Offline consumer electronics sales channels should start with finding out reasons that are turning consumers towards the online channels, suggests retail sales expert Tapas Gupta
A recent report published by the India Brand Equity Foundation has forecast that e-commerce industry in India will grow to be worth US$ 200 billion by 2026. It also said that consumer electronics vertical was the biggest contributor to online channel’s revenue during 2018.
Adding to the worries of the offline consumer electronics sales channels, it pointed out that players including the likes of Flipkart, Amazon and Paytm mall were driving this growth. Google, as per the foundation, is planning to enter the e-commerce space as well.
Amidst all these developments, a market vertical that the India consumers have relied upon to experience the latest in consumer electronics, is naturally feeling threatened. EFY Group spoke to Tapas Gupta about the challenges offline sales channels are facing.
Gupta, who has been associated with premium consumer electronic brands as an offline retail expert from last 14 years, feels that offline channels can easily compete with the online sales channels. He said, “The share held by offline and online sales channels in the next five years will be in the ratio of 80:20. We must understand that the population size in India is huge and the size of untapped market, in terms of consumer electronics, is even bigger.”
Here are some more interesting excerpts
Que – Is it true that consumer electronics are available at better discounts on online channels? What can offline sales channel do in such cases?
Tapas – It is not only true but has a very negative effect on the sales in the offline sales channels as well. The fact that online channels are able to offer even bigger discounts on festive occasions, dents sales in offline sales channels. Be it Diwali, Independence Day, Holi or any other special occasion, online channels are always ready with big ticket discounts.
We even have online sales during Cricket World Cups. Offline sales channels may or may not be able to compete in terms of discounts, but it can surely stay in the race of consumer appliances sales.
The best way to do this is through loyalty and referral programs. ACE re-sellers, retailers and distributors can always launch loyalty programs in the form of coupons and add-on gifts on purchases. One great example of loyalty programs is brand or store cards given to buyers. There are a lot of stores that offer points on every purchase, points that can be credited in the form of cash for future purchases. Even small retailers can follow such loyalty programs. Discounts will keep fluctuating from time to time, but a good loyalty program will remain stuck in consumers mind for a very long period.
The next in the list should be referral programs. Encourage your existing customers to refer their friends and relatives by giving them points or discounts for future purchases. This will ensure more footfall in any retail outlet. Advantages of word-of-mouth publicity are far better than paid advertisements and marketing campaigns.
Que – What can retailers and re-sellers in the offline channel do to increase the amount of footfall in physical stores?
Tapas – When we think of a physical or a brick and mortar shop, the first thing that comes to our mind is the front display. Retailers, shop owners and re-sellers should try to make their outlets as attractive as they can. Window displays showcasing the flavours of the season matter a lot.
I have seen that a lot of retailers do not give importance to window displays. A lot of potential customers start by window shopping. What product you display and how you display it matters a lot.
One should also keep changing the front display stock. This practice helps build an impression that the physical store is as updated as the online portals.
Additionally, decorating outlets with flavours of the season is also critical. Shop owners must focus on Diwali-themed decorations around Diwali and Christmas decorations around Christmas. Easy ways to do this is by getting standees and flex boards made. One must also remember that his outlet is not decorated with Diwali decorations around Christmas. Being agile as per the season is of greatest importance.
Que – What strategy should offline stores follow to convert walk-ins into sales?
Tapas – A well-groomed and rich in product knowledge sales professional will always welcome people inside the store. The next thing is apt and conversational product demos. This is where product knowledge and sense of humour steps in. Instead of making product demos boring, the sales professional or the owner must try to concentrate on making it as lively as it can be. We have a plethora of smart products available on almost every shop now and one should start by giving a demo of the smart features.
For example – Ask a smart speaker about the climate outside or tell it to search for an action or romantic movie. This way, the consumer is more likely to indulge in the demo himself. He will most definitely end up asking questions to the smart speaker himself.
A fact that every consumer appliances sales professional must know is that a lot of people who walk into a store, already know about product USPs. So, instead of repeating them in a robotic manner, one should focus on the practical side of it. Show people what the product can do, and sales will automatically go up.
