One of the common complaints of most brick-and-mortar consumer durable stores is that consumers often visit them, check out displays with lot of interest, but hardly buy anything. They touch and feel products at a physical store but wait for deep discounts during Flipkart's Big Billon Sale or Amazon's Great Shopping Festival to buy them. Price-sensitive Indian shoppers prefer to shop online for consumer durables, especially during a slowdown. Although durable majors and large format retailers deny it, the truth remains that barring the mobile phone section, most parts of large format consumer durable stores are bearing a deserted look this festival season. Be it premium stores in suburban Mumbai or stores in towns such as Indore or Nashik, consumer durable stores look empty despite Diwali being hardly a week away.
Are consumers shopping for a Samsung or LG TV or a Godrej refrigerator online? Not really. Most consumer durable majors are actually launching online-only products and even sub-brands to catch the attention of the price-sensitive Indian consumers. From 4K TVs and smartphones to smart refrigerators and air-conditioners, there are a plethora of online-only products and sub-brands. While Samsung has M-Series, a range of online exclusive smartphones and UHD TV line-up with features such as 4K resolution, gaming and screen mirroring, Godrej Appliances has smart refrigerators, which come with an in-built music system. Onida, on the other hand, has an online-only sub brand, IGO. Vu Televisions has recently partnered with Amazon to launch the Vu UltraAndroid TV. In fact, online exclusive models have always been a key part of Vu's strategy. It gets around 60 per cent of its revenue from online sales. "I have sold my most expensive TVs (priced at Rs 20 lakh) in the Big Billion Sales," says Devita Saraf, Chairman, Vu Technologies.
Smart & affordable
These online exclusives are not necessarily dirt-cheap. They may be a few thousands lesser, but are packed with features. A 50-inch Igo (from Onida) for instance is a 4K TV embedded with Netflix and is priced at Rs 28,000, while a similar size 4K TV from the master brand is priced at Rs 33,000. "Our online exclusives are targeted at the millennials, 18-35-year-olds, who mostly shop only online and are on the look-out for superior technology at a competitive price," explains Pratyush Chinmoy, Marketing Head, Onida.
The new age consumer, according to Saraf of Vu Technologies, wants to replace his or her TV frequently. "The legacy TV brands (the likes of Sony) are expensive and one doesn't get ROI. We have the picture quality, we have the brand value, but it's affordable in a way that you can afford to buy new TVs every few years." VUs latest range of online exclusives for instance, have inbuilt games, fitness lessons as well as shopping apps. "You can use the TV in lieu of a gym, a gaming arcade or a movie theatre. For a consumer it is bang for the buck," Saraf further explains.
Brands have started segmenting their offerings as per consumer profiles. Godrej Appliances for instance decided to launch its Godrej Music Play refrigerators as an online exclusive as it felt that the product would connect better with the younger target audience that purchases online. "We are trying to understand which TG (target group) is dominant on which channel and are accordingly crafting products," says Kamal Nandi, Business Head & EVP, Godrej Appliances.
"We have different value propositions for online and offline channels, appealing to different set of audiences and products and both the channels are equally important," adds Neeraj Bahl, MD & CEO, BSH Home Appliances India.
Brands are also careful about ensuring that there isn't too much difference between their online exclusives and their regular offerings. "There isn't too much gap in pricing, else offline will not survive," says Nandi of Godrej Appliances.
In fact, a large number of the appliance majors are opting for online exclusives only for price sensitive categories such as mobile phones, where one doesn't find too many differentiators in terms of features. The models that have significant differentiators are generally not sold as online exclusives as they want to stay away from discounting. Samsung's A-Series, for instance, comes with far more features than its M-Series, which is an online exclusive. In order to capture the attention of the price-sensitive consumers and at the same time ensure that their core brand proposition doesn't get diluted amid discounts, many consumer durable majors are opting for sub brands or online exclusives. "By creating a separate sub-brand for price sensitive consumers, brands are reducing price conflict," explains Nandi of Godrej.
However, Ritesh Ghosal, Chief Marketing Officer, Croma-Infiniti Retail, believes that online exclusives don't have a bright future and would have limitations in scaling up. A bulk of online sales happen on the back of pricing, leaving brands with narrow margins. "It is essential for brands to have a physical presence in order to achieve scale," says Ghosal, who also feels that after-sales service of online-only brands are a challenge.
Saraf of Vu Technologies, however, argues that being a millennial brand, she is especially sensitive to their needs in the online world. "We found lot of consumers who binge watch do it especially at night. We are the first ones to have a 24-hour call centre. They call and ask us how to download Netflix on their TV, or how to hunt for a YouTube tutorial. We also have a pre-sales call centre, which helps consumers to choose the right model." Saraf says that building an online-only brand needs a mindset that would understand millennials. "One needs to innovate as per lifestyle needs. My business has been growing 20 per cent year-on-year because I have been innovating."
Despite being largely an online brand, 40 per cent of Vu's revenues come from physical stores. Even outside the world of consumer durables, it is common knowledge that in order to achieve scale one definitely needs a physical presence. No wonder personal care brands such as Nykaa, fashion brands such as Label Life and many other online-first brands are feeling the need of an omni-channel presence. However, online exclusives will surely give temporary respite to consumer durable companies, which are among the worst hit due to the consumption slowdown.