Our Margin Figures For Retailers are 40 to 50 Per cent: Riversong

The company’s R&D unit is already working on Internet of Things (IOT) products and plans to bring out one more IoT product by the end of next quarter. Riversong is only concentrating on the offline market for now 

Manvendra K Chandola (MKC), CEO, Riversong India, in an exclusive conversation with EFY-ACE, shed light on the kind of business model the company is following in India. Apart from positioning itself in the premium product category, the IMG Group-owned company is also looking forward to being called as the next smart devices company.

Chandola said, “Our R&D centre is already working on IoT products. Initially, when I started interacting with the R&D team, their first thought was that we want to be a smart devices company in India. This is a reason why we went offline in India.”

Here are some more interesting excerpts from the interaction

Que 1 – What is Riversong all about? What’s the vision behind the launch?

MKC – Riversong is basically a subsidiary brand of IMG group, which is mainly into manufacturing of and supply of mobile phones. Riversong was established as a subsidiary brand in 2015. The idea of the founders was to have their own brand.

Instead of making phones for others they decided to manufacture for themselves. They started with the operations in UAE, Africa, China, Hongkong and India. We started in India in 2017 with distribution and sales through the online channel before shifting focus to the offline network in 2018. We are completely focusing on the offline channel now.

Que 2 – Any specific reason behind switching focus to the offline channel? A lot of brands are relying on the online channel to drive sales these days.

MKC – We feel the opportunity is much bigger in the offline channel than the online channel. See, its simple, the market size of offline channels is way bigger than what online channel will be in next five years. We are not saying that we will not be doing sales through the online channel but for now offline is our main focus.

Additionally, we think that the Indian customers are more inclined towards touching and feeling the product before buying it. Riversong wants to be a viable brand, and to achieve that being present in India all over through a strong retail network is the first requirement.

Que 3 – When we speak of retail network, how many retailers do you have in your network?

MKC – We initiated our offline distribution expansion in December last year. We were working on appointing channel partners under the super distributor’s category during January to March 2019 period. Then we started working on the mico-distributors network.

We have three types of distributors and retailers. Super distributors are basically the ones who handle entire states, in some cases there are even two or three super distributors in a few states. Under them come micro-distributors, who handle the retail network at ground level for us. As of now, we are present in 13 states with 20 super distributors and 77 micro-distributors. We have approximately 8,000 retailers as of now.

Que 4 – Which states are you strongest in? Which areas are you receiving strong sales figures from?

MKC – At present, we are strongest in the state of Karnataka, followed by Mumbai, Delhi and Chennai. Our company is a premium product brand.

We also have distributors in places like Bareilly, Muzzaffarnagar and Lucknow. As of now 60 to 65 per cent of our sales are coming from these metro cities, particularly from A or A+ outlets.

Que – 5 Which Indian states are you focusing on right now to increase revenues?

MKC – Right now, we are focusing on the entire South India as the market there is very organised. Retail business is very high in the South in terms of A class outlets. At present, 30 to 35 per cent of our business is coming from the South. Our focus, for now, is on Karnataka, Tamil Nadu, Mumbai and Delhi.

Que 6 – What are the criteria a business should fulfill for joining the Riversong distributorship network?

MKC – I will try to explain that through an example. Suppose I am looking for a distributor in West Bengal, which is completely a new market for me. Then I will start by checking how many outlets he is covering out of total market in Kolkatta; the amount of money that he is going to invest in my business; whether his business is stable or not? whether he will be able to provide dedicated manpower or not?, etc.

While choosing a distributor, it is important to check their reputation in the market. So, we ask all the above mentioned questions before giving him the responsibility of our sales network.

Que – 7 Why should a micro or a macro distributor join you? What’s in for them?

MKC – They would  join us for three different things or reasons. Super distributors get the best margins in the industry. Talking of mobile industry, the margins are as thin as 1.5 to 1.7 per cent. Hence, it is very difficult to make money. In our category, these partners are getting around 15 to 30 per cent margin.

Quoting a real example – If a distributor is selected for Karnataka and he is going to feed Bangalore directly, then his margin comes out to be 25 to 30 per cent. 25 per cent is the upfront margin and five per cent is the margin based on the volume of the target that is given to him.

If he achieves the target, then he gets this additional five per cent. So, if he’s doing a business worth 50 lakh, he is getting a margin of 15 lakh which is 30 per cent of the sales. Similarly, in case of retailers, the margin is 40 to 50 per cent.

Que – 8 You started working in India in 2017, that makes you one of the youngest brands in the country. What are the difficulties that you are facing while doing business here both in terms of Government support and from consumer point of view?

MKC – In terms of government support, there are no obstacles in doing business in India. You are getting product, paying the duties and selling it by paying GST.

Now talking about the market, if we discuss about the mobile accessories market, about 90 per cent of the market is unorganised. They come from different areas, the quality is cheap and the price is cheap too. We consider this as an opportunity because the market is still virgin.

The retailers want to sell the product with invoices, with GST in place. When everything is done with transparency, it is understood that you want quality product as you care for the customer. The customer will come back and will talk about the product whether they like it or not. So, there are challenges, but there is opportunity too.

Que – 9 You spoke about IOT products earlier. Are you planning to introduce more IOT products in Indian market?

MKC – We will be having our own R&D centre and we are already working on it. Initially, when I started interacting with the R&D team, their first thought was that we want to be a smart devices company in India. This is a reason why we went offline in India.

We are the first company who went offline for the smart devices. We thought that the end customer of our product is the buyers who go to the retailers so it is good to go offline. We also observed that there are some products for which retailers themselves go online to buy them on customers’ demand.

Tests for IoT products are going on, and these will decide what products should come out in the market under the IoT category. May be by the end of next quarter, one more IoT product will come out in the market.

Que – 10 In terms of numbers, how was 2018 for you? What ‘s your target in terms of market share during this year?

MKC – The year 2018 was a year of test marketing for us. The product that was supposed to come out in the month of April, was released in June. The number of products was very less in 2018. This year will be the base year when we can expect good growth of the organisation as well as the brand.

My target right now is to have a proper distribution channel for all our products across India. People should know more about Riversong. We are going to focus on marketing and digital marketing is going to play a major role.