Retail versus Channel: going hand in hand!
2010-12-22 Nidhi Sethi,
Product Manager-Flash,
Kingston India.
The retail explosion in the country has had resounding success in the IT industry and the growing number of players joining the retail bandwagon is a testimony to this. Kingston has a very robust programme in place when it comes to its retail strategies and business. It has got seven national distributors, who are spread all over the country in around 40 branches. “Under them, we have other regional resellers and retailers contributing to our overall sales and turnover. Thus, if a customer cannot go to a branch directly, he can go to these resellers and retailers with their complaints and they will provide him with everything,” says Nidhi Sethi, Kingston.
Kingston does not have any criteria while choosing any of its partners. “It is not like they have to do us exclusive. Today, even a stationery shop sells Pen drives. People no longer have to go to an IT market to buy them. Now if these stationery shops want to keep our products, we are happy to cater to them as well. If the product is good, even the small sellers will take them and so will the end-consumers.” Kingston has recently partnered with Ingram Micro for its DRAM business in India. The association between Kingston and Ingram Micro India aims to increase the former's market share, market penetration and the product availability in India.
Sandeep Parasrampuria,
Director,
Best IT World (India) Pvt Ltd.
On the other hand, iBall has a different system in place. They directly sell its products to its STPs (Superior Technology Partners), who are like its wholesalers. Below them come the STRs (Superior Technology Resellers) and the STIs (Superior Technology Integrators). STPs and STRs are the two partners to whom iBall directly sells its products. Since STIs come third in hierarchy, sales do not happen directly with them and they buy their products from STPs and STRs. But iBall ensures that its sales people visit all the three to ensure effective functioning and communication. While there are around 800 - 900 STP partners and 2,500 STR partners in India, the number of STIs is above 15,000. “For our STPs and STRs, we have good distribution people, so not many are getting added. But for our STI segment, we keep looking for our direct contracts. The STP partners can get all our products, but our STR partners are given few categories,” informs Sandeep Parasrampuria, Director, Best IT World (India) Pvt Ltd.
Masahiko Yamada,
President & CEO,
Wacom Co. Ltd.
Wacom, which had recently set up its subsidiary in India, is wooing the emerging Indian market with many of its tablet products. Bamboo One is one such product which is customized keeping the Indian consumers in mind. “Indian customers are very excited about our products and the response that is coming in is very commendable. We are very much confident that we can reach our customers without much effort,” said Masahiko Yamada, President & CEO, Wacom Co. Ltd.
Wacom has appointed 3 national distributors - Aditya Infotech, Unicorn and Neoteric and have got resellers in different parts of the country to look after its sales and distribution of its products. Wacom has a strong focus towards developing its retail market. “Retail is a growing segment for us and we have started our focus on it from the last couple of months. We too have presence in LFRs like Croma and Reliance Digital,” added Yamada.
Kingston does not always look at the profit figures all the time and it believes in giving good margins to its partners. “We believe in partnership. It is like if you take care of them, they will take care of you. For partners who are very loyal to us, we help them do their branding. We help them decorate their shops, put up hoardings, etc. We tell them to maintain the branding that we have done for them.” When it comes to small retailers and resellers, they collect the products from the customers along with their complaints and then send them to Kingston, who eventually gets them replaced. “When the margin is good, they do everything,” adds Sethi.
iBall is also very much concerned about the profitability of its partners. That is why it always tries to maintain a decent pricing in the market and does not just dump goods. This prevents unnecessary pressure to cut the margins and they are always maintained at the dealer level.
Kingston also does a lot of other different things for the channel. For instance, it celebrated Kingston's birthday on the 17th of October by visiting seven cities and meeting up with partners. “We got some chocolate boxes and went to the main IT markets like Nehru place in Delhi. We also went to small shops, even to the small stationery shops and even if they had five pen drives of ours, we gave them a chocolate box in appreciation to celebrate Kingston's birthday. So, we keep doing something or the other to promote and motivate them.”
Kingston has also initiated an exciting ShopDeco contest for its partners all across India. Kingston celebrated Diwali with all its trade partners by rewarding them with gold & silver. The ShopDeco contest had seen the participation from 500 shops. The contest asked the Shop Owners to maintain Kingston branding in their shops, click pictures of it and mail the pictures to info@itsmyspace.com. To make the contest interesting, Kingston had also given points to various branding elements.
We see Kingston having the shop-in-shop concept of resellers all over India.
But iBall has set itself a very clear philosophy. “Wherever iBall products can be sold, we want to make them available there. So, we do not have any exclusive franchise or shop-in-shop kind of a concept at present. I do agree that visibility definitely increases when a certain portion of the shop is dedicated to your product and it does help. So as we are growing and our range is growing, we will also have something like that. But as of now and for the next six months, we are not looking forward to this.”
At present, iBall has presented more than 2,500 retail stores apart from channel partners and is planning to replicate this across the country. It has already started in about 9-10 cities and by March iBall should be making its presence in not less than 300 cities. iBall has presence in almost every LFR like Staple and Croma for over a year. “Businesses are increasing in the LFR space and since they are all at the national level, we have to handle them in a very different manner. We have a direct relationship with the LFRs and have our special managers who look after the dealings with the LFRs, added Parasrampuria.”
But despite the emergence of the modern retail business in the country, Indian IT vendors are very reluctant to do away with the traditional form of traders, i.e. the traditional channel partners. A major chunk of their business is still done t hrough the channel. Vendors are still seen to value their associations with the channel community and are not ready to lose them at the cost of the growing retail business.
“For people who sell few 100 pieces of goods, sparing five minutes of personal attention to 10-15 customers who come back with a complaint, is not a big deal. But when it comes to LFR vendors, where customers go into thousands, such kind of an attitude cannot be accounted for. For them, even five minutes mean compromising on a lot of things. Thus, channel partners become very important, because customers would like to go to someone giving good services. I don't want any channel, reseller or retailer to die. We focus on traditional partners and national distributors to cater to the LFRs,” shared Sethi.
Agreeing to this, Yamada said, “For a traditional market like that of India, the traditional form of trading cannot be neglected. We have a presence both in the retail as well as the traditional form of market. In the coming months, our focus is going to be very strong in the LFR space. We see Bamboo One as one mass market kind of a product, which is really going to do well when pitched in the LFRs and the multi-brand retail outlets and for which lot of people would like to go for.”
“India is a very huge country and people also look for convenience of relationship. So definitely these LFRs are going to survive and keep growing, but that does not mean that traditional retailers will not survive. On a personal note, I don't think during the next four to five years the traditional partners are going to be affected," opines Parasrampuria. LFR is a new concept and so it is taking its own time to stabilize and grow. But the traditional retailers have good relations with customers as they have been in the business for a very long time.
Finally...
Given the sentimental nature of the Indian customers, the feel-good factor is very important for them. They still have those values of remembering someone who has been good to them once. Though you have service centres everywhere, you still go to the channel and not the official vendor service centre and say here are ten pen drives, repair them within 2 days and send them back. Channels do that to maintain a good relationship, but LFRs will not do that. Even if the customer goes to their shop, he will not be entertained so warmly. It is the resellers and retailers who care to give this kind of satisfaction to customers, because at the end of the day relationship is what matters to them most. And, they continue to enjoy this credibility as they have been doing this for over two decades.
For more contact:
samrita@varindia.com
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