Online Channels Might Eventually Collaborate With Small Retailers: techARC Founder

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“Global brands will have more impact on India’s appliances and consumers industry as they have the technology, money, scale, and immense support from their respective governments”

In an exclusive conversation with EFY, Faisal Kawoosa, founder of techARC consulting firm, shed some light on India’s appliances and consumer electronics industry. He shared his views on topics ranging from the emergence of new brands in India to the future of small retailers and their business models in the country.

Faisal has over 14 years of experience in research and consulting in the technology domain. He has also worked with firms including Cyber Media Research (CMR), International Data Center India (IDC), Du Telecom and iLocus.

Excerpts

A lot of new appliances and consumer electronics brands are emerging in India, what do you think is the reason behind this sudden emergence?

India is a very vast consumer market. We have over 400 million households. There is rising middle class. ‘E-aspirations’ are growing across the segments too. The definition of comfort is also changing and people consider many of comfort gadgets as necessities. Also due to changing economic activities, people are feeling short of time and want to leverage gadgets which could support them in race against time.

Also, I believe due to mobile uptake across social segments of the population, the acceptability of electronics has grown.

Many finance organisations are providing zero percent loans on appliances and consumer electronics in India. Do you think this is one of the reasons behind growth of appliances and consumer electronics industry? What are other probable reasons?

Definitely, this has been a great enabler. People are able to spread their expenses in form of EMIs over a period of time. They are also able to leverage the zero cost benefits as zero percent finance does not make them spend more than the price.

Other reasons include the expansion and adoption of online channels. Online channels, especially Flipkart and Amazon, have also pushed electronics sales through heavy discounts and offers over and above the service.

LED TVs and smartphones segments are creating a lot of buzz in India, do you think we will see more brands entering these segments in the country?

Smartphones in India are leading towards consolidation. But, the vacuum is also attracting more foreign players. We recently saw Meizu making a re-entry in India, and more brands expected to enter in the country.

I don’t see any local brand thinking of getting into smartphone segment. Despite growth, Indian brands are not able to compete on technology and pricing due to poor ecosystem. Chinese brands, on the other hand, are able to leverage from both the fronts.

However, I expect to see more brands, including local ones, entering LED TVs segment in India. The focus would be more on bringing products in the entry to mid level markets.  The local brands though might again face difficulties in next six months, as the market will replicate the smartphone story with more Chinese brands entering and making it difficult to compete in LED TV segment.

I also expect the government to put in a serious effort in TV segment. Volumes in the LED TV segment are usually not as high as smartphones. Local content and manufacturing can also make some differentiation in the market. This is the segment, in my opinion, which is manageable as India is still in infancy stage in terms of electronics manufacturing.

Which brands do yo think will have more impact on India’s appliances and consumers industry – local or global? Why?

I think global brands will have more impact on India’s appliances and consumers industry. They have the technology, money, scale, and above all immense support from their respective governments. We don’t find the kind of support that would help serious local players grow in a competitive manner in India.

A brand’s success largely depends on its after-sales-service network? What according to you is the better approach, door-to-door service model or servicing through brand centers?

In my opinion, the best model is a mix of both. Also it would differ depending on product categories, and on the kind of service required.

For instance, in many cases of electronics servicing, it is unavoidable to get a product repaired at even the well-equipped service centres. At the same time door-to-door also works well in certain cases. For instance, replacement of smartphone broken screens is now being offered at the customer location itself.

Offline vs online sales is always a debated topic? Which do you think is the future of retail in the country?

Both offline and online channels shall co-exist. In fact, I expect a lot of collaborations in future between these two channels. These collaborations will bring in experience and hyper localisation for online channel, and sustainability in the offline space.

Rural India is a large market that has not been tapped yet. What should be a brand’s strategy to target this market? Should it be different from how brands approach tier-1 and tier-2 cities?

I think there isn’t any different strategy. I see it as a function of time. As soon as the market evolves a bit more, rural segment will also grow.

We should wait for the right time rather than pushing ‘crap’ products to the less affordable regions in the name of making the right fit of products for the segment.

A lot of brands are opening their experience centers in India, what do you think is the strategy behind opening these?

Everything cannot be virtual. Consumers still want to touch and feel the products. A product is not just a service that can be simply subscribed. A tangible product has to be experienced before making the final purchase.

This is where the experience centers come into picture.

India is witnessing an increase in organised trade appliances and consumer electronics business, will this trend affect small retailers and their business models?

Customer preferences are changing. They want to buy quality electronics in affordable range. But at the same time, they also want to have the best of the retail experiences. This is something that small retailers cannot offer. So, yes, the business is moving more towards the organised sector.

People want choice in appliances and consumer electronics, brands, models, and even the variants. These depth and breadth may not be the scale that small retailers could offer. But small retailers will still have a role in Tier-2 towns and cities.

How can small retailers compete against online giants and big retail chains?

Small retailers enjoy the proximity, trust and personal connect with their market, which may be very small, but is very critical. I think online channels will value this, and to some extent they have already started recognising it.  Online channels might eventually come up with good collaborations with small retailers as well.

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