This is how Bombay Merch is driving long term gains through licensing

BombayMerch – the distributor of toys and accessories was started as a hobby project. Over the years, the brand has grown to a level where it is directly distributing product lines to the likes of Hamleys, Crossword, Amazon and a substantial chunk is driven by licensed merchandise. In a candid conversation with License India, Akshay Butani, MD and Co-founder of Bombay Merch talks about how brand licensing has been an effective retail strategy for his brand. Talk to us about the journey of Bombay Merch with brand licensing. Bombay Merch was basically hobby project which was started in 2010. We started off as a distribution company, we started doing accessory knick-knacks, posters and print based products initially. I started my portal and we started adding more product lines, but what we actually found our calling in was toys. After three years into the business, it turned into a serious affair and there was no looking back from then. It was also the time when Indian rupee was depreciating badly and importing the product lines didn’t make the business sense to us. Profit margins had fallen almost 20 percent in the first year and have fallen almost 45 percent since the rupee depreciation in 2011-12. What made you opt for brand licensing as an effective retail strategy? We started picking up licensing for the product lines that we were importing initially but licensing as such was not profitable because the initial investments into the minimum guarantee wee not being made by us. The reasons were pretty small market size for this entire genre. It is still growing and booming but it is not something that is a volume game especially when you’re probably doing high MRP or premium product, it certainly becomes very niche market. It is the mass oriented products that are doing pretty well for companies all over at least the legacy companies like Mattel, Funskool. They always kept their product lines pretty low but nevertheless I think when it came to our toys license, on the DC side we saw 100 percent growth in sales revenue for the toys section at least and that is our core product line as of now. How are you addressing the competition? We have not just launched premium products but we’ve also launched low MRP products which also give us edge over competitors. We are still expensive than Mattel and Funskool put together but we still have a pretty good product line that is doing well in the Indian market. We are trying to work things on Marvel and Star Wars front as well where we can replicate what we have done with the Warner Bros license. How has brand licensing been beneficial for you? Not yet, but the company is known for it and it is what is our current true calling, however it isn’t something yet profitable. I think you have to set your mind on licensing being a long term gain rather than immediate benefits. The fact that Bombay Merch has lasted for six years from a hobby stage to a properly run business states that we have fine tuned us at every single step and we are in it for a long time. What product line is more in demand? Our figure lines are doing well. Also we got into product lines which are not based on licenses like remote control hobby space. So I have product lines starting from Rs 99 (accessories) and goes up to Rs 50 thousand in toys. I am trying to introduce product lines and find a niche which are untapped and that is what is working for us. Talk to us about your retail presence. We are a distribution based company and we supply to Hamleys, Crossword, Landmark, Amazon, Flipkart. We are also present in general trade i.e. mom & pop outlets at least in about 400 stores for low MRP products. What characters or IPs have the maximum presence in retail space? You main characters are still the kings – Batman, Superman on the DC front and Ironman etc on Marvel front. Deadpool was extremely in demand this year around the movie which was refreshing. People are moving away from the main characters from each of the studios and are going for other characters as well, but the market collectively is very small. Our products are collective based like Kotobukiya brand ranges between Rs 4,000 to Rs 12,000 and those are just the statues of superheroes. It is an extremely niche market. Getting action figures into statues is the next big thing. What is your take on Bollywood licensing? The problem with Bollywood is that they are not making cult properties. You look at the superhero films; honestly they were rubbish. They are making movie from monetary point of view but not from long term perspective like star wars. To reach that level, you have to have really good content and need to meet standards immediately of what Hollywood is doing. The reason why those properties are not success is because they don’t have a cult status right now, unless you are talking about a Sholey or something.