Festive Season Will Rejuvenate Offline Channel Biz: Partners
Mumbai: In a major setback for the brick and mortar, the IT hardware vendors have not announced festive season special incentive schemes and offers for partners this year. Vendors have showered festive offers on consumers and E Commerce marketplaces in the form of extended warranty, cash back, replacement, etc., but, no special monetary benefits have been announced for the offline channel. Partners are disappointed with the lack of support from the vendors and distributors, however, they are optimistic about the business growth during the festival of light.
No Incentives For Offline Channels
Offline partners are surprised and disappointed that this time majority of IT hardware vendors have ‘overlooked’ the offline channel in terms of monetary benefits for the festive season sale. The vendors and distributors who used to announced attractive tour packages and rebates for completion of festive season targets, this time have not announced major plans for the offline channel sale apart from vendors such as Lenovo, providing special training for the resellers and the regional distributors to handle the festival rush.
Swaran Singh, owner of Lotus Systems & Services says that unlike the last few years, vendors are also not very strict on offline channels for the sales targets. “Earlier, we used to have huge pressure from vendors to complete targets during festive season. But this time, vendors are not pushing offline partners to sell more. This is because vendors are giving more importance to E Commerce and LFRs”, Singh said.
Shrenik Bindage, owner of Purvaja Infotech says that vendors directly passing the benefit to customers is a loss of offline retailers. “Vendors are giving huge offers to customers to buy more, however, retailers who sell their products to end users are not getting any benefit out of it. Instead, vendors have announced various schemes on OLS, which is already taking away out market share. It will be a bit difficult for us to sell products with very thin margins this Diwali”, Bindage said.
Endorsing similar thoughts, Dipak Mortale, owner of Shree Ganesh Computers said that resellers in Nanded have not got any information of channel incentives from vendors and distributors this Diwali. “ Last time few vendors had announced few channel schemes for meeting the festive season targets. But this time we have not heard anything from vendors and distributors yet”, Mortale said.
Channel Times tried to reach vendors and national distributors to understand their views on channel incentives during festive sales. However, we did not receive revert from their end till drafting the article.
E Commerce Remains A Challenge
E Commerce always remains a tough challenge for the brick and mortar and the competition intensifies specially during festive season. Prominent E Commerce players such as Amazon, Flipkart, Snapdeal etc. have bullish over their business and have announced a slew of lucrative offers to woo customers. Similarly, brands have also opted to go ‘Digital’ this year and are offering several benefits for online buyers. Amazon has tied up with State Bank of India, while Flipkart has chosen Citibank to offer cash back of up to 15 percent when customers use credit and debit cards on these two banks.
Sanjeev Pathare, owner of Pune-based Computer Shoppee points out that certain banks offering flat discounts on online purchase, are killing the business of offline retailers. “Certain banks offerings flat 25-20 percent discount on online purchase is a big threat to the traditional offline channel and severely hitting our business during festive season. If customers are going to save huge money on card purchase, why will they come to the physical stores? Stakeholders of the channel business should take up this serious issue in order to safeguard our interest,” Pathare said.
LFRs are also luring customers with continent and easy payment options such as cash back, interest free EMIs, zero down payment etc. Bimal Jhaveri, Director of Hardtrac Computer Services says that finance schemes boost the retail sale as customers can go for bulk purchases as they have an ease to pay in installments. “ Vendors invest huge on marketing of their offerings during the festive season. These investments aimed at generating more sale and indirectly benefit retailers. Schemes like cash back and EMIs can be one of the ways to increase footfalls in the physical stores”, Jhaveri said.
Optimistic About Market
While the majority of resellers are anguished on vendors’ policies for OLS, certain partners say that it is a good opportunity of offline distribution channel to leverage the opportunity and increase revenues. Vinod Mulchandani, Director of Aarvee Computers said that despite challenges the market is showing positive signs and retail store buying has slowly started gaining traction.
“E Commerce remains the biggest challenge to offline channel business. However, since India is a big market and Indian customers tend to consider ‘look and feel’ while buying, retail sellers are also going to make money during this festive season. In other words, there is a market opportunity for everybody,” Mulchandani said.
Bindage said that instead of buying expensive and high configuration laptops, customers are opting for second hand and refurbished laptops and computers. Hence, the refurbished business has given new hopes to resellers.
“People today do not want to invest much on laptops and PCs. Hence, we are getting many inquiries for refurbished laptops. Since this time we have not got back-end incentives from vendors and distributors, we are not able to give extra benefits to end customers. But we are very much optimistic about the business this Diwali”, Bindage said.
Despite of challenges, the offline channel is quite optimistic about the market growth during this Diwali and said that the business would pick up in the coming days.