The Rise of Private Label Consumer Electronics Brands in India

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  • Almost every large scale consumer electronics retail chain sells its own private label consumer electronics
  • Flipkart, one of India’s biggest e-commerce portals has entered this space twice
Private label consumer electronics brands from electronic retail store chains

Private label consumer electronics brands by big and small retail chains is not at all a new concept in the Indian consumer electronics industry. But the trend has started picking up pace during the last two years. Tata’s Croma has been selling consumer electronics under its private label brand for last several years. Flipkart that launched Digiflip as one of its first private label brand in 2012, exited the business in 2016. The e-commerce company, however, has started retailing consumer electronics under MarQ label again.

Almost every major consumer electronics chain, whether offline or online, now sells consumer electronics in India under its own private label. Few more examples include Amazon Basics ACs, Vijay Sales Vise and Reliance’s Reconnect.

Vikash Thakur, senior manager, SKP Business Consulting LLP, explains, “E-commerce giants have ventured in selling private labels on their platforms to increase their share of revenue and improve profitability. In consumer electronics segments, Flipkart has following major private labels brands in electronics segment – MarQ, Billion, and SmartBuy whereas Amazon has private labels brands such as Amazon Basics, Presto, 10.or G, and Solimo”

Himanshu Jain, senior analyst, IDC, feels that operating private labels gives companies like Flipkart and Amazon a chance to leverage their own brand image in the market. He said, “Private labels consumer electronics gives such companies a chance to increase their revenue shares and helps them increase their market share. The catch here lies in the fact that the likes of Amazon and Vijay Sales might not have to share revenues with other brands.”

Private label consumer electronics market maturing in India

Vikash feels that the market of private label consumer electronics is in its growth stage in India. He told EFY Group that these private labels brands are likely to rise in the coming years in India. The growth of private labels will be on a rise in the organized segment and there are numerous benefits across the vertical for stakeholders.

He said, “Consumers are getting affordable products with par quality. These consumers are primarily from tier 2 and 3 cities. A large of consumers will be added internet savvy consumers due to access to internet and electrification in rural areas.”

But things might not be as merry for consumer electronics brands as they are for the owners of these private label consumer electronic brand owners and as for consumers. Jain shares, “Short term impact in the space can be a threat to incumbents in the market and a good revenue stream for e-commerce portals which are already in so much debt.”

Vikash, highlighting the margin figures shares, “Investors will be able to achieve better ROIs as the private labels’ brands provide around 25 to 35 per cent better margins for eCommerce companies apart from increasing the GMVs.”

Creating products in the vacuum categories

One strategy that big players operating private label consumer electronics brands follow here revolves around launching products in areas which are otherwise vacuum. For instance, both Flipkart and Amazon sell private label ACs in the country. Vijay Sales and Croma also sell ACs under their private label brands in India.

Vikash shares, “The e-commerce companies are bringing brands what consumers want due to the availability of huge consumers insights. The e-commerce giants are creating products that are currently vacuum in online channel sales. E.g. The penetration of AC sales is only five per cent in India out of which category leader online channel sales are less than five per cent. Both Flipkart and Amazon are present in this category.”

The pricing part

Himanshu Jain feels that there has not been a strong private label competitor in the smartphones market in India because the pricing of modern smartphones is already at a very highly competitive scale. He said that there might not be space for companies to enter this vertical through the private label door. However, he is also hopeful that players like Reliance and Tata may enter this market, especially given the fact that these both operate consumer electronics stores PAN India.

As far as categories like smart TVs, washing machines and ACs are in question, the story is completely different. Vikash Thakur explains, “These brands are priced 30 to 40 per cent cheaper than the category market leaders and 20 to 30 per cent cheaper than the other brands within the category. E.g. MarQ by Flipkart is selling Microwave ovens around 35 per cent cheaper than other brands whereas MarQ by Flipkart and Amazon Basics by Amazon is selling ACs at around 40 per cent cheaper prices than other brands.”

Positioning private labels and premium products

These private labels brands are usually positioned as an umbrella brand and are present across categories within consumer electronics and sometimes other categories as well. Flipkart’s Billion private label brand is present across category such as phones, mixer grinders, cookware, backpacks, irons and LED lights. The brand is positioned as both Make in India and Made in India. It is to be noted here that MarQ by Flipkart was launched in 2017, and is today present across large appliances categories such as washing Machines, ACs, smart TVs and refrigerators.

Vikash, on short-term and long-term effects of private label consumer electronics said, “In short-term, it is expected that e-Commerce companies will continue to launch products in consumer electronics segments such as refrigerators, washing machine, air conditioners, smart TVs, and others. The e-commerce companies will be competing against the national and multinational brands and will continue to create affordable products, products that consumers want.”

He continued, “In the long-term, the e-commerce companies are likely to create premium products and will no longer be restricted to low-value or mid-value priced products. This has already been seen in the food category where Nature’s Basket has two key private labels – Healthy Alternatives and L’Exclusif which addresses specific requirements of affluent consumers.”

Million dollar question – Should brands that sell through these channels be bothered?

The share of online channel sales is insignificant across categories except for mobile phones. The national brands’ majority of the sales in the consumer electronics segment, as per Vikash, are driven through retail outlets and the share of online is very low. Interestingly, even the online heavy smartphone brands have started aggressively expanding in the offline channel. Xiaomi and Realme are two of the biggest examples of the same.

Vikash said, “The national brands are constantly watching a new emerging threat in the coming years. In the long-term, the eCommerce companies will provide intense competition to national brands.”

The question that remains unanswered is what if e-commerce biggies like Flipkart and Amazon start selling these private label consumer electronics through the offline channel. E-commerce companies like Walmart, Target and Amazon are already doing it in USA!

Note – Vikash Thakur works as Senior Manager at SKP Business Consulting LLP and the view expressed in this article is his personal opinion and doesn’t reflect the company’s view.

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