VJ Express Business Plan

April 2016, Ho Chi Minh City

I. Introduction

– Executive summary

– Supply Chain value creation with VJ Express

II. Market Analysis

– Market overview

– Hypotheses

– Competitors analysis

III. Business Model

– Business model canvas

– VJ Express service portfolio

– SWOT

– Value proposition canvas

– Cost & Revenue projections

Business Plan Outline

I. Introduction– Executive summary

– Supply Chain value creation with VJ Express

II. Market Analysis

– Market overview

– Hypotheses

– Competitors analysis

III. Business Model

– Business model canvas

– VJ Express service portfolio

– SWOT

– Value proposition canvas

– Cost & Revenue projections

Business Plan Outline

Considering the facts from the market overview and the current

supply chain value creation as well as the rise of e-commerce in

Vietnam, I have identify a gap between the current available

express service in the market and the current market demand.

Namely, the service tailored for e-commerce vendors both big

corporations and small retailers. The e-commerce sector is on

the rise in Vietnam in recent years and this rise will continue for

years to come. One of the biggest concerns of e-commerce

platform are logistics suppliers.

If Vietjet Air expands vertically into the supply chain by an M&A

or venture capital investment into an existing express company,

this expansion will be catalyst for an explosion of new express

service portfolio. This service portfolio will in turn create a

sustainable competitive advantage against other airlines or/and

express couriers by driving the cost down but provide quality

service.

Vietjet Express: do more with less

Executive summary

• Mission statement– Become the market leader in domestic express in 5 years with 40%

market share

– Expansion into the e-commerce end-to-end supply chain.

• Core value– Innovative, tailored and end-to-end solutions for customers

– Do more with less

– Create sustainable, long-term competitive advantages

• Vision– Offer a pleasure consumer experience in express/ postal service

– Create unique aviation service in Vietnam

Executive summary

Supply Chain – The current status

quo in Vietnamese domestic market

Merchant

• Import/ Export handling

• Stable supplier

• Quality control

E-commerce/ Retailer

• Website platform

• Order processing

• Invoicing

• Assemble and Packaging

• Warehousing

3PL

• Line-haul Optimization

• Sorting/ Distribution

• Cost control

• Lead time control

End customer

• Product quality

• Service quality

• Overall experience

Supply Chain – VJ Express Service

Merchant E-commerce/ Retailer

3PL VJ Express

End customer

• Import/ Export

handling

• Stable supplier

• Quality control

• Website platform

• Order processing

• Invoicing

• Assemble and

Packaging

• Warehousing

• Line-haul

Optimization

• Sorting/

Distribution

• Cost control

• Lead time control

Tailored solution

for e-commerce

Umbrella product

I. Introduction

– Executive summary

– Supply Chain value creation with VJ Express

II. Market Analysis– Market overview

– Hypotheses

– Competitors analysis

III. Business Model

– Business model canvas

– VJ Express service portfolio

– SWOT

– Value proposition canvas

– Cost & Revenue projections

Business Plan Outline

• Market size: USD460 mil. (2015)

• Market share:

Market overview – Domestic Express

VN Post, 36%

DHL - VNPT, 14%Viettel, 11%

EMS, 7%

UPS Vietnam, 7%

TNT Viettrans, 7%

Kerry, 5%

Other, 13%

• Market share

Market overview – International express

VNPT -DHL40%

Fedex Express

35%

TNT Express

13%

UPS12%

• The usual express service, plus

• Quick/ Instant COD.

• Same-day delivery service in SGNHANSGN, then “by-

the-hour delivery” in SGNHANSGN.

• Reduce delivery lead-time by 40%.

• Warehouse management for e-commerce partners.

• Value added services: import/export handling, parts

assemble, packaging, invoicing, transportation solution.

• Additional service package for Vietjet Air, HDBank:

• Heavy luggage door-to-door delivery.

• Pre-flight, door-to-door luggage pick-up and drop-off.

• Develop express cargo terminal

Hypotheses – Service features

• Tailored, end-to-end solution for e-commerce customers

(big corporations to small merchants).

• Offer better solutions with lower cost factors (door-to-door

service).

• Offer unique solutions no other competitor has done/ or

can only be done with great cost incurred (same-day

delivery SGN-HAN-SGN, value added service).

• Create additional unique service for Vietjet Air.

• Create business opportunity in banking and finance by

managing the daily amount of COD received.

Hypotheses – Service benefits

• Finding a “fitting” and existing express company to

invest into since the domestic express market’s entrance

barrier is prohibitively high (in cost and in time invested).

Fitting company means:

• new, dynamic, disruptive technology driven,

• fairly good domestic network coverage,

• having established process, procedure and quality standards,

• having a company culture/image fits with that of Vietjet Air’s.

