Dien May Xanh: Detailed Business Analysis Report and Challenges

This report provides a detailed business analysis of Dien May Xanh, Vietnam's largest electronics retail chain. It examines the company's product categories, market opportunities, and competitors, including Cho Lon Electronic and e-commerce platforms. The report highlights Dien May Xanh's achievements, such as its extensive store network and revenue growth, while also addressing significant challenges like the impact of COVID-19 on sales and the failure of certain business models, including vuivui.com, and Điện Thoại Siêu Rẻ. The analysis also covers pricing issues and the competitive landscape, offering insights into the company's strategies and future prospects. The report references several sources to support its findings, offering a comprehensive overview of Dien May Xanh's operations and the broader retail environment in Vietnam. The report also discusses the impact of COVID-19, business model failures, and pricing issues. The report is available on Desklib, a platform offering resources for students.

DIEN MAY XANH
Launched in 2010 with the original name 'Dienmay.com' and then renamed Dien May Xanh
in 2015, Dienmayxanh.com has become Vietnam's biggest business electronics retail chain
with more than 1,000 stores nationally by market share (mwg.vn, n.d.). Each supermarket has
an area of 500 - 1000 square metres, selling mainly in electrical products and digital
equipment. In July 2016, Dien May Xanh became the first and only electronics retailer to
cover all 63 cities and provinces nationwide (mwg.vn, 2019).
1. Product categories:
Dien May Xanh offers products on the field of:
 Household electronics: television, refrigerators, washing machines, air conditioners,
microwave ovens …
 Digital electronics: smartphones, smartwatches, tablets, laptops, digital cameras,
digital electronics accessories …
 Home appliances: kitchen tools (pots, electric cookers, bowls, cups, pans, dishes …),
water purifier, air purifier ...
 Beside electronics and home appliances, Dien May Xanh also deals in collecting
electricity, water, wifi … bills, selling network services, sims, and fashionable, luxury
watches.
("Siêu thị Điện máy XANH - Mua bán điện tử, điện lạnh, gia dụng", 2020)
2. Opportunities of electronics retail industry:
According to Kantar WorldPanel’s Vietnam’s FMCG Insight Handbook 2020, Vietnamese
population is about 95 million people and approximately 26 million households (in 2019)
with major population age falls into the 25 - 39 years old, and there is a tendency to increase
consumption every year, which showing that there are a large amount of demands as well as
purchasing ability in electronics market in Vietnam.
In addition, in 2025, Vietnam is predicted to have a young population with Millennials
dominant (43%) and future consumers - Gen Z (7%) (Nielsen, 2019). These populations are
usually known as opening to new things, seeking for greater convenience and super
connected with technology. Hence, Dien May Xanh will have sustainable demands not only
now but also in the future.

Furthermore, smartphone users have increased 95% and 69% in urban 4 cities (including Ho
Chi Minh, Ha Noi, Da Nang and Can Tho) and rural areas, respectively (Kantar WorldPanel,
2020). This data shows that Vietnam has been developing toward modernization, a
technological country. Therefore, Dien May Xanh is a good strategy of MWG when ahead of
the trend of the fourth industrial revolution.
Moreover, average income per capita is forecasted to increase 90.7% up to 8.2 million dong
in urban 4 cities and 95.5% up to 4.3 million dong in rural areas in 2025 (Kantar WorldPanel,
2020). With that outstanding growth income, the Vietnam market in general and electronics
market in particular are believed to be more vigorous than ever. Thanks to increased income,
Vietnamese households have higher standards of living with more advanced appliances
(Kantar WorldPanel, 2020). However, in 2019, there were below 50% of households owned
microwave ovens, water filtering devices, vacuum cleaners... in both urban and rural areas
(Kantar WorldPanel, 2020). Thus, there will be a large market left for Dien May Xanh to
grow.
3. Competitors:
 Cho Lon Electronic - Furniture Supermarket:
This is a pioneer supermarket in the field of home electronics retail in Vietnam, specializing
in electronics, refrigeration, mobile, computers, home appliances, telecommunications,
furniture with service style. professional and modern ("Siêu thị Điện máy Chợ Lớn - điện tử,
máy lạnh, gia dụng, di động", 2020).
Not mentioned much like The gioi Di dong or FPT Store, but Cho Lon has excellent business
results: sales increased by 54% in 2016 from VND 8.100 billion dong to VND 12.500 billion
dong and increased by 26% to VND 15.800 billion in 2017 – more than the revenue of FPT
Shop. Double growth after 2 years, Cho Lon is the electronics chain that can chase the Dien
May Xanh ferociously. By focusing solely on the South, Cho Lon is clearly one of the most
desirable competitors of the Dien may Xanh in this region ("Nguyen Kim, MediaMart, HC
are simultaneously short of breath - Virac", 2018).
 E-commerce:
Some e-commerce exchanges in Vietnam: Shopee, Tiki, Sendo, Lazada.
In less than three years, e-commerce has developed to become a reality of consumer goods
products. The number of internet users are continuing to rise steadily in Vietnam. And the

