Consumer durable dealers entering the IT reseller domain

More and more consumer product dealers sare including digital gizmos
likecameras, hand-ycams, webcams, MP3 players, etc in their portfolio. This is
more or less in tandem with the strategic shift that major ven-dors are planning
with regard to selling IT and digital products.

In Thiruvanthapuram itself, a leading consumer durable dealer has started
selling LG PCs and plans an exclusive show-room for IT, digital products and
modern home appliances. Nagesh of Singsons Electronics has also taken up
distribution of LG PCs in Thiruvananthapu-ram, Kollam and Pathana-mthitta
districts. He is also setting up a high-tech show-room for exclusive retail
sales of modern home appliances like microwave ovens, food processors, digital
and IT pro-ducts in Thiruvananthapuram.

The question that is playing on everyone's mind is that what will be the
impact on the con-ventional IT channels with the move to promote IT products
more as 'lifestyle' products and not as technology products and efforts to
attract impulse buy-ing through attractive retail displays?

IT resellers are of the view that IT selling is a different ball game and
consumer durables dealers who dare to venture into even digital products will
find the going tough.

"Firstly, the margins are thin for IT products and IT products require
continuous support and loyalty to customers, which electronics dealers are not
accustomed to," stated SK Harikumar, Chief Executive, Logitech Infoway.

According to an IT reseller, Biju OB of Comsol Pvt Ltd, setting up of
parallel channels including vendor's own outlets would affect existing
resellers. Many resellers said that they were unaware of the strategic shift
planned by major ven-dors to pro-mote IT and digital produ-cts as 'lifestyle'
products thro-ugh retailing. The channel community has not been app-ropriately
br-iefed on any such moves.

Marikar Mo-tors, an auto-mobile dealer in Kerala, has set up Marikar
Electronics as a separate divi-sion to deal in Canon products and Escotel
Mobile. Its port-folio includes photocopiers, fax machines, MFDs, LCDs and other
digital products. Accord-ing to T Binu Mitran, Senior Sa-les Officer, Marikar
Electronics, "In two years, our installation base for copiers has reached
86 as against large existing suppliers who have around 300 because we are riding
piggy-back on the Marikar brand name that is trusted by custo-mers. We are also
looking at bio-medical products to be added to our portfolio." For non-IT
firms venturing into IT, much depends on the efficiency and depth of domain
know-ledge of the person who mana-ges the show, according to Aji Justus of Addon
Technologies.

Developments in IT and convergence of IT, digital pro-ducts and home
appliances have also shaken existing con-sumer durable dealers from their
complacency. The margins have come down and custo-mers are more aware of the pr-oducts
than the shop salesman, stated Floor Manager of Quilon Radio Service (QRS),
Ramkumar.

"Earlier it was just counter sales, now the salesman has to be equipped
to deal with a wide range of queries from the cus-tomer. Therefore, we now have
company salesman specially trained and paid for by the concerned companies to
sell various products. They are paid less in salary but given more incentives.
This works well for both the brands and the dealer," Ramkumar said.

With the pas-sage of time, co-nsumer dura-bles market has also imbibed
certain features of the IT mar-ket. One, there is a multitude of products on
offer, thus redu-cing the margin for the dealer. However, con-sumers are
changing their pro-ducts much faster than before and opt for various exchange
schemes including those for refrigerators, mobile phones, TVs, washing machines
and audio. Therefore, according to Ramkumar in the long run, decreased margins
will be offset by larger sales volume. Customers are the ultimate beneficiaries.

It's too early to say whether the existing channels will be swept away by
strong retail currents because they have a loyal institutional and corpo-rate
base also apart from the existing customer base built up over a long period of
time. What could be of worry to the resellers is that they do not have the
financial muscle to take on big consumer durable dealers, who have a better
retail presence. However, the new developments will lead to specialization among
consu-mer durable and IT dealers.

Both the consumer durables segment and IT segment are going through a
transforma-tion phase in the last lap of its marketing cycle-interface with
the customer. For a consu-mer durables dealer, the philo-sophy was 'sell it
and forget it'. But now modern products and appliances need continuing
support, which dealers cannot refuse. IT resellers need to be aware that there
is more and more opportunity in 'lifestyle' products and the trend is now
more towards 'impulse buying'. On the other hand, consumer durable dealers
wishing to sell modern products need to shed their sell and forget it approach
and imbibe the lesson from their IT counterparts that sales is not an end but
the beginning of a new relationship.

R Sreekumar

(CyberMedia News)