
So far, the promise of delivery within one hour after placing an order is making Chopp one of the rarest brands carries out this policy to serve customers. Grofers - a similar model like Chopp, operating in 25 cities in India, used to start off as an express delivery company but now only focuses on next-day delivery, “with the minimum of 20 hours and average 28 hours” (How Grofers got the online grocery game right and won Rs 400 crore from SoftBank, 2018, by Athira Nair). This means that while making the one-hour promise, Chopp should ensure the ultimate efficiency of its logistics to not fall back on its promise or otherwise risk losing the trust of customers. Moreover, maintaining this means there is a huge dependency on human resources. All it takes is just 30 employees not showing up, the whole business can go down. Chopp so far resolves this problem by putting a restriction on its hourly and daily orders - maximum 5 orders an hour, and maximum 50 orders a day. However, such limitation is putting a jeopardy on the expansion of the firm’s service and making difficult to attract more potential customers. To really solve this, Chopp should invest more on upscaling and upgrading logistics to minimize the time of transactions between stores and focus more on hiring delivery men to
increase daily processed orders. Another trouble looming at their back is the dramatic increase in competitors - especially indirect ones - such as supermarkets like Coopmart, Lotte Mart; convenience stores like 7Eleven, Family Mart; bikehailing apps, naming Grab, Goviet, possessing food delivery and other specific food catering service like Foody, Now. Altogether these make the picture duller for Chopp since Vietnamese customers, largely makeup of middle-class, seem to favor the option of pre-made meals because they cost less (compared to raw materials delivered by Chopp with the surcharge of 20,000 VND of transaction fees each store, meaning that it will cost extra more buying from different stores.) Pricesensitiveness is common among middle-class customers, so in order to make them return, promotions should be offered often and the logistics should be impressive enough. As regards the high-end groups, they often hire a service man to do all the shopping stuff for them, so the percentage of the remaining people choosing Chopp is not as much. Besides, among the group of people opting for Chopp’s solution, there is a need on convenience, yet customers are also wary of missing or not getting deliveries on time, so it takes a hefty long time to raise public awareness, gain trust from them and establish Chopp as a reliable brand staying on top of mind of busy customers. Last but not least, although Chopp’s claim to possess the highlytrained shoppers to pick up the freshest food for customers, they should also pay attention to the smallest details of customers’ demand, e.g, a customer wants to buy fresh Dole banana, yet there should be staff contacting for clarification as which ripeness level of the banana the customer want, middle-sized or large bunch of banana and so forth. Or, if possible, Chopp should upgrade the app allowing the customers to take painstaking notes of their requirements. And there should be reimbursement program if delivery is failed or delayed or products delivered are not satisfactory to customers. All in all, models like Chopp will be the trends for the future rather than now since Vietnamese customers knowing this service are still few and far between or remain quite skeptical about its doability. Challenges galore and there are many obstacles in operation and customers’ mindset for Chopp to tackle and get over. Yet, if these problem can be solved, this will be a goldmine of potential market worthing million dollars for Chopp in the future in Vietnamese market, like what Grofers, Bigbasket, Pinkcitykirana, etc, has gained from India’s market or other hyperlocal model elsewhere in the world. REFERENCE Foreign reference A. Nair, Is online grocery shopping the new frontier of Global e-commerce?, yoursory.com, 2018.
https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400crore-softba nk D. D’Andrea and R. D’Andrea, Is online grocery shopping the new frontier of Global e-commerce?, khaz.com.br, 2016. https://khaz.com.br/is-online-grocery-shopping-the-new-frontier-of-global-ecommerce/ P.R. Cateora, M.C. Gilly, J.L. Graham, International Marketing, 5 th edition, 2011, McGraw – Hill Irwin. Online Grocery Business Model is Yet To Be Cracked!, entrepreneur.com, 2015. https://www.entrepreneur.com/article/248541 S. Kashyaap and A. Nair, From Rs 30 cr to Rs 1,800 cr in 5 years, BigBasket says they are just getting started, yourstory.com, 2016. https://yourstory.com/2016/12/bigbasket-growth-story-2 Domestic reference Hao Tran, How Chopp Plans to Make Healthy Food Accessible in Vietnam, Vietcetera, 2016. http://vietcetera.com/en/how-chopp-plans-to-make-healthy-food-accessible-invietnam/ Kiều Diễm, Vì sao Co.opmart vẫn là nhà bán lẻ hàng đầu Việt Nam?, Zing.vn, 2017 https://news.zing.vn/vi-sao-co-opmart-van-la-nha-ban-le-hang-dau-viet-nampost743457.html Mai Phương, Cạnh tranh... đi chợ thuê, Thanh Niên, 2017. https://thanhnien.vn/tai-chinh-kinh-doanh/canh-tranh-di-cho-thue-661781.html Như Mai, World Bank: 13% dân số Việt Nam thuộc tầng lớp trung lưu theo chuẩn thế giới, Nhịp cầu đầu tư, 2018. https://nhipcaudautu.vn/thuong-truong/world-bank-13-dan-so-viet-nam-thuoc-tanglop-trung-luu-theo-chuan-the-gioi-3323418/ Mộc Nhiên, Đi chợ online: Thị trường chờ bùng nổ, Doanh nhân Sài Gòn, 2017. https://doanhnhansaigon.vn/chuyen-lam-an/di-cho-online-thi-truong-cho-bung-no1078573.html Việt Nguyễn, Bách Hóa Xanh và chiến lược lấy khách hàng từ chợ truyền thống. Cafef, 2018 http://cafef.vn/bach-hoa-xanh-cua-the-gioi-di-dong-bao-vay-cho-truyen-thong20181130110611597.chn Xuân Hinh, Dân văn phòng thích thú với dịch vụ "đi chợ thuê", Dân Trí, 2017. https://dantri.com.vn/kinh-doanh/dan-van-phong-thich-thu-voi-dich-vu-di-cho-thue20170613142303774.htm Tri Túc, Bách Hóa Xanh và bài toán lợi nhuận trong thị trường 70 tỷ USD, Cafef, 2018