next generation of customers who will soon reach the age of consumerism will fully disrupt
the way of shopping, voicing new desires, demanding versatility, autonomy and convenience
for manufacturers and retailers to give them. As customers are constantly linked, they can
demand even more from the digital world than the current shoppers. They would need more
convenient shopping experience (now 69 per cent of households are working with
housewives) to save more time for their personal lives (intensifying traffic on the streets of
Vietnam will make shopping trips less quick and easy) (Carrasco, 2016).
Therefore, it may soon be an acceleration of the involvement of online retail giants, such as
Alibaba and Amazon, who decide to take their first major move in driving this channel in
Vietnam (Carrasco, 2016).
4. Achievements:
 Business scale: 1,224 stores nationwide (mwg.vn, n.d.).
 Revenues:
o In 2019, the revenue of the Dien May Xanh was 58,239.18 (mwg.vn, 2019).
o In 2014, the revenue of the Dien May Xanh had just reached 2300 billion but
in 2017 it was nearly VND 30,300 billion ("Nguyen Kim, MediaMart, HC are
simultaneously short of breath - Virac", 2018).
o In the first 7 months of 2017, revenue of this chain continued to increase 84%
to nearly VND 29,000 billion ("Nguyen Kim, MediaMart, HC are
simultaneously short of breath - Virac", 2018).
 Profits: In 2019, the profit after tax of the Dien May Xanh was 2,186.52 (mwg.vn,
2019).
CHALLENGES:
1/ COVID-19: Decrease in sales and revenues
The company's business results have begun to be significantly affected by the Covid-19
pandemic since April 2020.
1.1. Internal and external reasons:
 Temporarily close more than 600 stores from April 1 to April 15 and still maintain the
closure of more than 300 stores from April 16 to April 25 to coordinate against
epidemics at the request of State agencies (Nguyễn, 2020).

 Compared to the same period in 2019, the refrigeration industry revenues recorded a
decline due to not only COVID-19 but also seasonal factors (Nguyễn, 2020).
 A decrease in the purchasing power of the economy from three effects: a decrease in
exports, a decrease in jobs and a decrease in income (Việt, 2020).
 People's income is affected, the total needs of the whole society will be greatly
reduced (Châu, 2020).
1.2. Impact on The Gioi Di Dong:
 In the first 4 months of 2020, MWG recorded consolidated net revenue of VND
37,187 billion, an increase of 9% compared to the same period in 2019, while profit
after tax decreased by 6%, reaching VND 1,341 billion (Nguyễn, 2020).
 MWG's sales in April 2020 decreased 14% compared to this period in the previous
year. In particular, the total revenue of the two chains The Gioi Di Dong and Dien
may Xanh decreased by nearly 30%. Meanwhile, the critical operating costs, though
actively adjusted, were not fully cut during the social gap, leading to a significant
impact on the net profitability of the company (Nguyễn, 2020).
 Stock prices plummeted (Châu, 2020).
2/ Business models failure
Not all MWG's business models are profitable. In recent years, MWG did not hesitate to
terminate many business models after a period of trial but did not achieve as expected.
Some MWG’s fail business models:
a. E-commerce site vuivui.com
MWG launched vuivui.com in December 2016 with an aim of bringing customers a truly
safe, reliable, convenient online shopping experience with competitive prices of over 40,000
products. At the end of 2018, MWG officially closed this e-commerce site after 2 years of
operation (Huy, 2020).
Internal and external reasons:
 The online retail market in Vietnam is also extremely tough. In the market share war
that never cools between the "tycoons" Lazada, Tiki, Adayroi, Sendo ... a series of
recruits means that in addition to quality, businesses need a financial strategy to
survive on this battlefield ("Thấy gì từ việc 'phá sản' Vuivui.com của ông Nguyễn
Đức Tài?", 2018).

