Conceptualization of the possible vertical expansion of Vietjet Air into the land/express transportation market.

1. VJ Express Business Plan
April 2016, Ho Chi Minh City

2. 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

3. 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

4. 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

5. • 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

6. 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
experienc
e

7. 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

8. 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

9. • 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%

10. • Market share
Market overview – International express
VNPT -
DHL
40%
Fedex
Express
35%
TNT
Express
13%
UPS
12%

11. • 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

12. • 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

13. • 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

14. Two type of potential customers:
• Traditional post/ mail sending customer
• E-commerce customer
Hypotheses – Type of customer

15. • 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

16. • 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

17. • 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

18. • 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

19. • 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

20. Competitor analysis – Key success factor
Rating is based on scale out of 10.
The maximum achievable score is 10.
Key Success
Factor
Weighting
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

21. 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

22. 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.

23. Cost Structure Revenue Streams
Key Partners Key Activities
Key Resources
Value Proposition Customer Relationship
Channels
Customer Segments
Business Model Canvas

24. • 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

25. Value proposition
Customer’s tasks
Customer’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

26. 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.

27. Cost and revenue projection
Please refer the excel file for more detail