Hypotheses – Dependency analysis

Two type of potential customers:

• Traditional post/ mail sending customer

• E-commerce customer

Hypotheses – Type of customer

• With the current express service posing these problems to

customer:

• Slow/ untimely delivery time

• Instability in delivery quality (package damage, content damage…)

• Customer service of the delivery man (especially true for online

retailer), return policy.

• Slow cash-flow of receiving COD

• Lack of a more time sensitive and cost effective solution

• Inconvenience methods in sending and/or receiving shipment.

• Lack of a complete solution starting from a mouse-click and

ending with receiving/ returning the delivered shipment.

Hypotheses – Customer problem

• The usual express service, plus

• Same-day delivery service in SGNHANSGN, then “by-the-hour

delivery” in SGNHANSGN.

• Reduce delivery lead-time by 40%.

• Value added services: import/export handling, parts assemble,

packaging, invoicing, transportation solution.

Hypotheses – Minimum features set

• Channel:

• Take advantage of the current distribution channel of the merged

express company.

• Pricing:

• For existing express service: remain the same pricing strategy

• For new express service (e.g: same-day SGNHANSGN delivery):

charge the same price as premium express service offered by

competitor.

Hypotheses – Channel and Pricing

• Market type: Resegmenting an existing market by

offering unique competitive advantages with lower

cost.

• Unique competitive advantages comes from vertical

expansion of airlines into express company

Process optimization/ synchronization: create tailored solution for

express company aims at e-commerce clients.

Profit margin optimization: “take away the middle man”, the air

carrier/ express company work directly with e-commerce

merchant, the general population.

New value added service by exploiting the unique advantage of

having a expanded airfreight network.

Cost consolidation in marketing, PR, branding.

Hypotheses – Market type

• The competitors define the basis competition by

widespread coverage and long established brand due to

the fact that 2 of the biggest competitors (VNPost and

VNPT are state-owned corporations).

• The service offered by VJ Express will achieve:

• Better tailored service

• Lowering the total cost of adoption

• Same coverage (97% total populated area in Vietnam)

Hypotheses – Competition

Competitor analysis – Key success factor

Rating is based on scale out of 10.

The maximum achievable score is 10.

Key Success

FactorWeighting

VN Post

Rating

VN Post

Score

VNPT –

DHL

Rating

VNPT –

DHL

Score

Viettel

Rating

Viettel

Score

Coverage 0.1 9 0.9 9 0.9 7 0.7

Pricing 0.3 6 1.8 5 1.5 4 1.2

Service Portfolio 0.2 2 0.4 6 1.2 3 0.6

Service Quality 0.4 5 2 6 2.4 4 1.6

Total 1 22 5.1 26 6 18 4.1

I. Introduction

– Executive summary

– Supply Chain value creation with VJ Express

II. Market Analysis

– Market overview

– Hypotheses

– Competitors analysis

III. Business Model– Business model canvas

– VJ Express service portfolio

– SWOT

– Value proposition canvas

– Cost & Revenue projections

Business Plan Outline

Business Model

• Strategic investment into a rising Last-mile logistics service

provider such as giaohangnhanh.vn

• Synergy for the two partners to expand/ exploit the network

in providing the market a unique, one of a kind solution for

the general population (80% of the Vietnamese population

currently living in rural area) ranging from airport luggage

pickup to ticketing and e-commerce hub.

Cost Structure Revenue Streams

Key Partners Key Activities

Key Resources

Value Proposition Customer Relationship

Channels

Customer Segments

Business Model Canvas

• Express service:

• Domestic and International delivery

• Automatic parcels delivery

• Luggage airport pickup/ delivery

• Supply chain service:

• Warehousing/ 3PLs to facilitate e-commerce

• Contract Logistics

• Production

VJ Express service portfolio

Universal Express Service

Unique Express Service

Value proposition

Customer’s tasksCustomer’s needs

Customer’s wants

Service

Wants creators

Needs relievers

Last-mile

delivery

Reliability of

transport service

End-to-End

solution

Secure & quick

delivery channel

Customer service

Cost efficient, on-time

transportation service

Easy accessibility

VJ EXPRESS SWOT

STRENGHTS

•Ultilization of aircraft capacity with in-house

pricing to maximize loading.

•Ultilization of road-network and the current

stake in the e-commerce market.

•Extension of current airline & express services

WEAKNESSES•Depedency on strategic partner in road-

network.

•High and fluctuative operating cost (fuel, rental

price..)

•Capital intensive investment leads to limited

exit strategy.

THREATS•“Scare away” of the traditional airfreight

customer.

•Competition from other e-commerce giants

(Alibaba, Ebay..)

•]Vertical expansion by other legacy carriers.

OPPORTUNITIES

•Market size is growing rapidly

•High profit margin

•Synergy created by combined distribution

network of both Giaohangnhanh and Vietjet Air.

•Expansion into mobile commerce sector.

Cost and revenue projection

Please refer the excel file for more detail