- This mid-sized consumer electronics showroom has tied up with six different finance firms
- Starting consumer electronics business with just smartphones, this showroom now sells TVs, refrigerators and washing machines
Tushar Communications, a consumer electronics showroom situated in a tier-II market in Delhi NCR (national capital region), is taking on the online sales channel with the help of finace firms. Rajan Rathore (RR), partner, Tushar Communications, Faridabad, Haryana, feels that tying up with finance firms like Bajaj, Home Credit and HDB has helped his showroom increase the number of products its sells every month.
He also has an interesting answer on the eroding margins due to increased digital payments. Rajan also believes that the trend of more people buying consumer electronics online is reversing.
Here is what more does a consumer electronics retailer sitting in a tier-II market near Delhi thinks about the appliances and consumer electronics (ACE) industry
Q1 – When did you start this business? What prompted you to start this business?
RR – I, along with my elder brother started this business three years back. We started retailing smartphones and smartphone accessories in the beginning as the margins were really great and smartphones were becoming a trend in the area. The reason we entered this business was an aim to start our own business. We were looking for something that had the potential for giving us returns from the first month itself.
A lot of our friends are in this business as well. They all advised us to enter the consumer electronics business with smartphones as it is necessary to create a name for your self in the market before entering the bigger game. Now we sell TVs, washing machines and refrigerators through the same showroom.
Q2 – What’s your vision for your business and India’s ACE industry?
RR – We started with smartphones and now sell TVs, washing machines and refrigerators. My next aim is to add more consumer electronics categories. The next categories we will explore are ACs, air-coolers and geysers.
I want to see India’s ACE industry growing to such an extent that it becomes bigger than the one in China. Indian consumers prefer Chinese-products because they are affordable than others. I believe that if everything is manufactured in India, our margins will increase and so will the benefits to consumers.
Q3 – How do you see India’s ACE industry growing from here?
RR – India’s ACE industry is growing through mixed time at the moment. Some of the fellow retailers believe that the market size is diminishing, while some like me believe that there’s still a lot of potential. With so many TV and smartphone brands operational in the market, it has become really difficult for us, and for the consumers, to decide which one to go with.
Sales people from a lot of brands approach us everyday with promises of higher margins and better support. It is really becoming difficult for retailers like us to ascertain which brand to sell and which not.
Q4 – What are your expansion plans in the near future?
RR – If all goes well, we plan to open more showrooms in the nearby areas. Our next target is to open one showroom each in the nearby colonies. The population size here is huge. We are also trying to reach out to more consumers via Facebook ads now.
Q5 – How’s your business doing in this FY? There’s a lot of news of growth from the ACE sector – are you witnessing it too, in your business?
RR – The first few months were slow. However, the sales have started to pick pace now. The festive season is around the corner as well. We are now selling an average of three smartphones per day. For TVs, the average is around one per day. Washing machines and refrigerators are slow moving consumer electronics here but they also have better margins.
Yes, we are witnessing the growth too. People talk a lot about Flipkart and Amazon now. They want us to sell them products on prices offered by these. But this happens for smartphones at most times. For categories like TVs, refrigerators and washing machines, consumers here still prefer shops like ours.
Q6 – Any product segments or brands that are affecting your business positively or negatively? Any new strategy implemented by your team in this FY that’s resulting in growth?
RR – While TV, washing machines and refrigerators are slow moving products in this area, smartphones are fast moving ones. The likes of Flipkart and Amazon were eating a lot of offline business, but after we collaborated with smartphone finance firms, the sales are back on track.
We are now selling an average of three smartphones per day. Most of the smartphones we sell in a month are through these finance firms. I would also like to share that after we collaborated with these firms, the average selling prices of smartphones have gone up to. A consumer who generally comes looking for a smartphone in the below Rs 10,000 category, a lot of times, decides to buy one worth Rs 15,000, through the financing route.
Q7 – What’s your strategy for developing your team to guide and sell the right product to your customers?
RR – We do not gave a big team here. I along with two more people manage the whole showroom. We try to convert every walk-in into a consumer. When a consumer walks out without buying a product from us, we sit and discuss what went wrong. At times we also collect contact numbers of our consumers and call them to check if they found out the product they were looking for.
Additionally we have also created some social media pages and are running ads in our area using them. Though we get a lot of inquiries through the same, but not a lot of people who contact us through these social media channels end up buying from us.
Q8 – What’s your strategy for products that get discontinued or obsolete? How do you avoid losses on them?
RR – We do not make losses on them at all. A lot of companies offer us credit note on selling old products. Additionally we are always careful while ordering the quantity of the products we are not sure about.
Q9 – Do you indulge in B2B (institutional) sales also? If yes, how much of that is it, a percentage of your overall revenue?
RR – No we do not indulge in B2B sales.
Q10 – How are you handling the challenges created by Online portals like Amazon and Flipkart?
RR – The biggest challenge posted by Amazon and Flipkart was of pricing. Most of the brands have started addressing that challenge now. We can now offer a lot of products in better prices than Flipkart and Amazon but our margins take a heat. On the other hand, we are also able to make new customers who in turn recommend our showroom to other potential customers.
There are still brands that do not offer as much margins to offline retailers as they do to online channel. But the trend is changing now.
Q 11 – Are you accepting digital payments from customers through Debit Cards, Credit Cards, PayTM, etc? Are you seeing an increase in the same?
RR – Yes, we do accept all the major credit and debit cards. We also take payments through Paytm, Phonepay and Google Pay. In fact, the number of people making digital payments in more than the number of people makeing cash payments. Consumers at our shop even like paying for phone recharges and smartphone acessories digitally.
The margins take a hit when we take payments through debit and credit cards. But these remain the same in case of Paytm, Google pay and Phonepay. We encourage consumers to make payments through Google pay and Paytm.
*Note – This conversation originally took place in Hindi.