Consumer durable dealers entering the IT reseller domain

More and more consumer product dealers are including digital gizmos like cameras, handycams, webcams, MP3 players, etc. in their portfolio. This
is more or less in tandem with the strategic shift that major vendors are planning with regard to selling IT and digital products.In Thiruvanthapuram itself, a leading consumer durables dealer has
started selling LG PCs and plans an exclusive showroom for IT, digital products and modern home appliances. According to Nagesh of Singsons Electronics,
the average sales per month of LG PCs has reached 20-30 units that compares well with what an average IT reseller has
achieved. "We have a loyal customer base for consumer products and appliances which we are now tapping for
our IT products," he added.

Singsons has also taken up distribution of LG PCs in Thiruvananthapuram, Kollam and Pathanamthitta districts. It is also
setting up a high-tech showroom for exclusive retail sales of modern home appliances like
microwave ovens, food processors, digital and IT products in Thiruvananthapuram. 

The question that is playing on everyone's mind is that what will be the impact on the conventional IT channels with the move to promote IT
products more as `life style' products and not as technology products and efforts to attract impulse buying
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," according to Logtech Infoway
chief executive SK Harikumar.

Setting up of parallel channels including vendor's own outlets would affect existing resellers, according to Biju OB of Comsol Pvt Ltd, an IT
reseller.

Many resellers said that they were unaware of the strategic shift planned by major vendors to promote IT and digital products as `life-style'
products through retailing. The channel community has not been appropriately briefed on any such moves.

Marikar Motors, an automobile dealer in Kerala, has set up Marikar Electronics as a separate division to deal in Canon
products and Escotel Mobile. Its portfolio includes photocopiers, fax machines, MFDs, LCDs
and other digital products. According to Marikar Electronics senior sales officer T Binu Mitran, "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
customers. 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 knowledge of the person who
manages the show, according to Aji Justus, Addon Technologies. Developments in IT and convergence of IT, digital products and home
appliances have also shaken existing consumer durable dealers from their complacency. The margins have come down and customers are more aware of
the products than the shop salesman, according to floor manager of Quilon Radio Service (QRS) Ramkumar. QRS is one of the largest consumer
durable dealer networks in Kerala. It is investing heavily in refurbishing its showrooms and separate sections have been devoted for digital, audio and modern
home appliances.

"Earlier it was just counter sales, now the salesman has to be equipped to deal with a wide range of queries from the customer. 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 passage of time, consumer durables market has also imbibed certain features of the IT market. One there is a multitude of products on
offer thus reducing the margin for the dealer. However, consumers are changing their products much faster than before and opt for various exchange
schemes including those for refrigerators, mobile phones, TVs, washing machines and audio. Therefore, in the long run decreased margins will be offset by
larger sales volume, according to Ramkumar. Customers are the ultimate beneficiaries. 

It is too early to say whether the existing channels will be swept away by strong retail currents because they have a loyal institutional and
corporate 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 

more visible retail presence. However, the new developments will lead to specialization among consumer durable and IT dealers, according to Aji
Justus of Addon. This will reduce competition overall and help resellers be known more by the focus areas they are dealing with.

Both the consumer durables segment and IT segment are going through a transformation phase in the last lap of its marketing cycle-- interface
with the customer. For a consumer durables dealer the philosophy 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 `life-style' 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

Thiruvananthapuram

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