Himanshu Chakrawarty, CEO of The Mobile Store, has a feeling that data bundling does not promise a good Internet experience for customers. In a free-wheeling interview with Beryl Menezes, he spoke about consistent innovation, competition from Flipkart and growing popularity of Indian brands, among other things.
The Mobile Store has come a long way from humble beginnings in 2006 to India's largest brick-and-mortar mobile retailer today...
With close to 800 stores across the country, we have a 28% share of the domestic mobile retail market. We are also the largest sellers of SIM cards, data cards and mobile accessories. We are looking to open 50 Mobile Lounge stores in FY13, although there will be no more new regular Mobile Store branches, as we think smartphones are all about the experience that the Lounge concept offers. While we suffered with profitability in the first few years, in the last two years, we have been focusing on smartphone growth, from which we have been receiving 90% sales in the last three months. India is one of the fastest smartphone growth markets witnessing sales of 2 million a month and 24 million smartphone sales a year compared with 15 million last year. We have also refined our offerings to only GSM phones – almost all of which have 3G capability, as we strongly believe CDMA is a dead technology.
With immense competition from multi-brand retail outlets and original manufacturer experience stores, how has Mobile Store stayed on top?
We have a three-level differentiation, from pre-buying to post-buying that we offer customers. In terms of pre-buying, we aid customers via an efficient call centre and website. We also offer expert advice to customers at the store and allow them to experience the product. Third, post purchase, we help customers install software and and demonstrate the phone's functionality. This is useful, as across manufacturers, at least 1-2% of phones are dead-on-arrival and do not work, in which case they can also be returned to the store within 3-7 days. Besides, we also offer extended warranty of 1 year, at 2-2.5% of the handset cost, as we believe most smartphone issues appear 1 year post purchase, once the phone's warranty has expired. The Mobile Store also offers after-sales maintenance, free of cost if the handset is bought from the store – and a minimal fee for repairs of handsets bought elsewhere.
What about competition from online marketplaces like Flipkart, Homeshop 18 and Amazon?
While we do not claim to offer the lowest sale price, we do get first preference from wholesalers and distributors for fresh inventory – both at our stores and online portal launched last May. The pricing on our online portal is 3-4% lower than that at the Mobile Store, similar to industry offerings. Besides, online handset sales still make up only 10-12% of smartphone purchases today. That said, we believe online presence presents a huge opportunity for us, and we receive huge traction on our website, thanks to freshest inventory, brand name, regular promotions and pre-booking. Besides, we also launched the first full-Hindi mobile retail website in June-end and boast of four lakh Facebook fans.
How is your EMI strategy working out? Any plans to start debit card EMIs?
We pioneered with the EMI option for smartphone sales two years ago, which contributes 30% to our smartphone sales today, from 2-3% when it was introduced. EMI is popular because while the pricing of smartphones are similar worldwide, salaries are varied, and hence, there is a gap between aspiration and affordability, which EMI options help bridge. While we have tied up with 10 major bands for credit card EMIs, two months ago we launched an EMI scheme for non-credit card holders, where the customer is given the phone purely based on identity proof, an ECS form and a cancelled cheque. Already a sixth of our sales this month in Mumbai are from non-credit card EMI schemes, and we will soon be introducing the scheme in Delhi, Chennai and Kolkata also. Debit card EMI option should hopefully be launched by August-end.
So, Samsung is still the hottest-selling smartphone brand...
Yes, Samsung has been the market leader for over a year due to the maximum number of new innovations and handset launches. Apple is the second highest-selling brand. Surprisingly, desi brand Micromax has beaten Nokia to third best-selling smartphone, as it is very popular with the youth, despite a pick-up in Nokia sales in the last six months, thanks to Lumia and Asha versions. BlackBerry, HTC and Sony continue to be in decline, in terms of sales.
What is pushing the popularity of India-made smartphones?
We were late in catching in on the trend towards home-grown brands and started selling local brands like Micromax and Karbonn only a year ago. Indian brands are more affordable and have done a good job in following up innovation by leading brands and offering them at much lower prices. Besides, while Indian brands were only focussed on cheap feature phone offerings, now they are all offering quality smartphones, and spending a lot on advertising, which has changed the Indian consumer's mindset towards Indian brands.
Has handset bundling helped smartphone sales?
No, it hasn't. This is because handset bundling has not been offered across operators, and besides the after-sales experience in terms of 3G experience and telco call centre issues very disappointing. We thus believe that contrary to popular notion, the market is not driven by data tariff war, as the mobile internet experience is not consistent, as the network is inefficient to support it.
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