Purchase managers on the block
Purchase managers on the block

A group, which offers to its members Xxtra discounts on almost anything from reputed vendors, is an interesting business model that we have come across in the recent times. In a candid conversation with Nikunj Bubna, Director, Power Circle, we learn more about how this model works and how it is set to take off in the times to come….

Vrinda Oberai (VO): I understand that you work on a limited member base, wherein a limited number of members can get good Xxtra discounts from reputed vendors. How does the same work?

Nikunj Bubna (NB): We want the Power Circle member base to be premium and concentrated only around metros and tier I cities and each such city will have its own preset limits to member registrations. For eg, in Mumbai (including Navi Mumbai and Thane), we would want only 750,000 privileged and active members benefitting without cannibalising the existing direct sales of the vendor.

VO: What is the USP of Power Circle? Who is your target audience? How did you zero in on the concept on which Power Circle rests?

NB: Power Circle, to the best of our knowledge, is the only ‘pull model’ kind of platform in India (and probably also in the world), which serves like a purchase manager for individual consumers, helping them get Xxtra discounts on whatever they wish to buy (apparels, cars, furniture, restaurants, property, movie tickets, etc) whenever they wish to buy, and that too from reputed vendors. While e-commerce companies target the online shopping community, our target audience is the entire Sec A and Sec B urban population, which is probably over 400 million in India. After having successfully piloted the concept under our ‘Purple Swarms’ brand since 2009 for HNIs in Mumbai, we thought why not benefit and reach out to a much larger audience since the market size is huge. Even vendors have a long-term sustainable gross margin per sale, which they wouldn’t mind sharing with a large consumer community and hence, we believe this concept of a ‘buying power aggregator’ cum ‘purchase manager’ has a clear, evergreen and long lasting potential.

VO: How do you categorize your members? Do you also categorize the discounts that you offer?

NB: Primarily, the brand Power Circle is there to cater to the mid-income consumers while our other brand Purple Swarms is purely for the high income consumers, typically having an annual income above Rs 20 lakh. Within Power Circle, at the time of registration, we categorise members mainly on the source, eg they may be employees of HSBC, customers of Angel Broking, our direct registrations, etc. Once they are in Power Circle, the service is the same. Since there are thousands of products, it’s not practical to show the exact amount of Xxtra discount. The walk-in discounts might also change frequently, but we communicate the range of Xxtra Discount members can get. If the Xxtra Discount is up to 5 per cent, then we call it ‘nominal', if it is between 5 per cent and 15 per cent, then we call it 'attractive', and Xxtra discounts more than 15 per cent are classified as 'huge'. For example, if the walk-in discount at the vendor is 12 per cent and the Xxtra discount through Power Circle is 10 per cent, then even though the member gets a total discount of 22 per cent, it will show as 'Attractive' Xxtra Discount since it is between 5 per cent and 15 per cent.

VO: How much is your responsibility in the whole transaction?

NB: We have a battery of purchase managers and enquiry managers to support the service back-end. A customer can make an enquiry either online or call the purchase managers for the same. Enquiry managers take it over from there and are responsible for smoothly resolving any issues that may arise between the vendor and the customer during the course of the purchase. We tie-up with reputed vendors, who are responsible for product quality, delivery, warranty, etc. A potential five million-plus huge member base makes our job of getting customers better service from vendors easier, but finally it’s between the customer and the vendor.

VO: Who comprises your vendor base? On what basis does your relationship with your vendor(s) work?

NB: Our vendor base is as diverse as the categories in which we serve in, ranging from pest control to a panditji (Hindu priest). We have car and bike authorised dealers, restaurants, cafes, pubs and bars, a pharmacy chain, gyms, cakes and bakery shops, electronics and consumer durables retailers, banquet halls, caterers, movie theatres, event planners, apparel stores, jewellers, accessory retailers, real estate developers, travel agents, furniture, bath fittings, modular kitchen and home décor retailers, etc. Since, we are taking up the role of a ‘purchase manager’, our business development team carefully researches the market and then approaches the shortlisted vendors with an exciting proposition of increasing business volumes and market share through an exclusive association with Power Circle without any upfront marketing cost or deposit. The vendor just needs to offer us a sustainable and special Xxtra discount (typically ranging around 10-15 per cent) on his/her product range, depending on the category margins. In select categories, we might also request for a small commission, which vendors would not object to, since they are paid at the month-end based on successful purchases made by our members.

VO: Apart from increasing the number of vendors you work with, is there any other way that you’re looking at to expand?

NB: Within the next six months, we are looking to expand on all counts – touching our targeted member base of 50 lakh across 18 major Indian cities and having 10,000-plus vendors. Considering our service back-up and involvement in the purchase process, we would be looking to build a 1,500-plus strong team.

VO: How quick is your revert to a call/query that you receive from a prospective customer regarding a purchase? How much time does the process take?

NB: Make an enquiry for a product or a vendor either online or over the phone takes less than 40 seconds, post which the customer can directly connect with the vendor to close the purchase (since the vendor’s contact details have been shared via SMS/ email). Every enquiry made has a respective enquiry manager responsible to ensure that the customer gets the pre-negotiated Xxtra discount in the most hassle free manner from the reputed vendor partner. Since we already have a shortlisted vendor, the customer’s purchase time can be reduced by over 50 per cent than the time she would have usually taken.

VO: How do you, as a company, reach out to your target customers? How do you plan to build on your customer base? What is your marketing strategy?

NB: At present, our main method of reaching out is via corporate contact programmes, where we partner with large companies like Indiabulls Group, WNS BPO, HSBC, Datamatics, etc. having captive bases of at least 5,000 well-paid employees/clients in India. Right from HR managers to Country Heads have liked our unique proposition of ‘Xxtra Discounts on Anything, Anytime’, which would really benefit their own people well. We believe that since our service can be experienced by anyone immediately and the customer can get an immediate gratification with a ‘Wow’ experience, word-of-mouth will play an important role along with our mass media advertising campaigns that will be launched sometime later.

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