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UniverCell has announced that it received Rs. 100 crore investment (in four tranches since 2007) from Peepul Capital (earlier iLabs Venture), and the money is being used for expansion : 167 stores now to 300 by March, 2009.
Branded Mobile retail outlets are swamping the mobile market and is expected to capture ~40% of the retail telecom market in 2 years.
Apart from UniverCell, other branded outlets that exists are Subhiksha (positioned as ‘cheapest’ phone destination– positioning mainly driven through TV/Print/radio ads and has a strong brand recall), Axiom stores (Panataloon’s JV with Axiom of Dubai), MobileNxt (N18 venture), Spice’s HotSpot and several electronic retail outlets like eZone etc.
Dynamics of Mobile Retail Stores – Where is the big opportunity?
- Size of handset market – ~7000 crore a year – ULCH accounts for ~50%
- Ever increasing demand – for e.g. 9 mn subscribers in the month of August, 2008
- Untapped market -of Replacements : As per BCG research, by 2010, India’s replacement market will be 70 %! [source]
Retail stores vs. mom-and-pop stores
- Better margins – Unlike the unorganized stores (estimated ~50,000 mom-and-pop stores sell phones, recharge cards/accessories etc), Branded retailers buy directly from manufacturers – at price ~4-5% cheaper.
- The big money is on the volume and most of these branded stores are undercutting small retailers in pricing – the % market share (mobile sales) of branded outlets has increased from 1% in 2006 to 15% in 2008.
- Inventory range: Branded retail stores have far more brands than unorganized retailers – offer more brands/choice of phones.
What’s happening in the Market?
Small mobile sellers are considering pooling their purchases to have better negotiating and bargaining power with mobile manufacturers – just the way, small retailers in TN are teaming up to form a chain!
Branded retail outlets’ biggest challenge comes from piracy and gray market, but falling price (of handsets) and replacement market boom can potentially drive customers to branded stores.
What’s your opinion?