 Too notice in attracting customers, many e-commerce sites then fell into capital crisis,
with heavy losses, especially businesses with insufficient financial potential ("Thấy gì
từ việc 'phá sản' Vuivui.com của ông Nguyễn Đức Tài?", 2018).
 Although MWG has a quite good capital, it is focusing its efforts on Bach Hoa Xanh,
so it is impossible to disperse resources for two "expensive" fields ("Thấy gì từ việc
'phá sản' Vuivui.com của ông Nguyễn Đức Tài?", 2018).
Impact on The Gioi Di Dong:
At the end of 2017, Vuivui.com's revenue was only 75 billion dong, not much contributing to
MWG's revenue structure (Huy, 2020).
b. Glasses:
At the end of June 2019, MWG began selling the eyewear business model by adding more
eyeglasses at the phone store of The Gioi Di Dong chain, located in District 9, HCMC.
By March 2020, after 9 months of launch, MWG decided to stop selling eyeglasses (Huy,
2020).
Internal and external reasons:
Business leaders said that it was necessary to stop doing business because small shops outside
had advantages in prescription glasses. If you put an eye tester in phone and electronics
stores, it is somewhat inappropriate (Huy, 2020).
c. Điện Thoại Siêu Rẻ:
Điện Thoại Siêu Rẻ was established in August 2019, the products were mainly phones which
were under 8 million dong and sold at 10% cheaper price than The Gioi Di Dong chain.
This model was created with the aim of capturing 20% of the market share from small mobile
and household stores. Sales of Điện Thoại Siêu Rẻ stores are about 350-400 million VND /
month (Huy, 2020).
However, on June 29th 2020, the website of Điện Thoại Siêu Rẻ announced it would stop
working and redirect to thegioididong.com (Huy, 2020).
Internal and external reasons:
 From its establishment to the closure of less than a year, MWG has opened 17 stores
of the Điện Thoại Siêu Rẻ chain, however, with a commitment to distributing cheap,
genuine products, the profit margin is low. Meanwhile, small mobile and home stores
often have an advantage when accompanied by a range of other services such as
selling and repairing (Huy, 2020).

