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|The delivery industry is seeing increasingly fierce competition|
Last week, Viettel Post JSC officially held its first trading session on the Unlisted Public Company Market (UPCoM) with the stock code VTP and the opening price of VND68,000 ($3).
The company has sold nearly 41.4 million shares, reaching the capitalisation of VND2.8 trillion ($122 million).
Viettel Post is the second largest contender in the Vietnamese postal industry, after Vietnam Post (VN Post). In 2017 alone, Viettel Post’s total revenue hit more than VND4 trillion ($147 million), up 37,64 per cent on-year. Viettel Post targets to reach VND10.5 trillion ($456.5 million) in revenue by 2020.
Tran Trung Hung, Viettel Post general director, said that after hitting the stock market, the company will start revolutionising every operation, not only domestically but also in foreign markets. Accordingly, it will change from being employed by foreign companies to directly investing in foreign countries, and branch out from only delivery services to become a more holistic logistics enterprise making use of technology in its operations.
“Our strategic target is to become a leading logistics company, aiming at seizing 30-35 per cent of the market share with the market capitalisation of $500 million in 2020,” said Hung.
Regarding the potential of the Vietnamese postal industry, Minister of Information and Communications Nguyen Manh Hung stated at a recent working session with Prime Minister Nguyen Xuan Phuc that the postal industry now not only includes delivering mail and newspapers, but it is emerging as a major channel for e-commerce, logistics, and e-government.
“The postal market is expanding with the participation of numerous enterprises. With the annual growth speed of 35-40 per cent, Vietnam’s postal market will outdo telecommunications in terms of turnover,” Minister Hung stated.
The postal industry, including delivery, shipping services, and logistics, currently makes for a particularly promising land. According to the Vietnam E-commerce Association (VECOM), e-commerce in Vietnam witnessed a growth of over 25 per cent in 2017 and might hit the scale of $10 billion in 2020.
A survey of some delivery companies shows that delivery services are posting revenue growth of 62-200 per cent. This is an ideal opportunity for delivery enterprises to make a breakthrough in development.
The express delivery market is now dominated by not only traditional companies, such as Viettel Post, VNPost, and EMS, but startup companies (giaohangnhanh, supership, giaohangtietkiem) and multinational companies (DHL eCommerce, Grab Express, Lazada Express) have also jumped into the field, heating up competition.
As evaluated by Pham Anh Tuan, VNPost’s chairman, the race in the postal market is even fiercer than in telecom.
“In the past, I believed that it was extremely tough competition in the telecoms market. However, the postal market, in fact, is even tougher. Telecommunications is being scrambled by three main operators Vinaphone, Mobifone, and Viettel, whereas the postal industry is pulled about by approximately 300 authorised enterprises, not to mention a series of freelance delivery enterprises and unlicensed delivery services from bus operating companies to small and super-small companies competing via discounts. Some investors have recently poured money into startups. They are willing to suffer losses for a couple of years just to win market share. If traditional delivery companies like us cannot figure out an efficient solution to turn the tables, we will certainly be kicked out of the competition,” Tuan expressed his concerns.
At the moment, some newcomers to delivery like Giao hang nhanh, Giao hang so 1, and Giao hang Ong Vang, are trying to boost sales by offering low prices and discounts, providing services around the inner city of big cities.
On the other hand, foreign enterprises focusing on international shipping, namely DHL, TNT Express or FedEx continue to enhance their presence by launching special services or establishing new subsidiaries in different cities and provinces.
Under such circumstances, Viettel Post and VNPost are working on improving the quality of their transport and warehouse systems, developing the logistics sector.
While Viettel Post has been listed on the UPCoM to attract investment for the expansion of its delivery services to reach other foreign countries, boosting logistics and postal technology, VNPost has just brought its southern centre of transport and logistics in Ho Chi Minh City on stream. In the meanwhile, VNPost is also carrying out the construction of seven regional transport and logistics centres, forming three main complexes in Hanoi, Ho Chi Minh City, and Danang.