 "For TV maker Vu Tech, online is proving to be the road to success. CEO explains how")
Vu Technologies, makers of LED televisions and commercial display panels under the brand Vu, has had a surge in business since it tied up with Amazon, Flipkart, Snapdeal and eBay two months ago.
The company, whose business is based on the concept of luxury in technology, says the strategic partnerships with the online firms have enabled it to widen its reach to 18,000 locations in the country including tier-II and -III cities.
Devita Saraf_, CEO and Design Head of Vu Technologies, talks on the change in strategy and how it is paying dividends._
Excerpts from the interview:
Vu Technologies went online recently. How has it benefitted the company?
Vu products have a large and diverse range. After six years of selling offline, we found that the products were not moving progressively. We changed the game by making our products accessible online. This allows our products to be available in far flung areas such as Assam, Jammu & Kashmir, for instance, where we did not have any sales earlier. We are also able to make our entire range accessible to consumers by going online. With that, an interesting shift has happened. We have noticed that consumers see the products online, and then come to our offline stores to see and buy the product they have liked online. After going online, our sales in June were Rs 10 crores and by the year-end, we expect 100 percent growth and sales to touch Rs 200 crores against Rs 100 crores last year.
There are a whole range of items and brands on sale on online sites. What is your strategy to stand up to the competition against other brands and international brands, too?
I think our e-commerce websites are user friendly. We have a multi-pronged approach to beat the competition on the e-commerce space. We introduce newer and more innovative products at competitive rates. We have a direct prices’ scheme where we give a five percent cash back offer on purchase. We are also partnering with key and major players in the e-commerce space and come out with attractive offers and promotions for customers (e.g. cash back, discounts, etc.). We also have a B2B focus with products like Ultimate Boss’ Office, Ultimate Meeting Room, etc. Competing brands typically offer third party or dealer warranty on their products online, whereas, Vu is the first television brand to offer products at ‘Company Direct Sales and Service Support’ for all products bought online.
What are the new trends in e-commerce in India that you are witnessing now? How do you see the industry shaping up with these changes?
Primarily, the growth of tier-II cities is driving online growth. E-commerce is growing faster in tier-II cities as compared to tier 1 cities. I think one of the reasons could be the lack of options/ selection in such cities, where there is a need to address pent-up demand. There is room for growth here. E-commerce has so far occupied only a very tiny portion of total retail that happens in India. So yes, there’s a lot of headroom to grow. In categories like electronics, e-commerce has made good progress. But in others, there’s a lot more to be done.
A 2014 study, India E-Commerce by venture capital firm Accel Partners points out that the Indian market is likely to look like China in a few years. While there are similarities, one key difference with both the markets is the language factor. Unlike China, India’s online shopper is largely an English speaking individual.
What are the challenges that e-commerce is facing in India?
There is a traffic-to-revenue gap on mobile-while lots of people end up on a shopping site using their mobile, they don’t seem to be buying enough. The reason could be because mobile sites aren’t good enough and also, that marketing budgets aren’t big enough on mobile. This also means that there are a lot of opportunities for startups to solve here.
There is a low adoption of e-commerce in central and North East India. North eastern states have poor logistics infrastructure and also, access to cheaper goods (think tax exemptions). Bihar, Uttarakhand and Jharkhand are some of the states that have lower penetration of e-commerce.
India is far behind other BRIC nations. Only 17 percent of Indians are online as compared to more than 40 percent of the other BRIC countries who are online. Of these, only 9 percent shop online while over 30 percent consumers shop online in the BRIC countries. We think that 17 percent is a very optimistic number (it could be much lower than this currently) but what is evident is the big online-offline divide.
Evidently, there is a huge growth potential for e-commerce in India, but profitability seems to be a far cry for now. This is not just the case of e-commerce. Organised offline retail has also been a largely unprofitable business.