[Vietnamnet Newspaper] The Covid-19 epidemic not only affects offline (direct) sales, but also affects online (online) business. What needs to be done is the initiative to change and adapt from the business itself.
Resisting the pandemic
Minh Thanh’s left chest is tattooed with the symbol “VW” – the name of his 7-year-old fashion shop brand name. That speaks to Thanh’s love for his “baby”, the effort to build during many years of youth is great.
Sadly, the waves of the Covid-19 epidemic caused the business of this designer fashion brand to wobble. Along with that are the concerns of the shop owner.
“In the past, there was a month when I sold 500-600 orders, now there are only about 150 orders a month. Revenue dropped from 300 million at its peak to 70-80 million, or about a third. I’ve been drowning since Tet until now,” Thanh said while still looking at his phone and checking the status of orders for the day.
With the number of followers on social networking sites reaching tens of thousands, the revenue is so low, but the cost of online advertising still has to be maintained, because otherwise, the brand of the shop will gradually be forgotten. Roughly, in order to maintain business operations, Thanh’s expenses have cost him nearly 100 million VND per month.
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A fashion model of Minh Thanh shop is about to be sold online
“Open your eyes and lose 2 million dollars in online advertising. Not seeing the order in the morning is a disappointment. As for the 20th of every month, if the revenue is not enough, I suffer a lot of stress”, the shop owner shared. Now Thanh has to use the accumulated money to sustain and raise the fashion shop at this time.
In the same situation as Minh Thanh, Linh – the owner of a fashion accessory shop in Binh Chanh district – said that the shopping demand of customers has decreased significantly in the context of the epidemic. Sales revenue decreased by about 30%.
“Currently I manage by participating in selling products on e-commerce platforms such as Shoppe, Lazada and Tiki; At the same time, run more sales programs to attract customers, otherwise there will be no customers,” Linh said.
In other businesses, from the beginning of May, the chain of 18 branches of the ICool karaoke system in Ho Chi Minh City also had to switch to selling coffee and fast food on the spot and running deliveries on food delivery apps. This is how this service business endured when the city government ordered the closure to serve the prevention and control of the Covid-19 epidemic.
Turning strongly to online sales is not easy
Both Minh Thanh and Linh have converted their business models to online sales, not renting space to regulate costs. Small business shops like these in Ho Chi Minh City are not unique.
Everyone thinks that when the epidemic comes, the demand for shopping will increase, but that is not the case. Food and essentials will be the best sellers. Other items must be selected according to the consumer’s pocket to adjust the selling price reasonably and run discount programs to attract buyers. The essential aviation industries are affected first.
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The decrease in sales caused the management of this fashion brand to adjust its business plan
Fashion belongs to this group and IVY moda, a popular Vietnamese fashion brand, is no exception. This brand’s offline sales decreased by 70%, the online segment did not have the same momentum as last year.
CEO of IVY moda – Le Thi Ngoc Linh – assessed that this wave of Covid 19 epidemic has a completely different effect from the outbreaks in April or August 2020. It’s a long and lasting effect.
Therefore, the Board of Directors is keeping a dynamic balance when dealing with problems; closely monitor developments of the Covid-19 epidemic and adjust sales activities every day.
“For retail businesses like IVY, digital transformation is important. Big sales system means big costs. Last year, we thrived in the online segment, joining e-commerce platforms like Shopee or Lazada. In fact, if the epidemic lasts longer, it will be necessary to reduce the direct selling system to be able to balance the operation, “Ms. Linh said.
Agreeing with the need to change the business model to adapt to the pandemic, Dr. Tran Quang Thang, Director of the Institute of Economics and Management of Ho Chi Minh City, said that the service industries must now accept and join hands in epidemic prevention and control for the community. “Although we can ensure both anti-epidemic and economic development, we need to be cautious. The door-to-door delivery should be promoted, combined with the traditional form in the present time, avoiding large gatherings,” Thang stated.
Further analyzing from an expert perspective, Dr. Nguyen Hoang Bao – Head of Economics, Investment, Planning and Development Department of the University of Economics Ho Chi Minh City – said that due to the epidemic, many businesses have gradually switched to the online sales trend.
“As online sales become more popular, more competition. A piece of cake is torn, of course the guests will be absent”, Dr. Bao said.
Observing people’s consumption behavior, an economist from Ho Chi Minh City assessed that they not only cut spending when their income decreases but also when their expected future income is not guaranteed. It is possible that in the coming time, the job is precarious and unstable, consumers need provisions and austerity. The above factors have a direct impact on business activities of enterprises, when people are not willing to open their wallets.
Clearly, the market is facing general difficulties. Recent data from the General Statistics Office stated that, in the first five months of the year, nearly 60,000 businesses suspended business for a definite time, stopped operating, and waited for bankruptcy procedures. The above figure increased 23% over the same period in 2020. On average, nearly 12,000 businesses withdraw from the market every month.
Mr. Bao proposed a solution, instead of focusing on quantity, focus more on quality, improving competitiveness when the economy returns to a new normal.
At the same time, due to reduced revenue, business models need to change in cost structure, such as cutting office rental costs or renting space when it is not effective. Disruptions are also an opportunity to find new markets and customers if businesses have advantages in cost, products, quality and diverse distribution channels, especially knowing how to take advantage of the Internet.
“The Covid-19 epidemic creates an underground mechanism to help the digital transformation process in Vietnam, which is a positive point today. This situation forces businesses to integrate big data to use and help businesses live with the pandemic. Forced to change or die,” said Mr. Bao.
Source: Quang Dinh (Vietnamnet Newspaper)