HANOI -- In a bustling street in Hanoi, a near-constant stream of customers flows in and out of a nondescript shop in search of daily necessities. The roughly 30-sq. meter space, packed to the brim with food and sundries, is among the thousands of small, traditional family-operated outfits that dominate Vietnam's retail landscape.
Despite its mostly old-school appearance, this particular store made one big change last fall that gives it a distinctly modern twist: taking part in VinShop, Vingroup's new wholesale service designed specifically for such small retailers.
"For a store like ours, ordering products can get complicated," the 38-year-old shopkeeper said. "The new service is convenient because we can get lots of different supplies in one delivery."
The store used have to deal with an army of suppliers to source the hundreds of products on its shelves. Now, a Vingroup truck comes each morning with almost everything it needs for the day in neatly packed boxes.
As Vietnam's leading conglomerate, Vingroup had little connection to these smaller outfits before VinShop's launch in October 2020. But it is now actively partnering with these stores in a renewed push into the retail sector.
Roughly 40,000 stores in Vietnam had signed up as of December, and the number only continues to grow. Stores on VinShop can also take customer payments through VinID, Vingroup's e-payment app with more than 10 million users.
Vingroup calls VinShop the country's first B2B2C or business-to-business-to-consumer channel. Thanks to reduced procurement costs and periodic advertising through the VinID app, stores using VinShop boost monthly income by 10 million dong ($434), the company says.
VinShop users are required to display a sign saying they buy their goods from Vingroup. But they are not exclusively bound to the service, and can also work with other wholesalers if they wish.
The Hanoi store buys about 70% of its inventory through VinShop. "We were able to cut our overall stocking costs," the shopkeeper said.
Vingroup has also partnered with Vietnam Technological and Commercial Joint-Stock Bank, known as Techcombank, to offer financing to VinShop users. Stores that purchase a certain amount of items from Vingroup qualify for up to 70 million dong in loans without collateral, and accrue no interest for the first 40 days.
The option is a boon for mom-and-pop retailers, which often experience cash flow problems. For example, stores usually need to stock up on inventory before the Lunar New Year. But finding the funds to do so can be difficult.
Vietnam's retail market doubled in size between 2010 and 2020 to $180 billion, according to Vietnam's General Statistics Office. But supermarkets and other modern retail formats only account for 25% of the market, according to a separate government report.
Small mom-and-pop stores are expected to remain the dominant force in Vietnamese retail for some time. Vingroup plans to work with them to cultivate new business opportunities following its own recent setbacks in the retail sector.
Vingroup was until recently Vietnam's largest retailer, with roughly 2,600 outlets including supermarkets and convenience stores. But a push to expand rapidly led to deepening losses.
The company announced what amounted to a withdrawal from the retail business in December 2019, and later transferred shares in retail subsidiaries to Masan Group, a major Vietnamese food maker, in a merger deal.