It also helps to keep EMI options and information of companies providing these handy. There will be times when consumer will simply not buy the product just because of the pricing part. Information about companies providing finance on these will always help.
One should try to initiate the EMI option talk without hurting the ego of a potential customer. A good line to open the topic is – “You know the best part is that we can get it financed for you in under five hours’ time.”
Que – A lot of consumers gather information about a product at physical shops but make the final purchases through online portals. How can retail shop owners convert such footfall into sales?
Tapas – It is very important to understand why your potential customers are doing so. Is it because of the discounts? Are they getting free goodies with the purchase? Are they getting a good EMI offer on the same?
Once you have outlined the probable reason through probing, there are chances of you making that sale increase by leap and bounds. In case the customer is opting to buy the product online because of discounts, tell him about the loyalty program that you are offering. If the decision seems influenced by free goodies, work out ways to offer additional warranty on the product. In case of EMI schemes, tell him that you can get it done in minimum time period and deliver the product before the end of the same day.
There may be a lot of other reasons that drive consumers to buy online, but the solutions to same can be provided by a sales professional with good presence of mind. Even if the customer does not buy that product from an outlet, that outlet should try collecting his phone number. Call in a day or two to check whether he has made the purchase and congratulate him on the same. This practice will help retailers and re-sellers in the long-term.
Que – What consumer electronics products, as per you, are the hardest to sell through offline sales channel? What do you suggest retailers to do in case of such products?
Tapas – I don’t think any product in the consumer electronics segment is hard to sell through offline channel. It all depends on the kind of experience you are giving to the people who walk into your store.
The better the experience the better will be your chances of making that sale. It is even easy to sell smartphones through physical stores. It is just that smartphones get sold easily through the online channel owing to the versatile choice of consumers.
If a consumer is looking for a product, and you don’t have that available in your showroom or warehouse, immediately check with the company. One can also try to build a network of retailers. Doing so will always help in cases when you don’t have. However, never lie about the availability, tell him clearly that it will take two to three days for you to source that product. It is always good to remember that even online sales channel takes two to three days for delivering products.
Que – How will you compare modern trade offline channels like Great Eastern, Croma, Reliance Digital and Vijay Sales, to small consumer electronics stores?
Tapas – India is the second most populated country in the world. If you compare the number of stores to that of the population size in the country, you will find that the size of untapped market is huge.
Markets in Tier III and rural markets still rely on physical stores. The ratio between online and offline sales, as per me, is 80:20. Coming back to the question, big stores like Great Eastern and Croma will not affect sales of small outlets much. While the former will keep enjoying its market share in urban areas, the latter, owing to relationships between shop owners and customers, will enjoy its market share in the tier 3 and other rural markets.
Que – What’s the difference between selling consumer electronics in urban and rural markets? How should one approach these?
Tapas – Urban markets have more space for high-end consumer electronics in comparison to rural markets. It’s a strong possibility that a consumer looking to buy a new TV in the urban market has probably bought TVs in the past as well. However, most of the flat screen TV purchases made by a consumer from a rural area, in the current times, are probably their first.
Prioritising what inventory you want to sell is of utmost importance. It’s no use promoting 4K or 8K TVs in rural markets. Similarly, trying to sell CRT TVs in urban markets will not be a good strategy as well. One should always pay close attention to the kind of market he is in.
It’s simple math – a urban consumer will most probably have more disposable income than a consumer from the rural area.
Que – Which sales channels – offline or online, will capture more consumer electronics market share in the next five years?
Tapas – The share held by offline and online sales channels will be in the ratio of 80:20. We must understand that the population size in India is huge and the size of untapped market, in terms of consumer electronics, is even bigger.
This untapped market will most probably experience its major product in the consumer electronics category through the offline channel.
There’s a huge possibility that the trend of consumers experiencing products at physical stores before ultimately buying them from online e-commerce portals will reverse. Instead, people will gather information about consumer electronics from online sources and will buy them from physical stores. We have already seen this trend picking up in many parts of Kolkata. It will not take long before the trend starts picking up in other metro cities as well.