 Điện Thoại Siêu Rẻ is heavily influenced by the system shutdown in response to
social exclusion requirements (Châu, 2020).
d. An Khang Pharmacy:
In the pharmaceutical sector, MWG believes that this is a potential market when there is no
chain of stores accounting for 20% of the market share.
However, up to now, after more than 2 years of investing in An Khang drugstore chain, the
system still has only about 20 stores in HCMC (Huy, 2020).
Internal and external reasons:
Although the pharmaceutical industry is expected to benefit from the COVID-19 epidemic,
the business situation of this pharmacy chain is not very positive (Huy, 2020).
Impact on The Gioi Di Dong:
This chain of stores continued to lose money and gradually burned MWG's investment of
tens of billion dong. In 2018, An Khang Pharmacy lost 2.1 billion VND and another loss of
3.47 billion VND in 2019 ("Thế Giới Di Động lỗ 9,4 tỷ đồng từ chuỗi nhà thuốc An Khang",
2020). In Quarter I / 2020, An Khang drugstore chain lost 1.4 billion dong (Huy, 2020).
3/ Pricing issue
3.1. Internal and external reasons:
 Although MWG owns Vietnam's top online selling and trading websites such as
thegioididong.com, dienmayxanh.com, and bachhoaxanh.com, there will be the price
war from online competitors wanting to compete for market share may reduce
MWG's operating profit margin (Y, 2019).
 Bach Hoa Xanh Grocery stores must compete with other competitors such as Saigon
Co.op, Satrafoods. In addition, transportation costs from warehouse to store account
for about 3% of the revenue of Bach Khoa Xanh chain, so this chain has to reduce
COGS or increase store revenue to increase the gross profit margin of Bach Hoa Xanh
Store from 18% to 20% (Y, 2019).
 The expansion of the store network has led to a rapid increase in selling expenses and
administration expenses (Y, 2019).
 The gioi di dong has chains of stores with a large area, located in a beautiful location
with a large number of staff. Moreover, it not only trades in one product which is a
smartphone, but also trades many other products such as laptops and accessories
(Thanh, 2019).

3.2. Impact on The Gioi Di Dong:
With a high price, The Gioi Di Dong loses lower-income segments such as students,
unemployed, low workers... which affects lower sales, revenues, and profits of the company.
SOLUTION
1/ COVID-19: Decrease in sales and revenues
 Negotiate to reduce the rental price of business premises for all chains (Hồng, 2020).
 Restrict new recruits until the disease situation is more strongly controlled (Hồng,
2020).
 Cautious about the plan to open new stores to monitor the impact of Covid-19 on
customer shopping behaviours, only open Bach Hoa Xanh grocery stores which have
prepared premises and personnel in advance (Hồng, 2020).
 Try the company's best to reduce the difficulty, not to make an effort to tie it up (Việt,
2020).
 Enterprises will make business plans that are no longer bloody as in previous years
(Việt, 2020).
 Businesses set annual plans, not multi-year plans (Việt, 2020).
 MWG's employees will receive the right to buy preference shares (ESOP - bonus
shares for employees) if they keep the profit in 2020 equal to at least 80% of the profit
of 2019 (Việt, 2020).
 In COVID-19 period, the company will focus on controlling costs and ready
platforms so that when the epidemic ends, MWG will be the first to rise up to run into
the future (Châu,2020).
 Priority should be given to ensuring business cash flow, so long-term investment
projects and expansion will be postponed (Châu,2020).
 Bach Hoa Xanh will open from 700 - 1,000 new shops, adds 1000 delivery staff to the
warehouse (Châu,2020). The creation of a multidisciplinary retail chain is also
starting to work on MWG in the current period. When electronics and technology are
not prioritized for shopping, people flock to essential goods, the Bach Hoa Xanh
Grocery Store starts contributing to the MWG’s revenue (Đăng, 2020).
2/ Business models failure

 Constantly follow the rule "trial and error" to find the best problem for the business
(Nhật, 2020).
 Stop before losing too much.
 Try and experiment new different models.
 Usually check to close stores with no business results ("Thấy gì từ việc 'phá sản'
Vuivui.com của ông Nguyễn Đức Tài?", 2018).
3/ Pricing issue
 The Gioi Di Dong can use basic rules of profit maximization that set price and output
quantity that make marginal cost equal to marginal revenue. With this method, instead
of setting a high price, The Gioi Di Dong can lower it by selling more products.
 The Gioi Di Dong can also use some pricing strategies such as two-part pricing, block
pricing, commodity bundling in order to make customers feel that they bought at a
bargain price but in fact, the company just keeps the old price with new pricing
strategies.
 The Gioi Di Dong can also use a randomized pricing strategy, which lets the company
usually change different random prices on all the products to make consumers not
able to know which prices are the cheapest ones.
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