LG to take online route to boost home appliance product sales

With e-commerce activity gathering pace in India, South Korea's consumer electronics firm LG Electronics has chalked out a new product strategy for boosting its online presence.

"We will have a completely different portfolio for the online medium. The products/models will be different in online across our entire home appliances range including home ACs. We have already shared plans with our online partners," LG Electronics India vice president - home appliances Vijay Babu told DNA Money.

Though online medium sales are quite low compared to offline, we still need to be present in this space, he said. "We will focus on online medium this year with a differentiated strategy. But, we won't sell the same models/products online and offline so that there is no conflict with the offline medium."

When asked if prices would be low online compared to offline, he replied in the negative saying prices will be competitive but will be the same on both the platforms. Online contributes a marginal 3-4 % to total sales for the company.

"We may not sell big volumes through the online medium but it will enable us in promoting our features and products," Babu said.

People in metro areas have been buying electronics items online through e-commerce sites such as Amazon and Flipkart. With online discounts running high, mobile phones and laptops have found big takers, but for big electronic items such as TVs, refrigerators and ACs among others, it is still a small market.

LG India on Monday announced the launch of 54 new AC models with 5 & 3-star rating from the Bureau Energy Efficiency (BEE) which come with cooling adjustment feature. In 2017, LG had converted all its AC products to inverter technology.

This year, the company expects a 40% growth in home ACs with Rs 3,500 crore sales.

The new product line up also has Smart ThinQ technology, which will allow users to control and monitor ACs anytime, anywhere with an app on the phone. Apart from control, consumers will also get filter cleaning notification and can control multiple home appliances through smart ThinQ. LG's air conditioners are also equipped with Ocean Black Protection which gives long-lasting protection against rust and corrosion.

The company expects a faster growth rate from the non-metro and Tier III markets, besides the metros, which are the highest contributors to the company's sales.

The home AC market is estimated to be around 5 million units with over 20 companies competing in the segment. LG has earmarked Rs 50 crore for marketing and branding campaign for ACs this season, in which around 30% would be spent on digital platforms. Currently, it has a capacity to roll out around two million units of ACs from two plants situated at Noida and Pune.

COOLING EFFECT

• 3-4% – online medium contributes to total sales
   
• Rs 3,500 cr – estimated sales from home Acs
   
• Rs 50 cr – LG has earmarked for marketing and branding campaign for ACs this season