Retailers’ service quality expected to follow suit as iPhone prices plummet

In April, The Gioi Di Dong (Mobile World) launched a promotion campaign named “Gia re qua” (Too cheap) for the iPhone 14.

Then FPT Shop, Di Dong Viet, CellphoneS, and Viettel Store introduced similar campaigns, reducing the device’s prices by at least VND10,000 (US$0.42).

Now the average selling price of the 14 Pro Max, the most advanced model, is around VND26 million, VND5 million less than at the beginning of this year.

Global economic difficulties have led to weak demand for smartphones, forcing retailers to reduce prices, a manager of Hoang Ha Mobile said.

With the price cuts, large retailers have drawn level with small players, who used to sell iPhones for up to VND2 million less.

Mai Trieu Nguyen, director of the Mai Nguyen chain, said the market is going through an unusual period but “Having no profits will not last long.”

In August 2019, The Gioi Di Dong opened a chain called “Dien thoai sieu re” (Super cheap phones) but closed it within less than a year.

It sold phones at up to a million dong cheaper than the The Gioi Di Dong chain, but had fewer employees and customers had to go to the company’s service center for warranty instead of the stores.

Analysts said the payoff for selling below cost price would be a reduction in customer care and service.

The manager of an electronics store warned: “The price war benefits consumers now. But it negatively affects retailers when profits are low. But in the long run the market could turn into a monopoly, and users will have less choice.”

Nguyen Lac Huy, a manager at CellphoneS, said the price war is changing business plans for most retailers, who have closed unprofitable stores, stopped opening new ones, made mass layoffs, or cut service quality.

CellphoneS expects revenues in the first half of this year to grow by only 8% year-on-year, the lowest in many years. It has closed three stores. “Many products are being sold at below cost price,” Huy said.

Nguyen The Kha, director of FPT Shop’s mobile telecommunications division, said the smartphone market remains tepid but would grow strongly in the fourth quarter of this year when the new iPhone model is launched.