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How to deal with Distributors in Vietnam

The easier way to sell in Vietnam is deal with Local distributors. Vietnam is becoming an increasingly attractive market to foreign brands in 2022. This rise is due to many factors, including product quality, prestige, taste, and other attributes.

But, there are many challenges to entering Vietnam’s market. We will discuss these in detail in the article. Local distributors are a great option for brands that sell B2B or B2C. This allows you to gain instant market access and reduces risks.

This article will Tips to deal with Vietnamese distributors. It will also highlight important points to consider when choosing a distributor.
Partnering with a distributor is the best way to get into Vietnam if you don’t have any experience or are not local. Let’s look at some of the most prominent benefits of working locally with distributors.

Vietnam is THE fast growing market

Evaluate the Network of your distributor

Many distributors have extensive local experience selling other brands, which has enabled them to establish a large network. Once a distribution partnership has been established, your products can be quickly reached by many consumers.

Supermarkets like Top Market, MM mega Market, and VinMart are well-known in larger cities. These companies have established relationships with distributors of imported goods, particularly in the FMCG sector. The Gioi Di Dong (Mobile World), and its associated company, Dien May Xanh are the best options for consumer electronics.

Savico, the largest dealership for automobiles in Vietnam, distributes well-known brands such as Honda, Toyota, Ford and Volvo.

Distribution Channels in Vietnam

Distributors can help you import products into your country, giving you access to all channels. This is in contrast to cross-border eCommerce sales, where you have access to one sales channel. Cross-border eCommerce platforms must meet product-specific requirements. They also need to be compatible with the size and price of the products.

It’s illegal to sell food products and supplements cross-border on Lazada. Cross-border selling of perishable food products is difficult to ensure refrigeration and cover higher logistics costs.
Sometimes distributors are focused on certain regions of Vietnam This is especially true in larger countries like Vietnam. To understand the best sales opportunities, a market analysis must be done before a distributor is selected.

Additional Business Fees

Supermarket commission need to be paid by local distributor and need “business fees”. This has long been a challenge for distributors/producers : the commissions paid to the middlemen.

The commission paid to supermarkets can vary depending on product categories. The commission ranges from 10% to 40%(imported stores).

Other than the commission, foreign brands are subject to additional fees and taxes that local suppliers do not have. It is therefore important that the company’s management maintains a competitive pricing structure while still remaining profitable.

Working with an experienced distributor will allow you to sell online as well as offline. This can prove beneficial for B2C sales. Although online sales are not as common for B2B sellers but the distributor can still sell products to all types of stores including supermarkets, hotels and convenience stores.

Good word of Mouth

Apple in Vietnam has long not had to spend too much money on promoting new products with its famous marketing strategies. They relied on a strategy of creating rumors or word of mouth marketing to get users ready and looking forward to new Apple products.

According to financial news agency Bloomberg, since the first generation iPhone was released in 2007, the media has especially loved Apple products. No need for the company to advertise, the media has also raced to exploit news about new products. At that time and the more advanced product generations of Apple, the press and social networks also tried to exploit information about the new iPhone. Although Apple has not revealed any information about the product, the rumors from the media have made any upcoming iPhone a “super product”. Apple gives users a feeling of “slowly not coming” (marketing scarcity) and a “follow-up” mentality (social proof) for customers.

This strategy is one of the famous marketing strategies that have been used since 1984 in the advertising “Big Brother”. A message has been conveyed to an entire generation: “Let go of your chains. Break the status quo. Think differently”.

Marketing to Seduce heart of local people

A distributor in Vietnam will appreciate a Facebook page in Vietnese or instagram page.
It will help him to engage with local sales team and to engage with Customers services of Retailers.

Vietnam is a well connected country and everybody follow brands, influencers via Mobile.

Added value via one Contact

The distributor need support from Brand to be able to sell . He will be your point of contact for all sales and will manage hundreds to thousands of customers. This can be time-consuming, but it requires enough experience to manage the process efficiently.

Distributors in Vietnam should be knowledgeable in both the sales and marketing process as well as customer satisfaction. For companies with little or no experience in Vietnam, this can prove difficult.

Registration & Logistics

Due to the many regulatory requirements in Vietnam for importing products into Asia, it is important that you have the knowledge and experience of a distributor in the local registration of products. This could include registrations with customs, product labeling and inspections of facilities, among other things.

It can be difficult to manage the registrations yourself and make it impossible for you to sell products locally. Both the seller and distributor should manage the registration process to ensure that all paperwork is in order. Logistic is the same, be sure your products are deliver on Time to not kill their moral.
Partnering with a Vietnese distributor means that you have no control over sales, marketing, customer support, or warranty activities. To maximize sales and satisfy consumer expectations, you need to work closely with your distributor.

Distributors, whether they are acting purposefully or not, often fail to meet expectations. Distributors can be obstructive and require exclusivity in order to benefit other brands. To avoid such situations, it is important to include minimum sales quotas, for example, on a quarterly basis.

Here are some things to remember when working with local distributors
Before you sign up for a partnership, confirm that the distributor can manage your local sales activities. Here are some examples of products that you should review before entering a partnership.

Support Your local Partner

treat your Distributor like your partner and support him, he will appreciate it and sell more.
Your distributor must have a sufficient network to sell the products in sufficient quantities. It’s also important to understand the retail chain that the distributor sells products to.

The following items will need to be included in the distribution agreement: the number of shops they have/sell to, the current brands they distribute, typical clients and the annual sales volume.

If the distributor in Vietnam is active on local eCommerce platforms you should also check what platforms they are on, buyer reviews, and delivery times. You should also review the customer service and warranty, and you should send him all pictures, and content you have to support his performance.

Companies should have a basic understanding of the market to be able to plan the best penetrating strategy.

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